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                                                                    EXHIBIT 10.1

                                LETTER OF INTENT

LETTER OF INTENT, dated as of 15th day of June, 2002 by and between SHENZHEN
FUHAOHENG INVESTMENT CO., LTD, a Chinese corporation having its registered place
of business at Room 2201, Block A, International Trade Plaza, Fu Hong Road,
Shenzhen, People's Republic of China (hereinafter referred to as Shenzhen
Fuhaoheng Investment Co., Ltd) and THERMOENERGY CORPORATION, an American company
whose principal place of business is located at 1300 Tower Building, 323 Center
Street, Little Rock, Arkansas 72201 USA (hereinafter referred to as
ThermoEnergy).

WHEREAS, Shenzhen Fuhaoheng Investment Co. LTD and ThermoEnergy intend to form a
Chinese joint venture company to construct and operate a pilot wastewater
processing plant utilizing ThermoEnergy's proprietary technologies, the
"Sludge-to-Oil Reactor System" (STORS) and the "Ammonia Recovery Process" (ARP)
in Shenzhen, People's Republic of China, and;

WHEREAS, upon the successful completion of the Shenzhen pilot plant project, the
Chinese joint venture company intends to pursue commercial, municipal and
industrial wastewater opportunities within the People's Republic of China
utilizing the STORS and ARP technologies, and;

WHEREAS, Shenzhen Fuhaoheng Investment Co. LTD and ThermoEnergy intend to
exchange business communications with each other upon the mutual execution of
this Letter of Intent and agree the details and content of these communications
shall be held confidential and proprietary, excluding information that is
subject to regulatory disclosure requirements mandated by the U.S. Securities
and Exchange Commission, and;

WHEREAS, it is the intent of Shenzhen Fuhaoheng Investment Co., LTD and
ThermoEnergy to conclude these communications by signing a formal joint venture
agreement during the week of September 15, 2002, and;

WHEREAS, ThermoEnergy agrees that if, for any reason, the joint venture
agreement is not signed during the week of September 15, 2002, it will continue
to negotiate in good faith with Shenzhen Fuhaoheng Investment Co. LTD for the
sole and exclusive use of STORS and ARP technologies within the People's
Republic of China until the close of business, December 31, 2002.

         NOW. THEREFORE,

         1. Shenzhen Fuhaoheng Investment Co. LTD will:

            A.    Provide a capital investment which shall be determined and be
                  based upon the results of a feasibility study conducted by
                  Qinghua University. The feasibility study shall be based upon
                  data provided by ThermoEnergy.



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                  Shenzhen Fuhaoheng Investment Co. LTD shall have an equity
                  position in the new Chinese joint venture company of not less
                  than fifty-one percent (51%).

            B.    Provide the land required for the construction of the pilot
                  plant.

            C.    Secure the necessary construction permits and any and all
                  other documentation required by Chinese government entities
                  for the pilot plant's design, construction and continuing
                  operation.

            D.    Provide the required infrastructure connections with the
                  city's present and operating sewage-processing system.

            E.    Identify and negotiate, in consultation with ThermoEnergy,
                  with qualified Chinese general contractors for the pilot
                  plant's construction.

            F.    Assist ThermoEnergy in identifying and negotiating with
                  qualified Chinese equipment vendors.

            G.    Provide guidance and assistance in all areas of mutual
                  interest to ensure timely and efficient management of the
                  project's design, construction and implementation phases.

         2. ThermoEnergy will:

            A.    Provide its proprietary processes known as the "Sludge-To-Oil
                  Reactor System," (STORS) and the "Ammonia Recovery Process"
                  (ARP) as its technology contribution to the new Chinese joint
                  venture company, which shall entitle ThermoEnergy to
                  thirty-five percent (35%) of the Chinese joint venture
                  company.

            B.    Provide a capital contribution, at its sole discretion, the
                  amount of which shall be determined prior to the week of
                  September 15, 2002, which will allow ThermoEnergy to purchase
                  up to an additional fourteen percent (14%) of the Chinese
                  joint venture company.

            C.    Be responsible for the design, construction and operating
                  phases of the pilot plant.

            D.    Provide Qinghua University with all requested and required
                  documentation by June 28, 2002 so as China-based technical
                  experts can author and publish a feasibility study which shall
                  verify ThermoEnergy's "STORS" and "ARP" technologies and which
                  shall be incorporated into the joint venture agreement.



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            E.    Be responsible for the selection of equipment used in the
                  STORS and ARP processes and the best source of such equipment.

            F.    Assist in the identification and selection of equipment
                  vendors for ancillary components of the pilot plant facility.

            G.    Provide guidance and assistance in all areas of mutual
                  interest to ensure timely and efficient management of the
                  project's design, construction and implementation phases.

IN WITNESS WHEREOF, the parties hereto have executed this letter of Intent as of
the date first written above.

SHENZHEN FUHAOHENG INVESTMENT CO., LTD        THERMOENERGY CORPORATION

/s/ Jang Gou Jin                              /s/ Dennis Cossey
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          JANG GOU JIN                        DENNIS COSSEY
          GENERAL MANAGER                     CHAIRMAN & CHIEF EXECUTIVE OFFICER













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