Document:

Exhibit
      4.1

     

    THIS
      NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
      SECURITIES LAWS. NEITHER THIS NOTE NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE
      SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING
      CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

    

    
      	
              Principal
                Amount: $500,000.00

            	
              Issue
                Date: August 12, 2008

            

    

    

    7.5%
      CONVERTIBLE PROMISSORY NOTE DUE DECEMBER 31, 2008

     

    FOR
      VALUE
      RECEIVED, ThermoEnergy Corporation, a Delaware corporation (the “Borrower”),
      hereby promise to pay to the order of Robert S. Trump (the “Holder”), the sum of
      Five Hundred Thousand Dollars ($500,000.00) on December 31, 2008 (the “Maturity
      Date”). 

     

    Interest
      on the outstanding principal balance shall be paid at the rate of seven and
      one-half percent (7.5%) per annum, payable on the Maturity Date. Interest shall
      be computed on the basis of a 365-day year, using the number of days actually
      elapsed.

     

    At
      the
      election of the Borrower by written notice to the Holder (a “Deferral Notice”)
      and payment to the Holder of a deferral fee in an amount equal to ten percent
      (10%) of the principal amount then outstanding (the “Deferral Fee”) no later
      than five business days after the Maturity Date, the Maturity Date may be
      extended to March 31, 2009. At the election of the Borrower, the Deferral Fee
      may be paid by adding such amount of to the principal amount of this
      Note.

     

    The
      Holder shall have the right at any time and from time to time until the
      principal and interest on this Note shall have been paid in full, to convert
      the
      principal and any interest and Deferral Fee due under this Note into shares
      of
      the Borrower’s Common Stock, par value $0.001 per share (the “Common Stock”). If
      the Holder exercises his right of conversion, the Holder shall give the Borrower
      a Notice of Conversion in the form annexed to this Note, setting forth the
      amount of principal, interest and Deferral Fee which the Holder is converting
      into Common Stock (the “Conversion Amount”) at the Conversion Price in effect on
      the date of such notice. The date of such notice is referred to as the
“Conversion Date.” Upon delivery to the Borrower of a completed Notice of
      Conversion, the Borrower shall deliver, within five (5) business days after
      the
      Conversion Date (such fifth day being the “Delivery Date”), irrevocable
      instructions to the transfer agent for the Common Stock to issue and deliver
      to
      the Holder a certificate for that number of shares of Common Stock into which
      the Conversion Amount is being converted. Except to the extent that the entire
      unpaid principal balance of this Note is being presented for conversion, the
      Holder shall not be required to present this Note in order to effect conversion,
      and the Holder shall maintain a ledger setting forth each conversion of
      principal and interest on this Note and such ledger shall, absent manifest
      error, be deemed to be binding and conclusive on the Borrower.

     

    This
      Note
      may be prepaid, in whole or in part, at any time without premium or penalty
      upon
      ten (10) days’ prior written notice to the Holder. Partial prepayments shall be
      applied (i) first to any unpaid Deferral Fee, (ii) then to accrued and unpaid
      interest, and (iii) the balance to principal.

     

    If
      the
      Maturity Date of this Note is extended to March 31, 2009 as provided above
      and
      if this Note is not repaid in full on such Maturity Date, then the entire
      principal amount of this Note, together with all interest accrued hereon and
      the
      Deferral Fee, shall automatically and without any action on the part of the
      Borrower or the Holder convert into shares of Common Stock at the Conversion
      Price in effect on the Maturity Date. On the Maturity Date, the Holder shall
      surrender this Note for cancellation and, against such surrender, the Borrower
      shall deliver irrevocable instructions to the transfer agent for the Common
      Stock to issue and deliver to the Holder a certificate for that number of shares
      of Common Stock into which this Note has been automatically
      converted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.1. Conversion
      Price.
      The
      Conversion Price shall be $0.75 per share of Common Stock; provided,
      however, that
      the
      Conversion Price is subject to adjustment as set forth in Section 1.2 of this
      Note. The number of shares of Common Stock to be issued upon each conversion
      of
      this Note shall be determined by dividing the Conversion Amount by the
      Conversion Price in effect on the Conversion Date.

     

    1.2. Adjustment
      to the Conversion Price.
      The
      Conversion Price and number and kind of shares or other securities to be issued
      upon conversion shall be subject to adjustment from time to time upon the
      happening of certain events while this conversion right remains outstanding,
      as
      follows:

     

    1.2.1. Stock
      Dividends, Subdivisions and Combinations.
      If the
      Borrower shall at any time:

     

    (a) declare
      or pay to the holders of its Common Stock a dividend payable in, or other
      distribution of, shares of Common Stock or in securities convertible into shares
      of Common Stock (“Convertible Securities”); or

     

    (b) subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock; or

     

    (c) combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock;

     

    then
      (i)
      the number of shares of Common Stock into which this Note is convertible
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock into which this Note is convertible immediately prior
      to
      the occurrence of such event would own or be entitled to receive after the
      occurrence of such event, and (ii) the then-current Conversion Price shall
      be
      adjusted to equal (A) the then-current Conversion Price multiplied by the number
      of shares of Common Stock into which this Note is convertible immediately prior
      to the adjustment divided by (B) the number of shares into which this Note
      is
      convertible immediately after such adjustment.

     

    1.2.2. Certain
      Other Distributions.
      If at
      any time the Borrowers shall declare or pay to the holders of its Common Stock
      any dividend or other distribution of:

     

    (a) cash;

     

    (b) any
      evidences of its indebtedness, any shares of its stock or any other securities
      or property of any nature whatsoever (other than cash, Convertible Securities
      or
      additional shares of Common Stock); or

     

    (c) any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of its stock or any other securities or property of
      any
      nature whatsoever (other than cash, Convertible Securities or additional shares
      of Common Stock);

     

    
      
        
        

      

      
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    then,
      upon conversion of this Note, the Holder shall be entitled to receive such
      dividend or distribution as if the Holder had converted the Conversion Amount
      prior to the date of such dividend or distribution. A reclassification of the
      Common Stock (other than a change in par value, or from par value to no par
      value or from no par value to par value) into shares of Common Stock and shares
      of any other class of stock shall be deemed a distribution by the Company to
      the
      holders of its Common Stock of such shares of such other class of stock within
      the meaning of this Section 1.2.1 and, if the outstanding shares of Common
      Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 1.2.1.

     

    1.2.3 Reorganization,
      Reclassification, Merger, Consolidation or Disposition of Assets.
      In case
      the Borrower shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another Person (where the Borrower is not
      the
      survivor or where there is a change in or distribution with respect to the
      Common Stock), or sell, convey, transfer or otherwise dispose of all or
      substantially all its property, assets or business to another Person, or
      effectuate a transaction or series of related transactions in which more than
      50% of the voting power of the Borrower is disposed of (each, a “Fundamental
      Corporate Change”) and, pursuant to the terms of such Fundamental Corporate
      Change, shares of common stock of the successor or acquiring corporation, or
      any
      cash, shares of stock or other securities or property of any nature whatsoever
      (including warrants or other subscription or purchase rights) in addition to
      or
      in lieu of common stock of the successor or acquiring corporation (“Other
      Property”), are to be received by or distributed to the holders of Common Stock,
      then the Holder shall have the right thereafter to receive, upon conversion
      of
      this Note, such number of shares of common stock of the successor or acquiring
      corporation or of the Borrower, if it is the surviving corporation, and Other
      Property as is receivable upon or as a result of such
      Fundamental Corporate Change by a holder of the number of shares of Common
      Stock
      into which this Note is convertible immediately prior to such Fundamental
      Corporate Change. In case of any such Fundamental Corporate Change, the
      successor or acquiring corporation (if other than the Borrower) shall expressly
      assume the due and punctual observance and performance of each and every
      covenant and condition of this Note to be performed and observed by the Borrower
      and all the obligations and liabilities hereunder, subject to such modifications
      as may be deemed appropriate (as determined by resolution of the Board of
      Directors of the Borrower) in order to provide for adjustments of shares of
      Common Stock into which this Note is convertible which shall be as nearly
      equivalent as practicable to the adjustments provided for in this Section 1.2.
      For purposes of this Section 1.2.3, “common stock of the successor or acquiring
      corporation” shall include stock of such corporation of any class which is not
      preferred as to dividends or assets over any other class of stock of such
      corporation and which is not subject to redemption and shall also include any
      evidences of indebtedness, shares of stock or other securities which are
      convertible into or exchangeable for any such stock, either immediately or
      upon
      a specified date or upon the happening of a specified event, and any warrants
      or
      other rights to subscribe for or purchase any such stock. The foregoing
      provisions of this Section 1.2 shall similarly apply to any successive
      Fundamental Corporate Change of the successor corporation.

     

    
      
        
        

      

      
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    1.2.4 Other
      Action Affecting Common Stock.
      In case
      at any time or from time to time the Borrower shall take any action in respect
      of the Common Stock, other than any action described in this Section 1.2, which
      would have a materially adverse effect upon the rights of the Holder, the number
      of shares of Common Stock into which this Note is convertible and/or the
      Conversion Price shall be adjusted in such manner as may be equitable in the
      circumstances, as determined in good faith by the Board of Directors of the
      Borrower.

     

    1.2.5
      Certain
      Limitations.
      Notwithstanding anything herein to the contrary, the Borrower agrees not to
      enter into any transaction which, by reason of any adjustment hereunder, would
      cause the Conversion Price to be less than the par value per share of Common
      Stock.

     

    1.3. Notice
      of Adjustment.
      Whenever the Conversion Price is adjusted pursuant to Section 1.2 of this Note,
      the Borrower shall promptly mail to the Holder a notice setting forth the
      Conversion Price after such adjustment and setting forth a statement of the
      facts requiring such adjustment.

     

    1.4. Mechanics
      of Conversion.

     

    1.4.1. Delivery
      of Certificate Upon Conversion.
      Except
      as otherwise set forth herein, not later than the Delivery Date, the Borrower
      shall deliver to the Holder (a) a certificate or certificates representing
      the
      number of shares of Common Stock being acquired upon the conversion of the
      Note
      (which certificate or certificates shall bear a legend indicating that such
      shares have been issued in reliance on an exemption from the registration
      requirements of the Securities Act of 1933 (the “Securities Act” and may not be
      sold, transferred or otherwise disposed of except pursuant to an effective
      registration statement under the Securities Act or in reliance on an exemption
      to the registration requirements of the Securities Act), and (b) a bank check
      in
      the amount of accrued and unpaid interest on the portion of the Note being
      converted unless the Holder converts such interest into Common Stock. If in
      the
      case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the Delivery Date,
      the
      Holder shall be entitled to elect by written notice to the Borrower at any
      time
      on or before its receipt of such certificate or certificates thereafter, to
      rescind such conversion, in which event the conversion shall be deemed void
      ab
      initio.

     

    1.4.2. Obligation
      Absolute.
      The
      Borrower’s obligations to issue and deliver the Common Stock upon conversion of
      this Note in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Borrower
      or
      any violation or alleged violation of law by the Holder or any other Person,
      and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Borrower to the Holder in connection with the issuance of
      such
      shares. In the event the Holder shall elect to convert any or all of this Note,
      The Borrower may not refuse conversion based on any claim that such Holder
      or
      any one associated or affiliated with the Holder of has been engaged in any
      violation of law, agreement or for any other reason unless an injunction from
      a
      court, on notice, restraining and or enjoining conversion of all or part of
      this
      Note shall have been sought and obtained. In the absence of an injunction
      precluding the same, the Borrower shall issue the Common Stock or, if
      applicable, cash, upon a properly noticed conversion.

     

    1.4.3. 
      Fractional Shares.
      Upon a
      conversion hereunder, the Borrower shall not be required to issue stock
      certificates representing fractions of shares of the Common Stock. All
      fractional shares shall be carried forward and any fractional shares which
      remain after a Holder converts all of this Note shall be rounded up to the
      next
      whole number of shares.

     

    
      
        
        

      

      
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    1.4.4. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Note shall be made without charge to the Holder thereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificate, provided that the Borrower shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of this Note and the Borrower shall not be required to issue or
      deliver such certificates unless or until the person or persons requesting
      the
      issuance thereof shall have paid to the Borrower the amount of such tax or
      shall
      have established to the satisfaction of the Borrower that such tax has been
      paid.

     

    Section
      2. Events
      of Default.

     

    2.1. 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.

     

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

     

    2.2.1. Borrower’s
      failure to make any payment of principal or interest or any other sums within
      fifteen (15) days of the date when due on this Note, unless the Borrower timely
      gives a Deferral Notice and pays the required Deferral Fee with respect to
      such
      payment; or

     

    2.2.2. Any
      representation or warranty or other statement made or furnished to the Holder
      by
      or on behalf of the Borrower in any document or instrument furnished in
      connection with this Note proves to have been false or misleading in any
      material respect when made or furnished; or

     

    2.2.3. 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 and the failure to cure (if curable) any such
      breach or failure within fifteen (15) days after receipt of written notice
      thereof from the Holder; or

     

    2.2.4. 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

     

    2.2.5. 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 90
      consecutive days or an order for relief in connection therewith shall be
      entered; or

     

    
      
        
        

      

      
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    2.2.6. If
      the
      Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease
      to
      legally exist, or merge or consolidate, or be merged or consolidated, with
      or
      into any other corporation.

     

    Section
      3. Miscellaneous

     

    3.1. Usury
      Saving Provision.
      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.

     

    3.2. Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof 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.

     

    3.3. Governing
      Law.
      This
      Agreement and the rights of the parties shall be construed and enforced in
      accordance with the laws of the State of New
      York
      applicable to agreements executed and to be performed wholly within such state
      and without regard to
      principles of conflicts of law.
      Each
      party irrevocably (a) consents to the jurisdiction of the federal and state
      courts situated
      in
      Pulaski County, Arkansas in
      any
      action that may be brought pursuant to this Agreement, and (b)
      submits to and accepts, with respect to its properties and assets, generally
      and
      unconditionally, the in personam jurisdiction of the aforesaid courts, waiving
      any defense that such court is not a convenient forum. In any such litigation
      to
      the extent permitted by applicable law, each party waives personal service
      of
      any summons, complaint or other process, and agrees that the service thereof
      may
      be made either (i) in the manner for giving of notices provided in Section
      3.5
      of this Note (other than by telecopier) or (ii) in any other manner permitted
      by
      law. 

     

    3.4. Waiver
      of Right to Trial by Jury.
      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 AND WAIVE ANY RIGHT TO BRING A COUNTERCLAIM AGAINST
      THE HOLDER IN ANY ACTION TO ENFORCE THIS NOTE. THIS WAIVER CONSTITUTES A
      MATERIAL INDUCEMENT FOR HOLDER TO ACCEPT THIS NOTE.

     

    3.5. Notice.
      All
      notices, requests or other communications required or permitted to be given
      under this Agreement to any party shall be in writing and shall be deemed to
      have been sufficiently given when delivered by personal service or sent by
      registered mail, overnight
      courier services with provided evidence of delivery or attempted
      delivery,
      or
      facsimile, to the Borrower at 124 West Capitol Avenue, Suite 880, Little Rock,
      Arkansas 72201 (fax: 501-375-5249) or to the Holder at its principal place
      of
      business. Either party may, be like notice, change the address or telecopy
      number or the person to whom notice is to be given.
      Notice
      shall be deemed given when received or when attempted delivery is made (based
      on
      evidence of attempted delivery by the United States Postal Service or an
      overnight courier or a messenger service), provided that notice by telecopier
      shall be deemed given when receipt is acknowledged by the
      recipient.

     

    
      
        
        

      

      
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    3.6. Amendment.
      This
      Note may be amended or supplemented only by the written agreement of the Holder
      and the Borrower.

     

    3.7. Assignability.
      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.

     

    3.8. Cost
      of Collection.
      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.

     

    3.9. Stockholder
      Status.
      The
      Holder shall not have rights as a stockholder of the Borrower with respect
      to
      unconverted portions of this Note. However, from and after the Conversion Date,
      the Holder will have all the rights of a shareholder of the Borrower with
      respect to the shares of Common Stock to be received by Holder after delivery
      by
      the Holder of a Conversion Notice to the Borrower regardless of whether physical
      certificates shall have been delivered.

     

    IN
      WITNESS WHEREOF, the
      parties have caused this Agreement to be executed and delivered by its duly
      authorized Executive Vice President and Chief Financial Officer as of the date
      and year first above written.

     

    
      	
              ThermoEnergy
                Corporation

            
	 	 
	
              By:

            	
              /s/
                Andrew T. Melton

            
	 	
              Andrew
                T. Melton

            
	 	
              Executive
                Vice President and
                CFO

            

    

    

    
      
        
        

      

      
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    NOTICE
      OF CONVERSION

    

    (To
      be
      executed by the Holder in order to convert the Note)

    

    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by ThermoEnergy Corporation on August
      12,
      2008 into shares of Common Stock of ThermoEnergy Corporation according to the
      conditions set forth in such Note, as of the date written below.

    

    Date
      of
      Conversion:__________________________________

    

    Conversion
      Price:____________________________________

    

    Number
      of
      Shares To Be Delivered:_______________________________

    

    Signature:________________________________________

    

    Print
      Name and
      Title:_____________________________________________________________________________

    

    Address:_______________________________________________________________________________________

    

    _______________________________________________________________________________________Exhibit
      4.2

     

    THIS
      COMMON STOCK PURCHASE WARRANT AND THE SECURITIES
      ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION
      OF SUCH
      ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS COMMON
      STOCK
      PURCHASE WARRANT.

     

    Warrant
      No. 2008-RT1

     

    COMMON
      STOCK PURCHASE WARRANT

     

    To
      Purchase Common Stock of

    ThermoEnergy
      Corporation

     

    This
      Is
      To Certify That Robert
      S. Trump,
      or his
      registered assign, is entitled, at any time from the Closing Date (as
      hereinafter defined) to the Expiration Date (as hereinafter defined), to
      purchase from ThermoEnergy Corporation, a Delaware corporation (the
“Company”),
      such
      number of shares of Common Stock (as hereinafter defined) as shall be determined
      pursuant to Section 2.1 below (subject to adjustment as provided herein), in
      whole or in part, at a purchase price of $1.50 per share (the “Exercise
      Price”),
      all
      on the terms and conditions and pursuant to the provisions hereinafter set
      forth.

     

    
      	 	
              1.

            	
              
                DEFINITIONS

              

            

    

     

    As
      used
      in this Common Stock Purchase Warrant (this “Warrant”),
      the
      following terms shall have the respective meanings set forth below:

     

    “Business
      Day”
shall
      mean any day that is not a Saturday or Sunday or a day on which banks in New
      York City, New York are required or permitted to be closed in the City of New
      York.

     

    “Closing
      Date”
shall
      mean August 12, 2008.

     

    “Commission”
shall
      mean the Securities and Exchange Commission or any other federal agency then
      administering the Securities Act and other federal securities laws.

     

    “Common
      Stock”
shall
      mean (except where the context otherwise indicates) the Common Stock, par value
      $0.001 per share, of the Company as constituted on the Closing Date, and any
      capital stock into which such Common Stock may thereafter be changed, and shall
      also include (i) capital stock of the Company of any other class (regardless
      of
      how denominated) issued to the holders of shares of Common Stock upon any
      reclassification thereof which is also not preferred as to dividends or assets
      over any other class of stock of the Company and which is not subject to
      redemption and (ii) shares of common stock of any successor or acquiring
      corporation received by or distributed to the holders of Common Stock of the
      Company in the circumstances contemplated by Section 4.4.

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    “Convertible
      Securities”
shall
      mean evidences of indebtedness, shares of stock or other securities of the
      Company which are convertible into or exchangeable, with or without payment
      of
      additional consideration in cash or property, for shares of Common Stock, either
      immediately or upon the occurrence of a specified date or a specified
      event.

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended, or any successor federal
      statute, and the rules and regulations of the Commission thereunder, all as
      the
      same shall be in effect from time to time.

     

    “Exercise
      Period”
shall
      mean the period during which this Warrant is exercisable pursuant to Section
      2.2.

     

    “Expiration
      Date”
shall
      mean December 31, 2015.

     

    “Fundamental
      Corporate Change”
shall
      have the meaning set forth in Section 4.4.

     

    “Holder”
shall
      mean the Person in whose name the Warrant or Warrant Stock set forth herein
      is
      registered on the books of the Company maintained for such purpose.

     

    “Market
      Price”
shall
      mean, on any date of determination, (i) the closing price of a share of Common
      Stock on such day as reported on the principal Trading Market on which the
      Common Stock is listed or traded, or (ii) if the Common Stock is not listed
      on a
      Trading Market, the closing bid price for a share of Common Stock on such day
      in
      the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
      if
      the Common Stock is not then listed or quoted on the OTC Bulletin Board, the
      closing bid price for a share of Common Stock on such day in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding to its functions
      of reporting prices).

     

    “Other
      Property”
shall
      have the meaning set forth in Section 4.4.

     

    “Person”
shall
      mean any individual, sole proprietorship, partnership, joint venture, trust,
      incorporated organization, association, corporation, institution, public benefit
      corporation, entity or government (whether federal, state, county, city,
      municipal or otherwise, including, without limitation, any instrumentality,
      division, agency, body or department thereof).

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended, or any successor federal statute,
      and the rules and regulations of the Commission thereunder, all as the same
      shall be in effect at the time. 

     

    “Trading
      Day”
      means
      (i) a day on which the Common Stock is traded on a Trading Market, or (ii)
      if
      the Common Stock is not listed on a Trading Market, a day on which the Common
      Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
      Board, or (iii) if the Common Stock is not then quoted on the OTC Bulletin
      Board, a day on which the Common Stock is quoted in the over-the-counter market
      as reported by the National Quotation Bureau Incorporated (or any similar
      organization or agency succeeding to its functions of reporting prices);
provided,
      that in
      the event that the Common Stock is not listed or quoted as set forth in (i),
      (ii) and (iii) hereof, then the term “Trading Day” shall mean a Business
      Day.

     

    “Trading
      Market”
      means
      whichever of the New York Stock Exchange, the American Stock Exchange, the
      Nasdaq National Market, or the Nasdaq Bulletin Board on which the Common Stock
      is listed or quoted for trading on the date in question.

     

    
      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

    

     

    “Transfer”
shall
      mean any disposition of any Warrant or Warrant Stock or of any interest in
      either thereof, which would constitute a sale thereof within the meaning of
      the
      Securities Act. 

     

    “Warrant
      Stock”
shall
      mean the shares of Common Stock issued or issuable to the Holders of the
      Warrants upon the exercise thereof.

     

    “Warrants”
shall
      mean this Warrant and all warrants issued upon transfer, division or combination
      of, or in substitution for, any thereof. All Warrants shall at all times be
      identical as to terms and conditions and date, except as to the number of shares
      of Common Stock for which they may be exercised.

     

    
      	 	
              2.

            	
              
                EXERCISE
                  OF WARRANT

              

            

    

     

    
      	 	
              2.1

            	
              Determination
                of Number of Shares for which Warrant is
                Exercisable

            

    

     

    The
      number of shares of Common Stock for which this Warrant may be exercised shall
      be determined by dividing (i) the aggregate amount paid by the initial Holder
      for the purchase of Common Stock and/or Convertible Securities during the period
      commencing on December 31, 2008 and ending on December 31, 2011 by (ii)
      $1.00.

     

    
      	 	
              2.2

            	
              Manner
                of Exercise

            

    

     

    From
      and
      after the Closing Date and until 6:00 p.m., New York time, on the Expiration
      Date, the Holder may exercise this Warrant, on any Business Day, for all or
      any
      part of the number of shares of Common Stock purchasable hereunder.

     

    In
      order
      to exercise this Warrant, in whole or in part, the Holder shall surrender this
      Warrant to the Company at its principal office at 124 West Capitol Avenue,
      Suite
      880, Little Rock, Arkansas 72201 or at the office or agency designated by the
      Company pursuant to Section 12, together with a written notice of the Holder’s
      election to exercise this Warrant, which notice shall specify the number of
      shares of Common Stock to be purchased, and shall be accompanied by payment
      of
      the Exercise Price in cash or wire transfer or cashier’s check drawn on a United
      States bank. Such notice shall be substantially in the form of the subscription
      form appearing at the end of this Warrant as Exhibit A, duly executed by the
      Holder or his agent or attorney. Upon receipt of the items referred to above,
      the Company shall, as promptly as practicable, execute or cause to be executed
      and deliver or cause to be delivered to the Holder a certificate or certificates
      representing the aggregate number of full shares of Common Stock issuable upon
      such exercise, together with cash in lieu of any fraction of a share, as
      hereinafter provided. The stock certificate or certificates so delivered shall
      be, to the extent possible, in such denomination or denominations as the Holder
      shall request in the notice and shall be registered in the name of the Holder
      or, subject to Section 9, such other name as shall be designated in the notice.
      This Warrant shall be deemed to have been exercised and such certificate or
      certificates shall be deemed to have been issued, and the Holder or any other
      Person so designated to be named therein shall be deemed to have become the
      holder of record of such shares for all purposes, as of the date the notice,
      together with the cash or check or wire transfer of funds and this Warrant
      is
      received by the Company as described above and all taxes required to be paid
      by
      the Holder, if any, pursuant to Section 2.3 prior to the issuance of such shares
      have been paid. If this Warrant shall have been exercised in part, the Company
      shall, at the time of delivery of the certificate or certificates representing
      Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of
      the
      Holder to purchase the unpurchased shares of Common Stock called for by this
      Warrant, which new Warrant shall in all other respects be identical with this
      Warrant, or, at the request of the Holder, appropriate notation may be made
      on
      this Warrant and the same returned to the Holder. Notwithstanding any provision
      herein to the contrary, the Company shall not be required to register shares
      in
      the name of any Person who acquired this Warrant (or part hereof) or any Warrant
      Stock otherwise than in accordance with this Warrant.

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.3

            	
              Payment
                of Taxes and Charges

            

    

     

    All
      shares of Common Stock issuable upon the exercise of this Warrant pursuant
      to
      the terms hereof shall be validly issued, fully paid and nonassessable, freely
      tradable and without any preemptive rights. The Company shall pay all expenses
      in connection with, and all taxes and other governmental charges that may be
      imposed with respect to, the issuance or delivery thereof, unless such tax
      or
      charge is a tax on income imposed by law upon the Holder, in which case such
      taxes or charges shall be paid by the Holder. 

     

    
      	 	
              2.4

            	
              Fractional
                Shares

            

    

     

    The
      Company shall not be required to issue a fractional share of Common Stock upon
      exercise of any Warrant. As to any fraction of a share which the Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such fraction in an amount equal to the same
      fraction of the Market Price per share of Common Stock as of the date of
      exercise of the Warrant giving rise to such fraction of a share. 

     

    
      	 	
              2.5

            	
              Early
                Expiration

            

    

     

    If
      at any
      time after the Closing Date the Market Price for the Common Stock equals or
      exceeds 200% of the Market Price on the Closing Date for a period of thirty
      (30)
      consecutive Trading Days, then the Company may, by notice to the Holder (the
      “Acceleration
      Notice”),
      accelerate the Expiration Date of this Warrant to such date as shall be
      determined by the Company in its sole discretion and set forth in the
      Acceleration Notice (the “Early
      Expiration Date”),
      which
      Early Expiration Date shall be not less than sixty (60) days, nor more than
      ninety (90) days, after the date of the Acceleration Notice. From and after
      the
      date of the Acceleration Notice, the term “Expiration Date” wherever used in
      this Warrant shall mean and refer to the Early Expiration Date.

     

    
      	 	
              3.

            	
              
                TRANSFER,
                  DIVISION AND
                  COMBINATION

              

            

    

     

    
      	 	
              3.1

            	
              Transfer

            

    

     

    Subject
      to compliance with Section 9, transfer of this Warrant and all rights hereunder,
      in whole or in part, shall be registered on the books of the Company to be
      maintained for such purpose, upon surrender of this Warrant at the principal
      office of the Company referred to in Section 2.1 or the office or agency
      designated by the Company pursuant to Section 12, together with a written
      assignment of this Warrant substantially in the form of Exhibit B hereto duly
      executed by the Holder or his agent or attorney and funds sufficient to pay
      any
      transfer taxes payable upon the making of such transfer. Upon such surrender
      and, if required, such payment, the Company shall, subject to Section 9, execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination specified in such instrument of assignment, and shall
      issue to the assignor a new Warrant evidencing the portion of this Warrant
      not
      so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
      assigned in compliance with Section 9, may be exercised by a new Holder for
      the
      purchase of shares of Common Stock without having a new warrant
      issued.

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    
      	
            	3.2	
              Division
                and Combination

            

    

     

    Subject
      to Section 9, this Warrant may be divided or combined with other Warrants upon
      presentation hereof at the aforesaid office or agency of the Company, together
      with a written notice specifying the names and denominations in which new
      Warrants are to be issued, signed by the Holder or his agent or attorney.
      Subject to compliance with Sections 3.1 and 9, as to any transfer which may
      be
      involved in such division or combination, the Company shall execute and deliver
      a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
      or combined in accordance with such notice.

     

    
      	 	
              3.3

            	
              Expenses

            

    

     

    The
      Company shall prepare, issue and deliver at its own expense (other than transfer
      taxes) the new Warrant or Warrants under this Section 3.

     

    
      	 	
              3.4

            	
              Maintenance
                of Books

            

    

     

    The
      Company agrees to maintain, at its aforesaid office or agency, books for the
      registration and the registration of transfers of the Warrants.

     

    
      	 	
              4.

            	
              
                ADJUSTMENTS

              

            

    

     

    The
      number of shares of Common Stock for which this Warrant is exercisable, or
      the
      price at which such shares may be purchased upon exercise of this Warrant,
      shall
      be subject to adjustment from time to time as set forth in this Section 4.
      The
      Company shall give the Holder notice of any event described below which requires
      an adjustment pursuant to this Section 4 at the time of such event.

     

    
      	 	
              4.1

            	
              Stock
                Dividends, Subdivisions and
                Combinations

            

    

     

    If
      at any
      time the Company shall:

     

    (a) declare
      or pay to the holders of its Common Stock a dividend payable in, or other
      distribution of, shares of Common Stock or in Convertible
      Securities;

     

    (b) subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock; or

     

    (c) combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock;

     

    then
      (i)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      occurrence of such event, and (ii) the then-current Exercise Price shall be
      adjusted to equal (A) the then-current Exercise Price multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares for which this
      Warrant is exercisable immediately after such adjustment.

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.2

            	
              Certain
                Other Distributions

            

    

     

    If
      at any
      time the Company shall declare or pay to the holders of its Common Stock any
      dividend or other distribution of:

     

    (a) cash;

     

    (b) any
      evidences of its indebtedness, any shares of its stock or any other securities
      or property of any nature whatsoever (other than cash, Convertible Securities
      or
      additional shares of Common Stock); or

     

    (c) any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of its stock or any other securities or property of
      any
      nature whatsoever (other than cash, Convertible Securities or additional shares
      of Common Stock);

     

    then,
      upon exercise of this Warrant, the Holder shall be entitled to receive such
      dividend or distribution as if the Holder had exercised this Warrant prior
      to
      the date of such dividend or distribution. A reclassification of the Common
      Stock (other than a change in par value, or from par value to no par value
      or
      from no par value to par value) into shares of Common Stock and shares of any
      other class of stock shall be deemed a distribution by the Company to the
      holders of its Common Stock of such shares of such other class of stock within
      the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4.1. 

     

    
      	 	
              4.3

            	
              Other
                Provisions Applicable to Adjustments under this
                Section

            

    

     

    The
      following provisions shall be applicable to the making of adjustments of the
      number of shares of Common Stock for which this Warrant is exercisable and
      the
      current Exercise Price provided for in this Section 4:

     

    (a) When
      Adjustments to be Made.
      The
      adjustments required by this Section 4 shall be made whenever and as often
      as
      any specified event requiring an adjustment shall occur. For the purpose of
      any
      adjustment, any specified event shall be deemed to have occurred at the close
      of
      business on the date of its occurrence.

     

    (b) Fractional
      Interests.
      In
      computing adjustments under this Section 4, fractional interests in Common
      Stock
      shall be taken into account to the nearest 1/10th of a share.

     

    (c) When
      Adjustment not Required.
      If the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or distribution or subscription or
      purchase rights and shall, thereafter and before the distribution to the holders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

     

    (d) Challenge
      to Good Faith Determination.
      Whenever
      the Board of Directors of the Company shall be required to make a determination
      in good faith of the fair value of any item under this Section 4, such
      determination may be challenged in good faith by the Holder, and any dispute
      shall be resolved by an investment banking firm of recognized national standing
      selected by the Company and acceptable to the Holder. The fees and expenses
      of
      such investment banking firm shall be paid by the Company.

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.4

            	
              Reorganization,
                Reclassification, Merger, Consolidation or Disposition of
                Assets

            

    

     

    In
      case
      the Company shall reorganize its capital, reclassify its capital stock,
      consolidate or merge with or into another Person (where the Company is not
      the
      survivor or where there is a change in or distribution with respect to the
      Common Stock of the Company), or sell, convey, transfer or otherwise dispose
      of
      all or substantially all its property, assets or business to another Person,
      or
      effectuate a transaction or series of related transactions in which more than
      50% of the voting power of the Company is disposed of (each, a “Fundamental
      Corporate Change”)
      and,
      pursuant to the terms of such Fundamental Corporate Change, shares of common
      stock of the successor or acquiring corporation, or any cash, shares of stock
      or
      other securities or property of any nature whatsoever (including warrants or
      other subscription or purchase rights) in addition to or in lieu of common
      stock
      of the successor or acquiring corporation (“Other
      Property”),
      are
      to be received by or distributed to the holders of Common Stock of the Company,
      then the Holder shall have the right thereafter to receive, upon exercise of
      the
      Warrant, such number of shares of common stock of the successor or acquiring
      corporation or of the Company, if it is the surviving corporation, and Other
      Property as is receivable upon or as a result of such
      Fundamental Corporate Change by a holder of the number of shares of Common
      Stock
      for which this Warrant is exercisable immediately prior to such Fundamental
      Corporate Change. In case of any such Fundamental Corporate Change, the
      successor or acquiring corporation (if other than the Company) shall expressly
      assume the due and punctual observance and performance of each and every
      covenant and condition of this Warrant to be performed and observed by the
      Company and all the obligations and liabilities hereunder, subject to such
      modifications as may be deemed appropriate (as determined by resolution of
      the
      Board of Directors of the Company) in order to provide for adjustments of shares
      of Common Stock for which this Warrant is exercisable which shall be as nearly
      equivalent as practicable to the adjustments provided for in this Section 4.
      For
      purposes of this Section 4.5, “common
      stock of the successor or acquiring corporation”
shall
      include stock of such corporation of any class which is not preferred as to
      dividends or assets over any other class of stock of such corporation and which
      is not subject to redemption and shall also include any evidences of
      indebtedness, shares of stock or other securities which are convertible into
      or
      exchangeable for any such stock, either immediately or upon a specified date
      or
      upon the happening of a specified event, and any warrants or other rights to
      subscribe for or purchase any such stock. The foregoing provisions of this
      Section 4.4 shall similarly apply to any successive Fundamental Corporate Change
      of the successor corporation.

     

    
      	 	
              4.5

            	
              Other
                Action Affecting Common
                Stock

            

    

     

    In
      case
      at any time or from time to time the Company shall take any action in respect
      of
      its Common Stock, other than any action described in this Section 4, which
      would
      have a materially adverse effect upon the rights of the Holder, the number
      of
      shares of Common Stock and/or the purchase price thereof shall be adjusted
      in
      such manner as may be equitable in the circumstances, as determined in good
      faith by the Board of Directors of the Company.

     

    
      	 	
              4.6

            	
              Certain
                Limitations

            

    

     

    Notwithstanding
      anything herein to the contrary, the Company agrees not to enter into any
      transaction which, by reason of any adjustment hereunder, would cause the
      Exercise Price to be less than the par value per share of Common
      Stock.

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

     

    
      	 	
              5.

            	
              
                NOTICES
                  TO THE HOLDER

              

            

    

     

    
      	 	
              5.1

            	
              Notice
                of Adjustments

            

    

     

    Whenever
      the number of shares of Common Stock for which this Warrant is exercisable,
      or
      whenever the price at which a share of such Common Stock may be purchased upon
      exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company
      shall forthwith prepare a certificate to be executed by the chief financial
      officer of the Company setting forth, in reasonable detail, the event requiring
      the adjustment and the method by which such adjustment was calculated (including
      a description of the basis on which the Board of Directors of the Company
      determined the fair value of any evidences of indebtedness, shares of stock,
      other securities or property or warrants or other subscription or purchase
      rights referred to in Section 4.2), specifying the number of shares of Common
      Stock for which this Warrant is exercisable and (if such adjustment was made
      pursuant to Section 4.2 or 4.5) describing the number and kind of any other
      shares of stock or Other Property for which this Warrant is exercisable, and
      any
      change in the purchase price or prices thereof, after giving effect to such
      adjustment or change. The Company shall promptly cause a signed copy of such
      certificate to be delivered to the Holder in accordance with Section 14.2.
      The
      Company shall keep, along with the transfer register maintained in accordance
      with Section 3.4, copies of all such certificates and cause the same to be
      available for inspection at said office during normal business hours by the
      Holder or any prospective purchaser of a Warrant designated by the
      Holder.

     

    
      	 	
              5.2

            	
              Notice
                of Corporate Action

            

    

     

    If
      at any
      time:

     

    (a) the
      Company shall take a record of the holders of its Common Stock for the purpose
      of entitling them to receive a dividend or other distribution, or any right
      to
      subscribe for or purchase any evidences of its indebtedness, any shares of
      stock
      of any class or any other securities or property, or to receive any other right;
      or

     

    (b) there
      shall be any capital reorganization of the Company, any reclassification or
      recapitalization of the capital stock of the Company or any consolidation or
      merger of the Company with, or any sale, transfer or other disposition of all
      or
      substantially all the property, assets or business of the Company to, another
      corporation; or

     

    (c) there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company;

     

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of the date on which a record date shall be selected
      for such dividend, distribution or right or for determining rights to vote
      in
      respect of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, dissolution, liquidation or winding up, and (ii)
      in
      the case of any such reorganization, reclassification, merger, consolidation,
      sale, transfer, disposition, dissolution, liquidation or winding up, at least
      10
      days’ prior written notice of the date when the same shall take place. Such
      notice in accordance with the foregoing clause also shall specify (i) the date
      on which any such record is to be taken for the purpose of such dividend,
      distribution or right, the date on which the holders of Common Stock shall
      be
      entitled to any such dividend, distribution or right, and the amount and
      character thereof, and (ii) the date on which any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up is to take place and the time, if any
      such time is to be fixed, as of which the holders of Common Stock shall be
      entitled to exchange their shares of Common Stock for securities or other
      property deliverable upon such reorganization, reclassification, merger,
      consolidation, sale, transfer, disposition, dissolution, liquidation or winding
      up. Each such written notice shall be sufficiently given if addressed to the
      Holder at the last address of the Holder appearing on the books of the Company
      and delivered in accordance with Section 14.2.

    
      
        
        

      

      
        A-8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.

            	
              
                NO
                  IMPAIRMENT

              

            

    

     

    The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issuance or sale of securities or other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such actions as may
      be
      necessary or appropriate to protect the rights of the Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock receivable upon the
      exercise of this Warrant above the amount payable therefor upon such exercise
      immediately prior to such increase in par value, (b) take all such action as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (c) use its best efforts to obtain all such authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof as may be necessary to enable the Company to perform its obligations
      under this Warrant.

     

    Upon
      the
      request of the Holder, the Company will at any time during the period this
      Warrant is outstanding acknowledge in writing, in form satisfactory to the
      Holder, the continuing validity of this Warrant and the obligations of the
      Company hereunder.

     

    
      	 	
              7.

            	
              
                RESERVATION
                  AND AUTHORIZATION OF COMMON
                  STOCK

              

            

    

     

    From
      and
      after the Closing Date, the Company shall at all times reserve and keep
      available for issuance upon the exercise of Warrants such number of its
      authorized but unissued shares of Common Stock as will be sufficient to permit
      the exercise in full of all outstanding Warrants. All shares of Common Stock
      which shall be so issuable, when issued upon exercise of any Warrant and payment
      therefor in accordance with the terms of such Warrant, shall be duly and validly
      issued and fully paid and nonassessable and not subject to preemptive
      rights.

     

    Before
      taking any action which would cause an adjustment reducing the then-current
      Exercise Price below the then par value, if any, of the shares of Common Stock
      issuable upon exercise of the Warrants, the Company shall take any corporate
      action which may be necessary in order that the Company may validly and legally
      issue fully paid and nonassessable shares of such Common Stock at such adjusted
      Exercise Price.

     

    Before
      taking any action which would result in an adjustment in the number of shares
      of
      Common Stock for which this Warrant is exercisable or in the then-current
      Exercise Price, the Company shall obtain all such authorizations or exemptions
      thereof, or consents thereto, as may be necessary from any public regulatory
      body or bodies having jurisdiction thereof.

     

    
      	 	
              8.

            	
              
                TAKING
                  OF RECORD; STOCK AND WARRANT TRANSFER
                  BOOKS

              

            

    

     

    In
      the
      case of all dividends or other distributions by the Company to the holders
      of
      its Common Stock with respect to which any provision of Section 4 refers to
      the
      taking of record of such holders, the Company will in each case take such a
      record and will take such record as of the close of business on a Business
      Day.
      The Company will not at any time, except upon dissolution, liquidation or
      winding up of the Company, close its stock transfer books or Warrant transfer
      books so as to result in preventing or delaying the exercise or transfer of
      any
      Warrant.

    
      
        
        

      

      
        A-9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.

            	
              
                RESTRICTIONS
                  ON
                  TRANSFERABILITY

              

            

    

     

    The
      Warrants and the Warrant Stock shall not be transferred, hypothecated or
      assigned before satisfaction of the conditions specified in legend affixed
      to
      the first page of this Warrant, which conditions are intended, in part, to
      ensure compliance with the provisions of the Securities Act with respect to
      the
      Transfer of any Warrant or any Warrant Stock. The Holder, by acceptance of
      this
      Warrant, agrees to be bound by the provisions of this Section 9.

     

    
      	 	
              10.

            	
              
                SUPPLYING
                  INFORMATION

              

            

    

     

    The
      Company shall cooperate with the Holder in supplying such information as may
      be
      reasonably necessary for the Holder to complete and file any information
      reporting forms presently or hereafter required by the Commission as a condition
      to the availability of an exemption from the Securities Act for the sale of
      any
      Warrant or Warrant Stock.

     

    
      	 	
              11.

            	
              
                LOSS
                  OR MUTILATION

              

            

    

     

    Upon
      receipt by the Company from the Holder of evidence reasonably satisfactory
      to it
      of the ownership of and the loss, theft, destruction or mutilation of this
      Warrant and indemnity reasonably satisfactory to it (it being understood that
      the written agreement of the Holder shall be sufficient indemnity), and in
      case
      of mutilation upon surrender and cancellation hereof, the Company will execute
      and deliver in lieu hereof a new Warrant of like tenor to the Holder;
provided,
      in the
      case of mutilation no indemnity shall be required if this Warrant in
      identifiable form is surrendered to the Company for cancellation.

     

    
      	 	
              12.

            	
              
                OFFICE
                  OF THE
                  COMPANY

              

            

    

     

    As
      long
      as any of the Warrants remain outstanding, the Company shall maintain an office
      or agency (which may be the principal executive offices of the Company) where
      the Warrants may be presented for exercise, registration of transfer, division
      or combination as provided in this Warrant.

     

    
      	 	
              13.

            	
              
                LIMITATION
                  OF LIABILITY

              

            

    

     

    No
      provision hereof, in the absence of affirmative action by the Holder to purchase
      shares of Common Stock, and no enumeration herein of the rights or privileges
      of
      the Holder hereof, shall give rise to any liability of the Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the Company.
      Nothing in the foregoing shall be construed in any manner to limit or deny
      the
      liability of a Holder in any other capacity, including, without limitation,
      as a
      director of the Company. 

     

    
      	 	
              14.

            	
              
                MISCELLANEOUS

              

            

    

     

    
      	 	
              14.1

            	
              Nonwaiver
                and Expenses

            

    

     

    No
      course
      of dealing or any delay or failure to exercise any right hereunder on the part
      of the Holder shall operate as a waiver of such right or otherwise prejudice
      the
      Holder’s rights, powers or remedies. If the Company fails to make, when due, any
      payments provided for hereunder, or fails to comply with any other provision
      of
      this Warrant, the Company shall pay to the Holder such amounts as shall be
      sufficient to cover any costs and expenses including, without limitation,
      reasonable attorneys’ fees, including those of appellate proceedings, incurred
      by the Holder in collecting any amounts due pursuant hereto or in otherwise
      enforcing any of its rights, powers or remedies hereunder.

    
      
        
        

      

      
        A-10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              14.2

            	
              Notice
                Generally

            

    

    

    Except
      as
      may be otherwise provided herein, any and all notices or other communications
      or
      deliveries required or permitted to be provided hereunder shall be in writing
      and shall be deemed given and effective on the earliest of (a) the date of
      transmission, if such notice or communication is delivered via facsimile
      (provided the sender receives a machine-generated confirmation of successful
      transmission) prior to 6:30 p.m. (Little Rock, Arkansas time) on a Business
      Day,
      (b) the next Business Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section on a day that is not a Business Day or later than 6:30 p.m. (Little
      Rock, Arkansas time) on any Business Day, (c) the Business Day following the
      date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is required
      to be given. The address for such notices and communications shall be the same
      as provided in the Securities Purchase Agreement; or such other address as
      may
      be designated in writing hereafter, in the same manner, by such
      addressee.

     

    
      	 	
              14.3

            	
              Indemnification

            

    

     

    The
      Company agrees to indemnify and hold harmless the Holder from and against any
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      claims, costs, attorneys’ fees, expenses and disbursements of any kind which may
      be imposed upon, incurred by or asserted against the Holder in any manner
      relating to or arising out of any failure by the Company to perform or observe
      in any material respect any of its covenants, agreements, undertakings or
      obligations set forth in this Warrant; provided,
      however,
      that
      the Company will not be liable hereunder to the extent that any liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, claims,
      costs, attorneys’ fees, expenses or disbursements are found in a final
      nonappealable judgment by a court to have resulted from the Holder’s gross
      negligence, bad faith or willful misconduct in its capacity as a stockholder
      or
      warrantholder of the Company.

     

    
      	 	
              14.4

            	
              Remedies

            

    

     

    The
      Holder in addition to being entitled to exercise all rights granted by law,
      including recovery of damages, will be entitled to specific performance of
      its
      rights under Section 2 of this Warrant. The Company agrees that monetary damages
      would not be adequate compensation for any loss incurred by reason of a breach
      by it of the provisions of Section 2 of this Warrant and hereby agrees to waive
      the defense in any action for specific performance that a remedy at law would
      be
      adequate.

     

    
      	 	
              14.5

            	
              Successors
                and Assigns

            

    

     

    Subject
      to the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced
      hereby shall inure to the benefit of and be binding upon the successors of
      the
      Company and the successors and assigns of the Holder. The provisions of this
      Warrant are intended to be for the benefit of all Holders from time to time
      of
      this Warrant and, with respect to Section 9 hereof, the holders of Warrant
      Stock, and shall be enforceable by any such holder or the holder of Warrant
      Stock.

    
      
        
        

      

      
        A-11

        
          

        

      

      
        
        

      

    

     

    
      	
            	14.6	
              Amendment

            

    

     

    This
      Warrant and all other Warrants may be modified or amended or the provisions
      hereof waived with the written consent of the Company and the
      Holder.

     

    
      	 	
              14.7

            	
              Severability

            

    

     

    Wherever
      possible, each provision of this Warrant shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Warrant shall be prohibited by or invalid under applicable law, such provision
      shall only be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Warrant.

     

    
      	 	
              14.8

            	
              Headings

            

    

     

    The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    
      	 	
              14.9

            	
              Governing
                Law

            

    

     

    This
      Warrant shall be governed by the laws of the State of New York, without regard
      to the provisions thereof relating to conflicts of law.

     

    In
      Witness Whereof,
      the
      Company has caused this Warrant to be executed by its duly authorized Executive
      Vice President and Chief Financial Officer.

     

    Dated:
      August 12, 2008

     

    
      	
              ThermoEnergy
                Corporation

            
	 	 
	
              By:

            	
                /s/
                Andrew T. Melton

            
	 	
              Andrew
                T. Melton

            
	 	
              Executive
                Vice President and CFO

            

    

     

    
      
        
        

      

      
        A-12

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    SUBSCRIPTION
      FORM

     

    [To
      be
      executed only upon exercise of Warrant]

     

    The
      undersigned registered owner of this Warrant irrevocably exercises this Warrant
      for the purchase of __________ shares of Common Stock of ThermoEnergy
      Corporation and herewith makes payment therefor, all at the price and on the
      terms and conditions specified in this Warrant and requests that certificates
      for the shares of Common Stock hereby purchased (and any securities or other
      property issuable upon such exercise) be issued in the name of and delivered
      to

     

      

      
        

      

    

    whose
      address is

     

      
        

      

    

     

    and,
      if
      such shares of Common Stock shall not include all of the shares of Common Stock
      issuable as provided in this Warrant, that a new Warrant of like tenor and
      date
      for the balance of the shares of Common Stock issuable hereunder be delivered
      to
      the undersigned.

     

    

    
      	 
	
              (Name
                of Registered Owner)

            
	 
	 
	
              (Signature
                of Registered Owner)

            
	 
	 
	
              (Street
                Address)

            
	 
	 
	
              (City)
                           (State)
                           (Zip
                Code)

            
	 
	
              Notice:
                The signature on this subscription must correspond with the name
                as
                written upon the face of the within Warrant in every particular,
                without
                alteration or enlargement or any change
                whatsoever.

            

    

     

    
      
        
        

      

      
        A-13

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    ASSIGNMENT
      FORM

     

    For
      Value
      Received the
      undersigned registered owner of this Warrant hereby sells, assigns and transfers
      unto the Assignee named below all of the rights of the undersigned under this
      Warrant, with respect to the number of shares of Common Stock set forth
      below:

     

    
      	
               

              Name
                and Address of Assignee

            	 	
              No. of Shares of

              Common Stock

            	 
	 	 	 	 

    

     

    and
      does
      hereby irrevocably constitute and appoint

      

    
      

    

    attorney-in-fact
      to register such transfer on the books of ThermoEnergy Corporation maintained
      for the purpose, with full power of substitution in the premises.

     

    Dated:
      _____________________________________________

     

    
      	   
              
	
              (Print
                Name)

	 
	 
              
	
              (Signature)

            
	 
	 
              
	
              (Print
                Name of Witness)

	 
	 
              
	
              (Witness’s
                Signature)

            
	 
	
              Notice:
                The signature on this assignment must correspond with the name as
                written
                upon the face of the within Warrant in every particular, without
                alteration or enlargement or any change
                whatsoever.

            

    

     

    
      
        
        

      

      
        B-1

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