Principal Amount:  $__________	June 23, 2014


 


12% SECURED PROMISSORY NOTE


 


For Value Received, ThermoEnergy Corporation,
a Delaware corporation (the “Borrower”), hereby promise to pay to the order of ______________ (the “Holder”)
the sum of ___________ Dollars ($__________) (or such lesser amount as may be then outstanding) together with interest on the unpaid
principal hereof from the date hereof at the rate of twelve percent (12%) per annum, compounded quarterly.


 


The entire principal amount of this Note,
plus interest accrued thereon, shall be due and payable in a single installment (i) on September 15, 2014 or (ii) upon demand following
the occurrence of an Event of Default, as defined below (in either event, “Maturity”). In the event the Borrower shall
not have paid the outstanding principal balance and accrued interest thereon at Maturity, then interest shall accrue from and after
the date of Maturity at the lower of (i) eighteen percent (18%) per annum, and (ii) the highest interest rate acceptable under
applicable usury laws, compounded monthly (the “Default Rate”). Interest shall be calculated on the basis of actual
days elapsed and a 360-day year consisting of four quarters of 90 days each and twelve months of 30 days each.


 


This Note is one of several substantially
identical promissory notes issued by the Borrower pursuant to that certain Loan Agreement dated as of June 23, 2014 by and among
the Borrower, the Holder and certain other persons (the “Loan Agreement”) (which promissory notes, including the Note,
are referred to herein as the “Series Notes”). So long as this Note is outstanding, the Holder shall be entitled to
the benefit of, and subject to the provisions of, the Loan Agreement.


 


The Borrower and the holders of the Series
Notes (including the Holder) have, contemporaneously herewith, entered into a Security Agreement (the “Security Agreement”)
securing the obligations of the Borrower to the Holder and the other holders of the Series Notes under such Series Notes, and so
long as this Note is outstanding the Holder shall be entitled to the benefit of, and subject to the provisions of, the Security
Agreement.


 


This Note may be prepaid, in whole or in
part, at any time without premium or penalty; provided, however, that no Series Note may be prepaid unless simultaneous with such
prepayment, the same portion of all outstanding Series Notes are also prepaid. Partial prepayments shall be credited first to accrued
and unpaid interest, and the balance, if any, shall reduce principal.


 


The entire unpaid principal amount of this
Note, together with interest thereon shall, on written notice from the Holder, forthwith become and be due and payable if any one
or more Events of Default shall have occurred (for any reason whatsoever and whether such happening shall be voluntary or involuntary
or be affected or come about by operation of law pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and be continuing.


 


The occurrence of any one or more of the
following events or conditions shall constitute an “Event of Default” under this Note:


 


(i)          The
Borrower’s failure to make any payment of principal or interest or any other sums within fifteen (15) days of the date when
due under any Series Note; or


 




    	 



    	 



    

 


(ii)         Any
representation or warranty or other statement made by the Borrower in the Loan Agreement or the Security Agreement proves to have
been false or misleading in any material respect when made or furnished; or


 


(iii)        Breach
of or failure in the due observance or performance in any material respect of any covenant, condition or agreement on the part
of the Borrower to be observed or performed pursuant to this Note, the Loan Agreement or the Security Agreement, and the failure
to cure (if curable) any such breach or failure within ten (10) days after receipt of written notice thereof from the Holder; or


 


(iv)        If
the Borrower shall (a) apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part
of any of its assets; (b) be unable, or admit in writing its inability, to pay its debts as they mature; (c) file or permit the
filing of any petition, case arrangement, reorganization, or the like under any insolvency or bankruptcy law, or the adjudication
of it as a bankrupt, or the making of an assignment for the benefit of creditors or the consenting to any form or arrangement for
the satisfaction, settlement or delay of debt or the appointment of a receiver for all or any part of its properties; or (d) any
action shall be taken by the Borrower for the purpose of effecting any of the foregoing; or


 


(v)         If
an order, judgment or decree shall be entered, or a case shall be commenced, against the Borrower, without its application, approval
or consent by any court of competent jurisdiction, approving a petition or permitting the commencement of a case seeking reorganization
or liquidation of the Borrower or appointing a receiver, trustee or liquidator of the Borrower, or of all or a substantial part
of the assets of the Borrower, and the Borrower, by any act, indicate its approval thereof, consent thereto, or acquiescence therein,
or such order, judgment, decree or case shall continue unstayed and in effect for any period of thirty (30) consecutive days or
an order for relief in connection therewith shall be entered; or


 


(vi)        If
the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease to legally exist, or, without the prior written
consent of the holders of Series Notes representing at least 662⁄3% in aggregate outstanding principal amount of the Series
Notes, merge or consolidate, or be merged or consolidated, with or into any other corporation.


 


All payment obligations arising under this
Note are subject to the express condition that at no time shall the Borrower be obligated or required to pay interest at a rate
which could subject the Holder to either civil or criminal liability as a result of being in excess of the maximum rate which the
Borrower is permitted by law to contract or agree to pay. If, by the terms of this Note, the Borrower is at any time required or
obligated to pay interest at a rate in excess of such maximum rate, the applicable rate of interest shall be deemed to be immediately
reduced to such maximum rate, and interest thus payable shall be computed at such maximum rate, and the portion of all prior interest
payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of principal.


 


No failure or delay on the part of the Holder
in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 




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All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the Commonwealth of Massachusetts, without regard to the principles of conflicts of law thereof. Each party agrees
that any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened. (a “Proceeding”) concerning the interpretation, enforcement
and of the transactions contemplated by this Note shall be commenced exclusively in the state or federal courts sitting in, or
having jurisdiction over, Boston, Massachusetts (the “Massachusetts Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the Massachusetts Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such Massachusetts Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. If either party shall commence a Proceeding to enforce any
provisions of this Note, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.


 


THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE HOLDER TO ACCEPT THIS NOTE.


 


This Note may be amended or supplemented,
or any provision hereof waived, only if all of the other Series Notes are amended or supplemented or provisions thereof waived
in like manner and only if such amendment, supplement or waiver is approved by the written agreement of the Borrower and of the
holders of Series Notes representing at least 662⁄3% in aggregate outstanding principal amount of the Series Notes.


 


This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. The Borrower may not
assign any of its obligations under this Note without the consent of the Holder.


 


If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees, regardless
of whether the Holder commenced litigation in order to enforce its rights under this Note.


 


In witness whereof, the Borrower
has caused this Note to be executed and delivered by its duly authorized Chief Operating Officer and Interim Chief Financial Officer
as of the 23rd day of June 2014.


 


	 	ThermoEnergy Corporation
	 	 	 
	 	By:	 
	 	 	Gregory M. Landegger
	 	 	Chief Operating Officer 
	 	 	and Interim Chief Financial Officer


 




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