Document:

Exhibit
      4.3

     

    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.

     

    Number
      of
      Shares of Common Stock: 300,000

    Warrant
      No. 2007-CE01

     

    COMMON
      STOCK PURCHASE WARRANT

     

    To
      Purchase Common Stock of

    
      THERMOENERGY
        CORPORATION

       

    

    This
      Is
      To Certify That Jeffrey
      L. Powell,
      or
      registered assign, is entitled to purchase from ThermoEnergy Corporation, a
      Delaware corporation (the “Company”),
      300,000 shares of Common Stock (as hereinafter defined and subject to adjustment
      as provided herein), in whole or in part, including fractional parts, at a
      purchase price per share as set forth in Section 2.2 hereof (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 July 2, 2007.

     

    “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 4.3.

     

    “Convertible
      Securities”
shall
      mean evidences of indebtedness, shares of stock or other securities 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Event”
shall
      have the meaning set forth in Section 4.3. 

     

    “Event
      Date”
shall
      have the meaning set forth in Section 4.3.

     

    “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.

     

    “Expiration
      Date”
shall
      mean May 31, 2013.

     

    “Fundamental
      Corporate Change”
shall
      have the meaning set forth in Section 4.5.

     

    “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 4.3.

     

    “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).

     

    “Purchase
      Agreement”
shall
      mean that certain Agreement for the Purchase and Sale of Securities dated as
      of
      July 2, 2007 by and among the Company, CASTion Corporation and certain former
      security holders of CASTion Corporation.

     

    “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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

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

     

    “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 other warrants issued pursuant to the Purchase
      Agreement, and all warrants issued upon transfer, division or combination of,
      or
      in substitution for, any thereof. Except as set forth in the Purchase Agreement,
      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

            	
              Manner
                of Exercise

            

    

    

    The
      Holder may exercise this Warrant, for all or any part of the number of shares
      of
      Common Stock purchasable hereunder, only
      upon
      the earlier of: 

     

    (i) a
      Fundamental Corporate Change; or

     

    (ii) the
      Expiration Date.

     

    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 its agent or attorney. Alternatively, at the election of the Holder,
      such Holder may pay the Exercise Price for the Common Stock for which this
      Warrant has been exercised by surrendering its rights to receive a portion
      of
      the Common Stock purchasable hereunder having a fair market value (as determined
      using the Market Price on the date the Holder’s election notice is received by
      the Company) equal to the aggregate Exercise Price for the Common Stock for
      which this Warrant is being exercised, in which case the Holder will receive
      the
      difference between (i) the number of shares of Common Stock to which such Holder
      would otherwise be entitled upon such exercise, minus (ii) the number of shares
      of Common Stock the rights to which have been so surrendered. Upon receipt
      of
      the items referred to above, the Company shall, as promptly as practicable,
      and
      in any event within three Business Days thereafter, 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 any required 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 2.2 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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.2

            	
              Exercise
                Price

            

    

     

    The
      Exercise Price shall initially be $0.50 per share and shall be subject to
      adjustment as provided in Section 4.

     

    
      	 	
              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.

     

    
      	 	
              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 its 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.

     

    
      
        
        

      

      
        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 its 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.

     

    
      
        
        

      

      
        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

            	
              Adjustments
                for Diluting Issuances

            

    

     

    (a)
      Special
      Definitions.
      For
      purposes of this Section 4.3, the following definitions shall
      apply:

     

    (i)
      “Option”
shall
      mean rights, options or warrants to subscribe for, purchase or otherwise acquire
      Common Stock or Convertible Securities.

     

    (ii)
      “Original
      Issue Date”
shall
      mean the date on which the Effective Time (as such term is defined in the
      Purchase Agreement) occurs.

     

    (iii)
      “Convertible
      Securities”
shall
      mean any evidences of indebtedness, shares or other securities directly or
      indirectly convertible into or exchangeable for Common Stock, but excluding
      Options.

     

    (iv)
      “Additional
      Shares of Common Stock”
shall
      mean all shares of Common Stock issued (or, pursuant to Subsection 4.3(c)
      below, deemed to be issued) by the Company after the Original Issue Date, other
      than the following (“Exempted Securities”):

     

    
      	
            	(A)	
              shares
                of Common Stock issued upon conversion of a Note (as such term is
                defined
                in the Purchase Agreement) or a Warrant (as such term is defined
                in the
                Purchase Agreement);

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	
            	(B)	
              shares
                of Common Stock issued or issuable by reason of a dividend, stock
                split,
                split-up or other distribution on shares of Common Stock that is
                covered
                by Subsection 4.1 or 4.2 above; or

            

    

     

    
      	
            	(C)	
              shares
                of Common Stock issued or deemed issued to employees or directors
                of, or
                consultants to, the Company or any of its subsidiaries pursuant to
                a plan,
                agreement or arrangement approved by the stockholders of the
                Company.

            

    

     

    (b)
      No
      Adjustment of Exercise Price.
      No
      adjustment in the Exercise Price shall be made as the result of the issuance
      of
      Additional Shares of Common Stock if: (a) the consideration per share
      (determined pursuant to Subsection 4.3(e)) for such Additional Share of
      Common Stock issued or deemed to be issued by the Company is equal to or greater
      than the applicable Exercise Price in effect immediately prior to the issuance
      or deemed issuance of such Additional Shares of Common Stock, or (b) prior
      to such issuance or deemed issuance, the Company receives written notice from
      the holders of at least 75% in principal amount of the then outstanding Notes
      agreeing that no such adjustment shall be made as the result of the issuance
      or
      deemed issuance of such Additional Shares of Common Stock.

    

    
      	 	
              (c)

            	
              Deemed
                Issue of Additional Shares of Common Stock.
                

            

    

     

    (i)
      If
      the Company at any time or from time to time after the Original Issue Date
      shall
      issue any Options or Convertible Securities (excluding Options or Convertible
      Securities which, upon exercise, conversion or exchange thereof, would entitle
      the holder thereof to receive Exempted Securities) or shall fix a record date
      for the determination of holders of any class of securities entitled to receive
      any such Options or Convertible Securities, then the maximum number of shares
      of
      Common Stock (as set forth in the instrument relating thereto, assuming the
      satisfaction of any conditions to exercisability, convertibility or
      exchangeability but without regard to any provision contained therein for a
      subsequent adjustment of such number) issuable upon the exercise of such Options
      or, in the case of Convertible Securities and Options therefor, the conversion
      or exchange of such Convertible Securities, shall be deemed to be Additional
      Shares of Common Stock issued as of the time of such issue or, in case such
      a
      record date shall have been fixed, as of the close of business on such record
      date.

     

    (ii)
      If
      the terms of any Option or Convertible Security, the issuance of which resulted
      in an adjustment to the Exercise Price pursuant to the terms of Subsection
      4.3(d) below, are revised (either automatically pursuant to the provisions
      contained therein or as a result of an amendment to such terms) to provide
      for
      either (1) any increase or decrease in the number of shares of Common Stock
      issuable upon the exercise, conversion or exchange of any such Option or
      Convertible Security or (2) any increase or decrease in the consideration
      payable to the Company upon such exercise, conversion or exchange, then,
      effective upon such increase or decrease becoming effective, the Exercise Price
      computed upon the original issue of such Option or Convertible Security (or
      upon
      the occurrence of a record date with respect thereto) shall be readjusted to
      such Exercise Price as would have obtained had such revised terms been in effect
      upon the original date of issuance of such Option or Convertible Security.
      Notwithstanding the foregoing, no adjustment pursuant to this clause (ii)
      shall have the effect of increasing the Exercise Price to an amount which
      exceeds the lower of (i) the Exercise Price on the original adjustment
      date, or (ii) the Exercise Price that would have resulted from any
      issuances of Additional Shares of Common Stock between the original adjustment
      date and such readjustment date.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (iii)
      If
      the terms of any Option or Convertible Security (excluding Options or
      Convertible Securities which, upon exercise, conversion or exchange thereof,
      would entitle the holder thereof to receive Exempted Securities), the issuance
      of which did not result in an adjustment to the Exercise Price pursuant to
      the
      terms of Subsection 4.3(d) below (either because the consideration per share
      (determined pursuant to Subsection 4.3(e) hereof) of the Additional Shares
      of Common Stock subject thereto was equal to or greater than the Exercise Price
      then in effect, or because such Option or Convertible Security was issued before
      the Original Issue Date), are revised after the Original Issue Date (either
      automatically pursuant to the provisions contained therein or as a result of
      an
      amendment to such terms) to provide for either (1) any increase or decrease
      in
      the number of shares of Common Stock issuable upon the exercise, conversion
      or
      exchange of any such Option or Convertible Security or (2) any increase or
      decrease in the consideration payable to the Company upon such exercise,
      conversion or exchange, then such Option or Convertible Security, as so amended,
      and the Additional Shares of Common Stock subject thereto shall be deemed to
      have been issued effective upon such increase or decrease becoming
      effective.

     

    (iv)
      Upon
      the expiration or termination of any unexercised Option or unconverted or
      unexchanged Convertible Security which resulted (either upon its original
      issuance or upon a revision of its terms) in an adjustment to the Exercise
      Price
      pursuant to the terms of Subsection 4.3(d) below, the Exercise Price shall
      be
      readjusted to such Exercise Price as would have obtained had such Option or
      Convertible Security never been issued. 

     

    (v)
      No
      adjustment in the Exercise Price shall be made upon the issue of shares of
      Common Stock or Convertible Securities upon the exercise of Options or the
      issue
      of shares of Common Stock upon the conversion or exchange of Convertible
      Securities.

     

    (d)
      Adjustment
      of Exercise Price Upon Issuance of Additional Shares of Common
      Stock.
      In the
      event the Company shall at any time after the Original Issue Date issue
      Additional Shares of Common Stock (including Additional Shares of Common Stock
      deemed to be issued pursuant to Subsection 4.3(c)), without consideration
      or for a consideration per share less than the applicable Exercise Price in
      effect immediately prior to such issue, then the Exercise Price shall be
      reduced, concurrently with such issue, to a price (calculated to the nearest
      one-hundredth of a cent) determined in accordance with the following
      formula:

    

    (P1)*(Q1)
      + (P2)*(Q2)

    Q1
      +
      Q2

     

    For
      purposes of the foregoing formula, the following definitions shall apply:

     

    (i)
“P1”
      shall mean the Exercise Price in effect immediately prior to such issue of
      Additional Shares of Common Stock; 

     

    (ii)
“Q1”
      shall mean the number of shares of Common Stock outstanding immediately prior
      to
      such issue of Additional Shares of Common Stock (treating for this purpose
      as
      outstanding all shares of Common Stock issuable upon exercise of Options
      outstanding or reserved for issuance pursuant to stock plans for the benefit
      of
      employees or directors of, or consultants to, the Company immediately prior
      to
      such issue or upon conversion of Convertible Securities (including the Notes)
      outstanding immediately prior to such issue); 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (iii)
      “P2” shall mean the price per share of Common Stock received by the Company with
      respect to the issue of such Additional Shares of Common Stock (determined
      by
      dividing the aggregate consideration received by the Company in respect of
      such
      issue by the aggregate number of Additional Shares of Common Stock issued);
      and

     

    (iv)
“Q2”
      shall mean the number of such Additional Shares of Common Stock issued in such
      transaction. 

     

    (e)
      Determination
      of Consideration.
      For
      purposes of this Section 4.3, the consideration received by the Company for
      the issue of any Additional Shares of Common Stock shall be computed as
      follows:

     

    (i)
      Cash
      and Property:
      Such
      consideration shall:

     

    (A)
      insofar as it consists of cash, be computed at the aggregate amount of cash
      received by the Company, excluding amounts paid or payable for accrued
      interest;

     

    (B)
      insofar as it consists of property other than cash, be computed at the fair
      market value thereof at the time of such issue, as determined in good faith
      by
      the Board of Directors of the Company; and

     

    (C)
      in
      the event Additional Shares of Common Stock are issued together with other
      shares or securities or other assets of the Company for consideration which
      covers both, be the proportion of such consideration so received, computed
      as
      provided in clauses (A) and (B) above, as determined in good faith by the
      Board of Directors of the Company.

     

    (ii)
      Options
      and Convertible Securities.
      The
      consideration per share received by the Company for Additional Shares of Common
      Stock deemed to have been issued pursuant to Subsection 4.3(c) shall be
      determined by dividing (x) the total amount, if any, received or receivable
      by
      the Company as consideration for the issue of such Options or Convertible
      Securities, plus the minimum aggregate amount of additional consideration (as
      set forth in the instruments relating thereto, without regard to any provision
      contained therein for a subsequent adjustment of such consideration) payable
      to
      the Company upon the exercise of such Options or the conversion or exchange
      of
      such Convertible Securities, or in the case of Options for Convertible
      Securities, the exercise of such Options for Convertible Securities and the
      conversion or exchange of such Convertible Securities, by (y) the maximum number
      of shares of Common Stock (as set forth in the instruments relating thereto,
      without regard to any provision contained therein for a subsequent adjustment
      of
      such number) issuable upon the exercise of such Options or the conversion or
      exchange of such Convertible Securities.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (f)
      Multiple
      Closing Dates.
      In the
      event the Company shall issue on more than one date Additional Shares of Common
      Stock that are a part of one transaction or a series of related transactions
      and
      that would result in an adjustment to the Exercise Price pursuant to the terms
      of Subsection 4.3(d) above, then, upon the final such issuance, the Exercise
      Price shall be readjusted to give effect to all such issuances as if they
      occurred on the date of the first such issuance (and without additional giving
      effect to any adjustments as a result of such subsequent issuances within such
      period).

     

    
      	 	
              4.4

            	
              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.

     

    
      	 	
              4.5

            	
              Reorganization,
                Reclassification, Merger, Consolidation or Disposition of
                Assets

            

    

     

    In
      case
      (i) any one Person, or more than one Person acting as a group, acquires
      ownership of stock of the Company that, together with stock held by such person
      or group, constitutes more than 50 percent of the total fair market value or
      total voting power of the stock of the Company; (ii) the Company sells, conveys,
      transfers or otherwise disposes of all or substantially all its property, assets
      or business to another Person, or (iii) any one Person, or more than one Person
      acting as a group, acquires (or has acquired during the 12-month period ending
      on the date of the most recent acquisition by such person or persons) ownership
      of stock of the corporation possessing 50 percent or more of the total voting
      power of the stock of the Company (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 4.3 shall similarly apply to any successive Fundamental Corporate Change
      of the successor corporation.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              4.6

            	
              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.

     

    
      	 	
              4.7

            	
              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.

     

    
      	 	
              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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              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
      20
      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
      20
      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.

     

    
      	 	
              6.

            	
              NO
                IMPAIRMENT

            

    

     

    The
      Company shall not by any action, including, without limitation, amending its
      articles 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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      	 	
              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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              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.

     

    
      	 	
              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

        
          

        

      

      
        
        

      

    

     

    
      	 	
              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.

     

    
      	 	
              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.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	 	
              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 Delaware, without regard
      to the provisions thereof relating to conflicts of law.

     

    In
      Witness Whereof,
      the
      Company has caused this Warrant to be duly executed and its corporate seal
      to be
      impressed hereon and attested by its Treasurer.

     

    
      	
              Dated:
                July 2, 2007

            	 	 
	 	 
	 	
              THERMOENERGY
                CORPORATION

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Dennis C. Cossey
	 	
              

              Dennis
                C. Cossey, President

            

    

     

    
      	
              Attest:

            	 	 	 
	 	 	 	 
	/s/
              Andrew T.
              Melton	 	 	
            
	
              

              Andrew
                T. Melton, Treasurer

            	 	 	
            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    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, either (check one):

     

    
      	 	o	
              tenders
                herewith payment of the Exercise Price of such shares in full, or
                

            

    

     

    
      	 	o	
              pursuant
                to Section 2.1 of the Warrant, surrenders the right to purchase certain
                shares of Common Stock in lieu of tendering payment of the Exercise
                Price
                thereof;

            

    

     

    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-1

        
          

        

      

      
        
        

      

    

     

    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-1Exhibit
      10.1

     

    AGREEMENT
      FOR THE PURCHASE AND SALE OF SECURITIES

    

    This
      Agreement for the Purchase and Sale of Securities (hereinafter called the
“Agreement”)
      is
      made and entered into as of the 2nd
      day of
      July 2007 (the “Effective
      Date”)
      by and
      among CASTion Corporation, a
      Massachusetts corporation (“CASTion”),
      the
      holders of shares of the capital stock of CASTion identified on Exhibit
      A
      attached
      hereto and made a part hereof (each a “Seller”),
      and
      ThermoEnergy Corporation,
      a
      Delaware corporation (the “Buyer”).
      CASTion, the Sellers and the Buyer are hereinafter collectively called the
      “Parties.”

    

    WHEREAS,
      the
      authorized capital stock of CASTion consists of 2,000,000 shares of common
      stock, no par value (the “Common
      Stock”),
      of
      which 4,724 shares are issued and outstanding, and 1,340,000 shares of preferred
      stock, no par value (the “Preferred
      Stock”),
      of
      which (i) no shares designated as Series A (the “Series
      A Stock”)
      are
      issued and outstanding, (ii) no shares designated as Series A-1 (the
“Series
      A-1 Stock”)
      are
      issued and outstanding, (iii) no shares designated as Series B-1 (the
“Series
      B-1 Stock”)
      are
      issued and outstanding, (iv) no shares designated as Series B-2 (the
“Series
      B-2 Stock”)
      are
      issued and outstanding, (v) 124,968 shares designated as Series C-1 (the
“Series
      C-1 Stock”)
      are
      issued and outstanding, (vi) 189,278.1 shares designated as Series C-2 (the
      “Series
      C-2 Stock”)
      are
      issued and outstanding, (vii) 125,000 shares designated as Series C-3 (the
      “Series
      C-3 Stock”)
      are
      issued and outstanding and (viii) 128,756.09 shares designated as Series C-4
      (the “Series
      C-4 Stock”)
      are
      issued and outstanding;
      and

    

    WHEREAS,
      the shares of Common Stock and Preferred Stock owned beneficially and of record
      by the Sellers (the “Shares”)
      are as
      set forth on Exhibit
      A
      hereto,
      and such Shares constitute, in the aggregate, (i) 0.00% of the total issued
      and
      outstanding shares of the Common Stock, (ii) 71.81% of the total issued and
      outstanding shares of the Series C-1 Stock, (iii) 98.97% of the total issued
      and
      outstanding shares of the Series C-2 Stock, (iv) 100.00% of the total issued
      and
      outstanding shares of the Series C-3 Stock, (iv) 90.72% of the total issued
      and
      outstanding shares of the Series C-4 Stock; and (v) 90.31% of the total issued
      and outstanding shares of Common Stock on an as-converted basis;
      and

    

    WHEREAS,
      no shares of Series A Stock, Series A-1 Stock, Series B-1 Stock or Series B-2
      Stock are issued and outstanding; and 

    

    WHEREAS,
      the Sellers are the holders of certain promissory notes or other obligations
      of
      CASTion (collectively, the “Notes”),
      as
      set forth on Exhibit
      A
      hereto;
      and

    

    WHEREAS,
      each of the Sellers has agreed to sell, assign, transfer, and convey all of
      the
      Shares and Notes owned by it to the Buyer and the Buyer has agreed to purchase
      from the Sellers all of such Shares and Notes on the terms hereinafter set
      forth; 

    

    NOW
      THEREFORE, in consideration of the mutual promises of the Parties hereinafter
      set forth and in reliance on the representations, warranties, covenants, and
      conditions contained in this Agreement; and for other good and valuable
      consideration, the Parties hereby agree as follows: 

    

    Recitals

    

    CASTion
      operates a waste water technology business in Worcester, Massachusetts
      (collectively, the "Business").

     

    
      
        
        

      

      
        Page
          1 of
          26

        
          

        

      

      
        
        

      

    

    

    CASTion
      is the lessee under the leases which are more particularly described on
Exhibit
      B,
      attached hereto and made a part hereof (the "Leases").

    

    CASTion
      is a party to those other contracts and more particularly described on
Exhibit
      C,
      attached hereto and made a part hereof (the "Contracts").

    

    CASTion
      is the owner of certain intellectual property including patent-pending R-CASTTM
brand technology, more particularly described on Exhibit
      D,
      attached hereto and made a part here of, together with certain proprietary
      engineering know-how and trade secrets (the "CASTion
      Technology").

    

    CASTion
      is the owner of certain other assets used in the operation of, or otherwise
      related to the Business (the “Other
      Assets”
and,
      together with the Leases, the Contracts and the CASTion Technology, the
“Assets”),
      including, without limitation, those accounts receivable more particularly
      described on Exhibit
      E,
      attached hereto and made a part here of (the "Accounts
      Receivable")
      and
      those bank accounts more particularly described on Exhibit
      F,
      attached hereto and made a part hereof. 

     

    Agreement

    

    1. Purchase
      of Shares and Notes.
      

    

    1.1 Purchase
      of Shares.
      Subject
      to the terms and conditions set forth herein, at the Closing (as defined below),
      each of the Sellers agrees to sell, assign, transfer, and convey to the Buyer
      all of the Shares and Notes owned by such Seller and the Buyer agrees to
      purchase from each Seller all of the Shares and Notes owned by such
      Seller.

    

    1.2. Purchase
      Price.
       The
      total
      purchase price payable by the Buyer to the Sellers for the Shares (the “Purchase
      Price”) shall consist, in the aggregate, of:

     

    
      	 	
              a.

            	
              Cash,
                in the aggregate amount of $1,850,000.00;
                and

            

    

     

    
      	 	
              b.

            	
              4,394,338
                shares of the common stock, par value $0.001 per share, of the Buyer
                (“ThermoEnergy
                Common Stock”) (the
                “Thermo
                Shares”);
                and 

            

    

    

    
      	 	
              c.

            	
              Convertible
                Promissory Notes of the Buyer, in substantially the form of Exhibit
                G
                attached hereto (the “Convertible
                Notes”)
                in the aggregate principal amount of $3,353,126.62, convertible into
                shares of ThermoEnergy Common Stock (the “Conversion
                Shares”)
                as set forth in the Convertible Notes; and

            

    

    

    
      	
            	d.	
              Warrants,
                in substantially the form of Exhibit
                H
                attached hereto (the “Warrants”)
                for the purchase an aggregate of 4,232,425 shares
                of ThermoEnergy Common Stock (the “Warrant
                Shares”).

            

    

    

    The
      Purchase Price shall be allocated to and among the Sellers as set forth on
      Exhibit
      A.

     

    2. Closing.
      The
      closing of the purchase and sale of the Shares hereunder (the “Closing”)
      shall
      be held at the offices of the Buyer in Little Rock, Arkansas or at such other
      place as CASTion and the Buyer may designate at 10:00 a.m. Central Time on
      the
      Effective Date or on such other date and at such other time as CASTion and
      the
      Buyer may designate; provided, however, that if all of the Conditions have
      not
      been satisfied or waived within twenty (20) days after the Effective Date,
      then
      either (i) CASTion, (ii) the Buyer or (iii) Sellers who, in the aggregate,
      hold
      a majority of the Shares may, upon notice to the other Parties, terminate this
      Agreement with no further obligation to any Party, so long as the failure to
      satisfy the Conditions is not the result of any action or inaction on the part
      of the terminating Party.  

     

    
      
        
        

      

      
        Page
          2 of
          26

        
          

        

      

      
        
        

      

    

     

    4.
       Sellers’
      Representations and Warranties.
      Each
      Seller, severally and not jointly, hereby represents and warrants to the Buyer
      as follows:

    

    4.1. Organization
      and Authority.
      If such
      Seller is an entity, it is duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization and has the requisite
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by this Agreement and otherwise to carry out its
      obligations hereunder. 

    

    4.2. Authorization
      and Enforceability.
      The
      execution and delivery of this Agreement by such Seller, and the performance
      by
      such Seller of the transactions contemplated by this Agreement, have been duly
      authorized by all necessary corporate or partnership or other applicable like
      action, on the part of such Seller. This Agreement has been duly executed by
      such Seller and constitutes the valid and legally binding obligation of such
      Seller, enforceable against such Seller in accordance with its terms.

    

    4.3. Title.
      Such
      Seller has good, valid and merchantable title to the Shares and Notes identified
      as owned by such Seller on Exhibit
      A,
      free
      and clear of all liens, encumbrances, or restrictive covenants or other
      restrictions, and upon the sale of such Shares and Notes to the Buyer in
      accordance with the terms of this Agreement, the Buyer will become the record
      and beneficial owner of such Shares and Notes free and clear of all liens,
      encumbrances, or restrictive covenants or other restrictions.

    

    4.4. Other
      Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by such Seller will (a) result in a violation or breach of any term
      or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of such Seller’s certificate of incorporation,
      operating agreement, partnership agreement or other governing document (if
      such
      Seller is an entity) or any instrument, commitment or obligation to which such
      Seller is a party, or by which such Seller or any of such Seller’s assets
      (including, without limitation the Shares and Notes identified as owned by
      such
      Seller on Exhibit
      A)
      may be
      bound, or (b) result in the creation of any lien, security interest, charge
      or
      encumbrance on any of the Shares or Notes identified as owned by such Seller
      on
Exhibit
      A,
      or (c)
      violate any law, rule, or governmental regulation or order, writ, injunction,
      decree, judgment or ruling of any court or governmental authority applicable
      to
      such Seller or any of the Shares or Notes identified as owned by such Seller
      on
Exhibit
      A.
      None of
      the Shares owned by such Seller is subject to any voting agreement, right of
      first refusal, “drag along” or “carry along” agreement or any similar agreement
      or covenant.

    

    4.5. Access
      to Information Regarding CASTion.
      Such
      Seller acknowledges
      that it has been afforded (i) access to information about CASTion and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in the Shares
      and
      Notes and (ii) the opportunity to obtain such additional information that
      CASTion possesses or can acquire without unreasonable effort or expense that
      such Seller deems necessary to make an informed investment decision with respect
      to its sale of the Shares and Notes pursuant to this Agreement. 

     

    
      
        
        

      

      
        Page
          3 of
          26

        
          

        

      

      
        
        

      

    

    

    4.6 Independent
      Investment Decision.
      Such
      Seller has independently evaluated the merits of its decision to sell Shares
      and
      Notes pursuant to this Agreement and to acquire Thermo Shares, Convertible
      Notes
      and Warrants pursuant to this Agreement and such Seller confirms that it has
      not
      relied on the advice of CASTion, the Buyer, any other Seller or any of their
      respective officers, directors, general partners or managers in making such
      decision. Such Seller acknowledges and agrees that the Buyer has not made any
      representations or warranties with respect to the transactions contemplated
      hereby other than those specifically set forth in Section 6 hereof.

    

    5. CASTion’s
      Representations and Warranties.
      CASTion
      hereby represents and warrants to the Buyer, except
      as
      set forth on the disclosure statement separately provided to the
      Buyer,
      as
      follows:

    

    5.1 Organization
      and Qualification. CASTion
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the Commonwealth of Massachusetts, with the requisite power and
      authority to own and use its properties and assets and to carry on the Business
      as
      now
      being conducted.
      CASTion
      is not in violation of any of the provisions of its Articles of Organization
      or
      bylaws. CASTion is duly qualified to conduct business and is in good standing
      as
      a foreign corporation in each jurisdiction listed on Exhibit
      I
      attached
      hereto and made a part hereof, which are the only jurisdictions in which the
      failure to be so qualified and in good standing could have or reasonably be
      expected to result in a material adverse effect on CASTion or the Business
      as a
      whole (a “Material
      Adverse Effect”),
      and
      no proceedings have been instituted in any such jurisdiction revoking, limiting
      or curtailing, or seeking to revoke, such power and authority or
      qualification.

    

    5.2. Authorization
      and Enforceability.
      The
      execution and delivery by CASTion of this Agreement, and performance by CASTion
      of the transactions contemplated by this Agreement, have been duly authorized
      by
      all necessary corporate action on the part of such CASTion, its Board of
      Directors and its shareholders. This Agreement has been duly executed by CASTion
      and constitutes the valid and legally binding obligation of CASTion, enforceable
      against CASTion in accordance with its terms.

     

    5.3. Default
      Under Other Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by CASTion will (a) result in a violation or breach of any term or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of (i) CASTion’s Articles of Organization or bylaws or
      (ii) except as would not be reasonably expected to have a Material Adverse
      Effect, any instrument, commitment or obligation to which CASTion is a party,
      or
      by which CASTion or, the Business may be bound, or (b) result in the creation
      of
      any lien, security interest, charge or encumbrance on any of CASTion’s assets or
      (c) violate any law, rule, or governmental regulation or order, writ,
      injunction, decree, judgment or ruling of any court or governmental authority
      applicable to CASTion, the Business or any of CASTion’s assets. 

    

    5.4. Subsidiaries.
      CASTion
      has no direct or indirect subsidiaries. 

    

    5.5 The
      Shares.
      All of
      the issued and outstanding shares of capital stock of CASTion, including without
      limitation the Shares, are validly issued and are fully paid, non-assessable
      and
      free of preemptive and similar rights, each having the rights of its particular
      class or series as set forth in CASTion’s Articles of Organization.

    

    5.6 The
      Notes.
      Each of
      the Notes is the legal, valid and binding obligation of CASTion, enforceable
      against CASTion in accordance with its terms. CASTion has asserted no defense
      against the rights of the holders of the Notes to collect the amounts due,
      or to
      become due, thereunder, and no basis for any such assertion exists.

     

    
      
        
        

      

      
        Page
          4 of
          26

        
          

        

      

      
        
        

      

    

    

    5.7 Filings,
      Consents and Approvals.
      CASTion
      is not required to obtain any consent, waiver, authorization or order of, give
      any notice to, or make any filing or registration with, any court or other
      federal, state, local or other governmental authority (a “Governmental
      Authority”)
      or
      other person or entity in connection with the execution, delivery and
      performance by CASTion of this Agreement and the consummation of the
      transactions contemplated hereby. 

    

    5.8 Capitalization.
      The
      authorized capital stock of CASTion consists of 2,000,000 shares of common
      stock, no par value (the “Common
      Stock”),
      of
      which 4,724 shares are issued and outstanding, and 1,340,000 shares of preferred
      stock, no par value (the “Preferred
      Stock”),
      of
      which (i) no shares designated as Series A (the “Series
      A Stock”)
      are
      issued and outstanding, (ii) no shares designated as Series A-1 (the
“Series
      A-1 Stock”)
      are
      issued and outstanding, (iii) no shares designated as Series B-1 (the
“Series
      B-1 Stock”)
      are
      issued and outstanding, (iv) no shares designated as Series B-2 (the
“Series
      B-2 Stock”)
      are
      issued and outstanding, (v) 124,968 shares designated as Series C-1 (the
“Series
      C-1 Stock”)
      are
      issued and outstanding, (vi) 189,278.1 shares designated as Series C-2 (the
      “Series
      C-2 Stock”)
      are
      issued and outstanding, (vii) 125,000 shares designated as Series C-3 (the
      “Series
      C-3 Stock”)
      are
      issued and outstanding and (viii) 128,756.09 shares designated as Series C-4
      (the “Series
      C-4 Stock”)
      are
      issued and outstanding. No person has any right of first refusal, preemptive
      right, right of participation, or any similar right to participate in the
      transactions contemplated by this Agreement.  Except as set forth on
Exhibit
      I
      attached
      hereto and made a part hereof, there are no outstanding options, warrants,
      rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities, rights or obligations convertible into or
      exchangeable for, or giving any person any right to subscribe for or acquire,
      any shares of Common Stock or Preferred Stock, or contracts, commitments,
      understandings or arrangements by which CASTion or any Subsidiary is or may
      become bound to issue additional shares of Common Stock, Preferred Stock or
      any
      other equity securities (collectively, the “Options”).
      On or
      prior to the time of Closing, CASTion shall have taken all action necessary
      to
      terminate all then-outstanding Options other than Options granted to employees
      under CASTion’s stock option plan. 

    

    5.9 Financial
      Statements and Subsequent Events.
      CASTion
      has furnished to the Buyer the financial statements of CASTion as of December
      31, 2006. Such financial statements have been prepared in accordance with GAAP
      applied on a consistent basis during the periods involved, except as may be
      otherwise specified in such financial statements or the notes thereto, and
      fairly present in all material respects the financial position of CASTion and
      as
      of and for the dates thereof and the results of operations and cash flows for
      the periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments and to the absence of footnotes. Since
      December 31, 2006, (i) CASTion has not incurred any liabilities (contingent
      or
      otherwise) other than (A) trade payables, accrued expenses and other liabilities
      incurred in the ordinary course of business, (B) indebtedness represented by
      the
      Notes, (C) indebtedness to the Buyer, and (D) liabilities not required to be
      reflected in CASTion’s financial statements pursuant to GAAP, (iii) CASTion has
      not altered its method of accounting or the identity of its auditors, and (iv)
      CASTion has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to
      purchase or redeem any shares of its capital stock,.

    

    5.10 Litigation. There
      is
      no pending litigation, investigation or other proceeding against CASTion which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      this Agreement or (ii) could, if there were an unfavorable decision,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect; and no such litigation, investigation or other
      proceeding has been threatened in writing. Neither CASTion, nor any officer
      thereof (in his or her capacity as such), is the subject of any pending
      litigation, investigation or other proceeding involving a claim of violation
      of
      or liability under federal or state law; and no such litigation, investigation
      or other proceedings has been threatened in writing.

     

    
      
        
        

      

      
        Page
          5 of
          26

        
          

        

      

      
        
        

      

    

    

    5.11 Compliance.
      CASTion
      (i) is in default under or in violation of (and no event has occurred that
      has
      not been waived that, with notice or lapse of time or both, would result in
      a
      default by CASTion under), nor has CASTion received notice of a claim that
      it is
      in default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case as could not,
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect.

    

    5.12 Regulatory
      Permits.
      CASTion
      possesses all certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to conduct
      the
      Business, except where the failure to possess such permits could not,
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect, and CASTion has not received any notice of proceedings relating
      to the revocation or modification of any such permits.

    

    5.13 Assets. 
      CASTion
      owns no real property and has good and marketable title in all personal property
      owned by it that is material to the Businesses, including without limitation
      the
      Other Assets, in each case free and clear of all liens, except for liens as
      do
      not materially affect the value of such property and do not materially interfere
      with the use made and proposed to be made of such property by CASTion. The
      Other
      Assets are in good working order, reasonable wear and tear excepted. The Leases
      are valid, subsisting and enforceable leases with which CASTion and, to
      CASTion’s knowledge, all of the other parties thereto are in compliance, and
      such Leases will remain in full force and effect following consummation of
      the
      transactions contemplated by this Agreement. The Contracts are valid, subsisting
      and enforceable agreements with which CASTion and, to CASTion’s knowledge, all
      of the other parties thereto are in compliance, and such Contracts will remain
      in full force and effect following consummation of the transactions contemplated
      by this Agreement. The Accounts Receivable were generated by valid sales of
      goods or services, have not been disputed and are believed by CASTion to be
      fully collectible (subject to reasonable reserves for bad accounts).

    

    5.14 Intellectual
      Property.
      CASTion
      owns, or has rights to use, the CASTion Technology and all other patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights that are necessary or material
      for
      use in connection with the Business as it is currently conducted and which
      the
      failure to so have could, individually or in the aggregate, reasonably be
      expected to result in a Material Adverse Effect. There are no claims filed
      or,
      to CASTion’s knowledge, made by others against CASTion to the effect that the
      CASTion Technology or any other intellectual property used by CASTion violates
      or infringes upon the rights of such claimant, and CASTion knows of no basis
      for
      any such claim. All of CASTion’s rights in the CASTion Technology are
      enforceable and, to CASTion’s knowledge, there is no existing infringement by
      another person or entity of any of such rights. To the knowledge of CASTion,
      no
      present or former officer or employee of, or consultant to, CASTion who
      participated in the development of any of the CASTion Technology was, at the
      time of such development, subject to any agreement with any former employer
      or
      other person or entity that in any way restricted his or her right to be
      employed by, or to consult with, CASTion or to participate in the development
      of
      the CASTion Technology.

     

    
      
        
        

      

      
        Page
          6 of
          26

        
          

        

      

      
        
        

      

    

    

    5.15 Transactions
      with Affiliates.
      None of
      the Sellers and none of the officers or directors of CASTion and, to the
      knowledge of CASTion, none of the employees of CASTion is a party to any
      transaction with CASTion (other than for services as employees, officers and
      directors), including any contract, agreement or other arrangement providing
      for
      the furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any Seller,
      officer, director or such employee or, to the knowledge of CASTion, any entity
      in which any Seller, officer, director, or any such employee has a substantial
      interest or is an officer, director, trustee or partner.

    

    5.16 Application
      of Anti-Takeover Provisions.
      CASTion
      has taken all necessary action, if any, in order to render inapplicable any
      control share acquisition, business combination, poison pill (including any
      distribution under a rights agreement) or other similar anti-takeover provision
      under CASTion’s Articles of Organization or the laws of the Commonwealth of
      Massachusetts that is or could become applicable to the Buyer as a result of
      the
      Buyer, the Sellers and CASTion fulfilling their obligations or exercising their
      rights under this Agreement, including without limitation the Sellers’ sale of
      the Shares and the Notes and the Buyer’s ownership of the Shares and the
      Notes.

    

    5.17 Environmental
      Matters. 
      To the
      knowledge of CASTion, (i) CASTion has complied
      with all
      applicable Environmental Laws; (ii) the properties currently owned or operated
      by CASTion (including soils, groundwater, surface water, buildings or other
      structures) are not contaminated by CASTion with any Hazardous Substances (and
      any representation to any contamination of any of such properties by any third
      party is expressly excluded); (iii) the properties formerly owned or operated
      by
      CASTion were not contaminated by CASTion with Hazardous Substances during the
      period of ownership or operation by CASTion (and any representation to any
      contamination of any of such properties by any third party is expressly
      excluded); (iv) CASTion is not subject to liability for any Hazardous Substance
      disposal or contamination on any third party property; (v) CASTion has not
      been
      associated with any release or threat of release of any Hazardous Substance;
      (vi) CASTion has not received any notice, demand, letter, claim or request
      for
      information alleging that CASTion may be in violation of or liable under any
      Environmental Law; and (vii) CASTion is not subject to any orders, decrees,
      injunctions or other arrangements with any Governmental Authority or subject
      to
      any indemnity or other agreement with any third party relating to liability
      under any Environmental Law or relating to Hazardous Substances. As used in
      this
      Agreement, the term “Environmental Law” means any federal, state, local or
      foreign law, regulation, order, decree, permit, authorization, opinion, common
      law or agency requirement relating to: (A) the protection, investigation or
      restoration of the environment, health and safety, or natural resources; (B)
      the
      handling, use, presence, disposal, release or threatened release of any
      Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination
      or
      any injury or threat of injury to persons or property and the term “Hazardous
      Substance” means any substance that is: (i) listed, classified or regulated
      pursuant to any Environmental Law; (ii) any petroleum product or by-product,
      asbestos-containing material, lead-containing paint or plumbing, polychlorinated
      biphenyls, radioactive materials or radon; or (iii) any other substance which
      is
      the subject of regulatory action by any Governmental Authority pursuant to
      any
      Environmental Law. 

    

    5.18 Taxes.
      CASTion
has,
      or shall
      have as of Closing, filed or validly extended all federal, state, local and
      foreign tax returns required by law, including, but not limited to all income,
      use, unemployment, federal withholding, payroll, ad valorem and property (real
      and personal) and all unemployment compensation taxes and assessments, and
      paid
      all taxes, assessments and penalties due and payable. There are no present
      disputes involving CASTion as to any taxes
      and
      CASTion has no knowledge of a tax deficiency which has been or might be asserted
      or threatened against CASTion which, if adversely determined, would reasonably
      be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        Page
          7 of
          26

        
          

        

      

      
        
        

      

    

    

    5.19 Employees.
      CASTion
      has no written or oral contracts, understandings or commitments involving the
      employment by or compensation of any person by CASTion which are not terminable
      at will. Seller has complete and full power to discharge and dismiss any or
      all
      of its current employees, without obligation to any person or
      entity.

     

    6. Buyer’s
      Representations and Warranties.
      The
      Buyer hereby represents and warrants to the Sellers and to CASTion as
      follows:

    

    6.1 Organization
      and Qualification. The
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Delaware, with the requisite power and authority to own
      and
      use its properties and assets and to carry on its business as currently
      conducted. The Buyer is not in violation of any of the provisions of its
      Certificate of Incorporation or bylaws. The Buyer is duly qualified to conduct
      business and is in good standing as a foreign corporation in each jurisdiction
      in which the failure to be so qualified and in good standing could have or
      reasonably be expected to result in a material adverse effect on the Buyer
      or
      its business, and no proceedings have been instituted in any such jurisdiction
      revoking, limiting or curtailing, or seeking to revoke, such power and authority
      or qualification.

    

    6.2 Authorization
      and Enforceability.
      The
      execution and delivery by the Buyer of this Agreement, and performance by the
      Buyer of the transactions contemplated by this Agreement, have been duly
      authorized by all necessary corporate action on the part of such the Buyer,
      its
      Board of Directors and its shareholders. This Agreement has been duly executed
      by the Buyer and constitutes the valid and legally binding obligation of the
      Buyer, enforceable against the Buyer in accordance with its terms.
      The
      Convertible Notes and the Warrants have been duly authorized and, when issued
      as
      contemplated by this Agreement, will be the legal, valid and binding obligations
      of the Buyer, enforceable against the Buyer in accordance with their respective
      terms.

    

    6.3 Other
      Agreements.
      Neither
      the execution and delivery of this Agreement nor the performance of this
      Agreement by the Buyer will (a) result in a violation or breach of any term
      or
      provision of or constitute a default (or an event which, with notice or lapse
      of
      time or both, would result in a default) under, or result in the termination
      or
      in a right of termination, or cancellation of, or accelerate the performance
      required by, or result in being declared void or voidable, any of the terms,
      conditions or provisions of the Buyer’s Articles of Incorporation or bylaws or
      any instrument, commitment or obligation to which the Buyer is a party, or
      by
      which the Buyer or any of the Buyer’s assets may be bound, or (b) result in the
      creation of any lien, security interest, charge or encumbrance on any of the
      Buyer’s assets or (c) violate any law, rule, or governmental regulation or
      order, writ, injunction, decree, judgment or ruling of any court or governmental
      authority applicable to the Buyer or any of the Buyer’s assets. 

    

    6.4 ThermoEnergy
      Common Stock.
      The
      Thermo Shares are duly authorized and, when issued at Closing in accordance
      with
      the terms of this Agreement, will be validly issued shares of ThermoEnergy
      Common Stock, fully paid, non-assessable and free of preemptive and similar
      rights.
      A
      sufficient number of shares of
      ThermoEnergy Common Stock to permit exercise in full of the Warrants and full
      conversion of the Convertible Notes have been reserved and set aside and the
      Warrant Shares and the Conversion Shares will, when issued and paid for upon
      exercise of the Warrants or conversion of the Convertible Notes in accordance
      with their respective terms, be duly authorized and validly issued shares of
      ThermoEnergy Common Stock, fully paid, non-assessable and free of preemptive
      and
      similar rights.

    

    6.5 SEC
      Documents.
      The
      Buyer has filed all of the reports, proxy statements and other documents
      (collectively, SEC
      Documents”)
      that
      the Buyer has been required to file with the Securities and Exchange Commission
      (the “Commission”).
      As of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and the rules and regulations of the Commission thereunder, and
      none of the SEC Documents, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary to make the statements therein, at the time and in the light of
      the
      circumstances under which they were made, not misleading. The financial
      statements of the Buyer included in the SEC Documents complied as to form in
      all
      material respects with applicable accounting requirements and with published
      rules and regulations of the Commission with respect thereto, have been prepared
      in accordance with generally accepted accounting principles applied on a
      consistent basis during the periods involved (except as may be indicated therein
      or in the notes thereto or, in the case of the unaudited statements, as
      permitted by Form 10-Q (or Form 10-QSB, as the case may be) of the Commission)
      and fairly present (subject, in the case of the unaudited statements, to normal
      recurring audit adjustments) the consolidated financial position of the Buyer
      and its consolidated subsidiaries as at the dates thereof and the consolidated
      results of their operations and cash flows for the periods then ended.

     

    
      
        
        

      

      
        Page
          8 of
          26

        
          

        

      

      
        
        

      

    

    

    6.6 Independent
      Investment Decision.
      The
      Buyer acknowledges and agrees that neither the Sellers nor CASTion has made
      any
      representations or warranties with respect to CASTion, the Assets, the Business
      or the transactions contemplated hereby other than those specifically set forth
      in Sections 4, 5 and 8 hereof.

     

    7. Investment
      Representations of the Buyer

    

    7.1.
       Investment
      Intent.
      The
      Buyer is acquiring the Shares and the Notes for its own account for purposes
      of
      investment and without expectation, desire, or need for resale and not with
      the
      view toward distribution or resale of the Shares or the Notes. The Buyer
      understands that no public market now exists for the Shares or the Notes and
      that a public market may never exist for the Shares or the Notes.

    

    7.2 Access
      to Information.
      The
      Buyer acknowledges
      that it has been afforded (i) access to information about CASTion and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in the Shares
      and
      the Notes and (ii) the opportunity to obtain such additional information that
      CASTion or the Sellers possess or can acquire without unreasonable effort or
      expense that the Buyer deems necessary to make an informed investment decision
      with respect to its purchase of the Shares and the Notes.

    

    7.3.
       Securities
      Act.
      The
      Buyer acknowledges that it understands that the Shares and the Notes to be
      purchased have not been registered under the Securities Act of 1933
      (“Securities
      Act”)
      or
      under any state securities law and understands that the Shares and the Notes
      cannot be resold in a transaction to which the Securities Act and state
      securities laws apply unless (i) subsequently registered under the Securities
      Act and applicable state securities laws or (ii) exemptions from such
      registration requirements are available. 

    

    8. Investment
      Representations of the Sellers.
      Each
      Seller, severally and not jointly, hereby represents and warrants to the Buyer
      as follows:

    

    8.1.
       Investment
      Intent.
      Such
      Seller is acquiring the Thermo Shares being issued to it pursuant to Section
      1.2(b) and will, upon conversion of the Convertible Note being issued to it
      pursuant to Section 1.2(c) or exercise of the Warrant being issued to it
      pursuant to Section 1.2(d), be acquiring the Conversion Shares or the Warrant
      Shares issued upon such conversion or exercise, for its own account for purposes
      of investment and without expectation, desire, or need for resale and not with
      the view toward distribution or resale of such shares of ThermoEnergy Common
      Stock. 

     

    
      
        
        

      

      
        Page
          9 of
          26

        
          

        

      

      
        
        

      

    

    

    8.2 Access
      to Information.
      Such
      Seller acknowledges
      that it has been afforded (i) access to information about the Buyer and its
      financial condition, results of operations, business, properties, management
      and
      prospects sufficient to enable it to evaluate its investment in ThermoEnergy
      Common Stock and (ii) the opportunity to obtain such additional information
      that
      the Buyer possesses or can acquire without unreasonable effort or expense that
      such Seller deems necessary to make an informed investment decision with respect
      to its investment in shares of ThermoEnergy Common Stock.

    

    8.3.
       Securities
      Act.
      Such
      Seller acknowledges that it understands that the Thermo Shares to be issued
      to
      it pursuant to Section 1.2(b), the Convertible Note to be issued to it pursuant
      to Section 1.2(c) and the Warrant to be issued to it pursuant to Section 1.2(d)
      have not been, and that, except as set forth in Section 12 of this Agreement,
      the Thermo Shares, the Conversion Shares issuable upon conversion of such
      Convertible Note and the Warrant Shares issuable upon exercise of such Warrant
      will not be, registered under the Securities Act or under any state securities
      law and understands that such ThermoEnergy Shares cannot be resold in a
      transaction to which the Securities Act and state securities laws apply unless
      (i) subsequently registered under the Securities Act and applicable state
      securities laws or (ii) exemptions from such registrations are available.

    

    8.4 Accredited
      Investor Status.
      Such
      Seller is an “accredited investor” (as such term is defined in Rule 501 of
      Regulation D promulgated by the Commission pursuant to the Securities
      Act.

     

    9.  Covenants
      Pending Closing.
      CASTion
      agrees that between the date hereof and the Closing:

    

    9.1. Conduct
      of Business.
      CASTion
      shall maintain its books and records, and carry on the Business in the usual,
      regular and ordinary course and in substantially the same manner as heretofore
      conducted and shall use its commercially reasonable efforts to preserve intact
      its present business organization, keep available the services of its present
      employees and preserve its goodwill and its relationships with customers,
      suppliers and others having business dealings with it. 

    

    9.2. Maintenance
      of Assets.
      CASTion
      shall maintain all of the Assets in good operating condition, ordinary wear
      and
      tear excepted, and will not sell,
      transfer, pledge or voluntarily subject to any lien, charge or other encumbrance
      any of the Assets except in the ordinary course of business. 

    

    9.3.
       Employee
      Compensation.
      CASTion
      shall not pay any bonuses, increase any employee’s salary or other compensation,
      or hire any employees except in the ordinary course of business consistent
      with
      past practices, and shall not enter into any agreements or arrangements to
      pay
      any such bonuses, to make any such increase in any employee’s salary or other
      compensation, or to hire any such employee.

    

    9.4. Insurance.
      CASTion
      will maintain and keep in full force and effect all insurance existing on the
      date hereof relating to the Business or the Assets.

    

    9.5. Corporate
      Existence.
      CASTion
      will continue to maintain its existence as a Massachusetts corporation in good
      standing.

    

    9.6 Access.
      CASTion
      shall allow the Buyer and its representatives and advisers access, during normal
      business hours, to visit and inspect all of CASTion’s facilities and shall
      permit the Buyer and its representatives and advisers to have reasonable access
      to all of the Assets (including the right to review and make extracts of
      CASTion’s books and records).

     

    
      
        
        

      

      
        Page
          10
          of 26

        
          

        

      

      
        
        

      

    

    

    9.7. Other
      Actions.
      CASTion
      will not take any action which would or could reasonably be expected to result
      in any of the representations and warranties of CASTion set forth in this
      Agreement becoming untrue in any material respect at any time on or prior to
      the
      Closing.

    

    9.8.
       Advice
      of Changes.
      CASTion
      and each Seller shall promptly advise the Buyer in writing of any change or
      event known to CASTion or to such Seller would or could reasonably be expected
      to have a Material Adverse Effect.

    

    10.  Buyer’s
      Conditions to Closing.
      The
      obligation of the Buyer to purchase the Shares and the Notes under this
      Agreement is subject to the fulfillment prior to or at the Closing of each
      of
      the following conditions (each of which may be waived by the Buyer in its sole
      discretion):

    

    10.1. Representations
      and Warranties.
      The
      representations and warranties of the Sellers and CASTion contained herein
      or in
      any exhibit, schedule, certificate or other document delivered pursuant to
      the
      provisions hereof, shall be true in all material respects as of the Effective
      Date and as of the Closing.

    

    10.2. Performance
      of Agreements.
      Each of
      the Sellers and CASTion shall have performed and complied in all material
      respects with all of the agreements and conditions required by this Agreement
      to
      be performed or complied with by them at or prior to the Closing. It is
      expressly acknowledged and agreed that the Buyer shall have no obligation to
      proceed to Closing and to purchase the Shares being sold hereunder by any Seller
      unless the Sellers are, at Closing, ready, willing and able to sell to the
      Buyer
      the lesser of (x) all of the Shares identified as owned by such Sellers on
      Exhibit
      A
      and (y)
      Shares having a combined voting power of not less than 90% of CASTion’s capital
      stock on an as converted basis. 

    

    10.3. Material
      Adverse Changes.
      There
      shall have occurred no event which could be reasonably anticipated to have
      a
      Material Adverse Effect.

     

    10.4 Inspections.
      From
      the Effective Date to the Closing, CASTion shall have allowed the Buyer and
      its
      representatives and advisers access, during normal business hours, to visit
      and
      inspect all of CASTion’s facilities and shall have permitted the Buyer and its
      representatives and advisers to have reasonable access to all of the Assets
      (including the right to review and make extracts of CASTion’s books and
      records).

    

    10.5 Corporate
      Actions.
      CASTion
      shall have delivered to the Buyer (i) copies of all resolutions adopted by
      the
      Board of Directors and/or the stockholders of CASTion approving this Agreement
      and the transactions contemplated hereby, certified by the Secretary of CASTion
      as being duly adopted and in full force and effect as of the Closing Date,
      (ii)
      the resignations of all of the officers and directors of CASTion, effective
      as
      of the Closing, (iii) copies of the Articles of Organization of CASTion and
      all
      amendments thereto, certified by the Secretary of State of the Commonwealth
      of
      Massachusetts, and (iv) a copy of the by-laws of CASTion, certified by the
      Secretary of CASTion as being in full force and effect as of the Closing
      Date.

    

    10.6 Management
      Bonus Pool.
      The
      Buyer shall have authorized and set aside, for issuance to the officers and
      employees of CASTion at the Closing (in distributive amounts to be determined
      by
      the board of directors of CASTion (as constituted immediately prior to the
      Closing), the following:

    

    
      	 	
              a.

            	
              $150,000.00
                in cash; 

            

    

     

    
      
        
        

      

      
        Page
          11
          of 26

        
          

        

      

      
        
        

      

    

     

    
      	 	
              b.

            	
              175,000
                shares of ThermoEnergy Common Stock (the “Management
                Shares”);
                and

            

    

    

    
      	 	
              c.

            	
              Warrants,
                in substantially the form of Exhibit
                H,
                for the purchase an aggregate of 300,000 Warrant Shares (the “Management
                Warrants”).

            

    

    

    The
      Buyer
      shall also have authorized and set aside, for issuance to Farley &
Associates, Inc. (“Farley”), an affiliate of the Company, at the Closing, (i)
      18,750 ThermoEnergy Common Stock (the “Farley
      Shares”) and
      (ii)
      a Warrant to purchase 37,500 Warrant Shares.

    

    In
      addition, the Buyer shall have executed and delivered to CASTion an agreement,
      in substantially the form of Exhibit
      I
      attached
      hereto (the “Bonus
      Agreement”),
      pursuant to which the Buyer would pay an aggregate of $300,000.00 to the
      officers and employees of CASTion (in distributive amounts to be determined
      by
      the compensation committee of the board of directors of CASTion (as constituted
      immediately prior to the Closing)) upon the happening of certain events
      specified in the Bonus Agreement.

    

    For
      all
      purposes herein (including without limitation Section 12), (i) the Management
      Warrants referred to in this Section 10.6 shall be deemed to be Warrants,
      notwithstanding the fact that such Management Warrants may be in a form, and
      may
      contain rights and restrictions, different from those of the Warrants and (ii)
      the Farley Shares and the Management Shares shall be deemed to be ThermoShares.
      For purposes of Section 12, Farley, the initial holders of the Management
      Warrants, and the initial holders of the Management Shares shall be deemed
      to be
“Sellers.” 

    

    10A. Sellers’
      Conditions to Closing.
      The
      obligations of the Sellers to sell the Shares and the Notes under this Agreement
      are subject to the fulfillment prior to or at the Closing of each of the
      following conditions (each of which may be waived by the Sellers in their sole
      discretion):

     

    10A.1. Representations
      and Warranties.
      The
      representations and warranties of the Buyer contained herein or in any exhibit,
      schedule, certificate or other document delivered pursuant to the provisions
      hereof, shall be true in all material respects as of the Effective Date and
      as
      of the Closing.

    

    10A.2. Performance
      of Agreements.
      The
      Buyer shall have performed and complied in all material respects with all of
      the
      agreements and conditions required by this Agreement to be performed or complied
      with by it prior to the Closing. 

    

    10A.3 Corporate
      Actions.
      The
      Buyer shall have delivered to CASTion and the Sellers copies of all resolutions
      adopted by the Board of Directors of the Buyer approving this Agreement and
      the
      transactions contemplated hereby, certified by the Secretary of the Buyer as
      being duly adopted and in full force and effect as of the Closing
      Date.

    

    10A.4 Management
      Bonus Pool.
      The
      Buyer shall have authorized and set aside the management bonus pool referred
      to
      in Section 10.6 above.

    

    11. Closing.
      

    

    11.1 Stock
      Certificates and Notes.
      At
      Closing, each Seller shall deliver to the Buyer (i) the certificate or
      certificates representing the Shares identified as owned by such Seller on
      Exhibit
      A,
      together with duly executed stock powers sufficient to effect the transfer
      of
      such Shares to the Buyer or its nominee and (ii) the Notes identified as owned
      by such Seller on Exhibit
      A,
      duly
      endorsed to the order of the Buyer. If
      any
      Note or any certificate representing the Shares has been lost, stolen or
      destroyed, the affected Seller may deliver to the Buyer, in lieu of such Note
      or
      stock certificate, an affidavit of that fact and an agreement to indemnify
      the
      Buyer in a manner reasonably satisfactory to Buyer against any claim that may
      be
      made against the Buyer with respect to such Note or certificate; provided,
      however, that Buyer shall not require any Seller to provide any bond or other
      security for such indemnity.

     

    
      
        
        

      

      
        Page
          12
          of 26

        
          

        

      

      
        
        

      

    

     

    11.2. Payment
      of Purchase Price.
      At
      Closing, against delivery by each Seller to the Buyer of the stock certificate
      or certificates, stock powers and Notes deliverable pursuant to Section 11.1,
      the Buyer will deliver to such Seller (i) the cash portion of the Purchase
      Price
      payable to such Seller in the amount specified on Exhibit
      A,
      (ii) a
      Convertible Note, payable to the order of such Seller, in the principal amount
      specified on Exhibit
      A
      and
      (iii) a Warrant, registered in the name of such Seller, for the purchase of
      the
      number of Warrant Shares specified on Exhibit
      A.

    

    11.3. Issuance
      of ThermoEnergy Common Stock.
      At
      Closing, the Buyer shall issue and deliver to the transfer agent for the
      ThermoEnergy Common Stock irrevocable instructions to issue to the Sellers
      the
      number of Thermo Shares issuable pursuant to Section 1.2(b), in the amounts
      specified on Exhibit
      A.
      

    

    11.4. Management
      Bonus Pool.
      At the
      Closing, the Buyer shall deliver to CASTion, for further distribution to the
      officers and employees of CASTion (in distributive amounts to be determined
      by
      the compensation committee of the board of directors of CASTion (as constituted
      immediately prior to the Closing), the cash portion of the management bonus
      pool
      referred to in Section 10.6 above, and the Buyer shall execute and deliver
      to
      CASTion, for further distribution to the officers and employees of CASTion
      (in
      distributive amounts to be determined by the compensation committee of the
      board
      of directors of CASTion (as constituted immediately prior to the Closing),
      the
      Management Warrants. In addition, the Buyer shall execute and deliver to CASTion
      the Bonus Agreement; 

    

    11.5 Other
      Documents.
      At
      Closing, CASTion and the Sellers shall, at the Buyer’s expense, execute and
      deliver to the Buyer such other instruments and documents as the Buyer’s
      attorney may reasonably determine to be necessary or convenient to effect the
      transactions contemplated by this Agreement and to afford the Buyer the benefit
      of this Agreement. At Closing, the Buyer shall, at the Buyer’s expense, execute
      and deliver to CASTion and/or the Sellers such other instruments and documents
      as CASTion’s attorney may reasonably determine to be necessary or convenient to
      effect the transactions contemplated by this Agreement and to afford CASTion
      and
      the Sellers the benefit of this Agreement.

    

    12. Registration
      Rights.
      

    

    12.1. Piggy-Back
      Registration.
      If
      (but
      without any obligation to do so) the Buyer proposes to register (including
      for
      this purpose, a registration effected by the Buyer for stockholders other than
      the Sellers) any shares of ThermoEnergy Common Stock under the Securities Act
      in
      connection with the public offering of such shares of ThermoEnergy Common Stock
      solely for cash other than (i) a registration statement on Form S-8 (or any
      successor form relating to the sale of securities to employees of the Buyer
      pursuant to a stock option, stock purchase or similar plan), (ii) a registration
      statement on Form S-4 (or any successor form relating to a merger, consolidation
      or similar transaction involving the Buyer), (iii) a registration on any form
      which does not include substantially the same information as would be required
      to be included in a registration statement covering the sale by the Sellers
      of
      the Thermo Shares, the Conversion Shares or the Warrant Shares, (iv) a
      registration in which the only ThermoEnergy Common Stock being registered is
      ThermoEnergy Common Stock issuable upon conversion of debt securities which
      are
      also being registered, or (v) a registration statement being filed by the Buyer
      pursuant to a contractual obligation existing prior to the date of this
      Agreement which prohibits the inclusion of additional shares, the Buyer shall,
      at such time, promptly give each Seller written notice of such registration.
      Upon the written request of a Seller given within twenty (20) days after mailing
      of such notice by the Buyer, the Buyer shall, subject to the provisions of
      this
      Section 12, cause to be registered under the Securities Act all of the
      Thermo Shares, Conversion Shares and Warrant Shares (collectively, the
“Registrable
      Securities”)
      that
      each such Seller has requested to be registered. In
      the
      event that any such registration shall be, in whole or in part, an underwritten
      public offering of ThermoEnergy Common Stock, the number of Registrable
      Securities to be included in such an underwriting may be reduced or excluded
      partially or completely (pro rata among the requesting Sellers based upon the
      number of Registrable Securities owned by such Sellers) if and to the extent
      that the managing underwriter shall be of the opinion that the inclusion of
      some
      or all of the Registrable Securities would adversely affect the marketing of
      the
      securities to be sold by the Buyer therein; provided,
      however,
      that no
      such Registrable Securities may be excluded from such registration unless all
      securities of the Buyer held by any person (other than a Seller) who did not
      make the original request for registration shall first be excluded from such
      registration.
      The
      Buyer shall have the right, without penalty, to terminate or withdraw any
      registration initiated by it under this Section 12.1 prior to the
      effectiveness of such registration whether or not any Seller has elected to
      include securities in such registration.

     

    
      
        
        

      

      
        Page
          13
          of 26

        
          

        

      

      
        
        

      

    

     

    12.2 Registration
      Obligations of the Buyer. In
      connection with the registration of the Registrable
      Securities for the account of the Sellers pursuant to Section 12.1, the Buyer
      shall:

     

    (a)Take
      all
      lawful action such that the registration statement and any amendment thereto
      does not, when it becomes effective, contain an untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      to make the statements therein, not misleading and that the prospectus forming
      part of such registration statement, and any amendment or supplement thereto,
      does not at any time include an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading.

     

    (b)Comply
      with the provisions of the Securities Act with respect to the Thermo Shares,
      the
      Conversion Shares and the Warrant Shares covered by the registration statement
      until the earlier of (i) ninety (90) days after the registration statement
      has
      been declared effective or (ii) such time as all of such Registrable Securities
      have been disposed of in accordance with the intended methods of disposition
      by
      the Sellers as set forth in the prospectus forming part of the registration
      statement (the “Registration
      Period”).

     

    (c)Prior
      to
      the filing with the Commission of the
      registration statement (including any amendments thereto) and the distribution
      or delivery of any prospectus (including any supplements thereto), provide
      draft
      copies thereof to the Sellers and reflect in such documents all such comments
      as
      the Sellers (and their counsel) reasonably may propose.

     

    (d)(i) register
      or qualify the Registrable Securities covered by the registration statement
      under such securities or “blue sky” laws of such jurisdictions as the Sellers
reasonably
      request, (ii) prepare and file in such jurisdictions such amendments
      (including post-effective amendments) and supplements to such registrations
      and
      qualifications as may be necessary to maintain the effectiveness thereof at
      all
      times during the Registration Period, and (iii) take all such other lawful
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period; provided,
      however,
      that the
      Buyer shall not be required in connection therewith or as a condition thereto
      to
      (A) qualify to do business in any jurisdiction where it would not otherwise
      be required to qualify, (B) subject itself to general taxation in any such
      jurisdiction or (C) file a general consent to service of process in any
      such jurisdiction.

     

    
      
        
        

      

      
        Page
          14
          of 26

        
          

        

      

      
        
        

      

    

     

    (e)As
      promptly as practicable after becoming aware of such event, notify each Seller
      whose Registrable Securities are covered by the registration statement of the
      occurrence of any event, as a result of which the prospectus included in the
      registration statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading, and promptly prepare an amendment to
      the
      registration statement and supplement to the prospectus to correct such untrue
      statement or omission, and deliver a number of copies of such supplement and
      amendment to each Seller as such Seller may reasonably request.

     

    (f)As
      promptly as practicable after becoming aware of such event, notify each Seller
      whose Registrable Securities are covered by the registration statement of the
      issuance by the Commission of any stop order or other suspension of the
      effectiveness of the registration statement and take all lawful action to effect
      the withdrawal, rescission
      or
      removal of such stop order or other suspension.

     

    (g)Make
      generally available to its security holders as soon as practicable, but in
      any
      event not later than eighteen
      (18)
      months
      after (i) the effective date of the registration statement, and
      (ii) the effective date of each post-effective amendment to the
      registration statement, as the case may be, an earnings statement of the Buyer
      and its subsidiaries complying with Section 11(a) of the Securities Act and
      the rules and regulations of the Commission thereunder.

     

    (h)Make
      reasonably available for inspection by the Sellers and any underwriter
      participating in any disposition pursuant to the registration statement, and
      any
      attorney, accountant or other agent retained by such Sellers or any such
      underwriter all relevant financial and other records, pertinent corporate
      documents and properties of the Buyer and its subsidiaries, and (ii) cause
      the Buyer’s officers, directors and employees to supply all information
      reasonably requested by such Sellers or any such underwriter, attorney,
      accountant or agent in connection with the registration statement, in each
      case,
      as is customary for similar due diligence examinations; provided,
      however,
      that all
      records, information and documents that are designated in writing by the Buyer,
      in good faith, as confidential, proprietary or containing any nonpublic
      information shall be kept confidential by such Sellers and any such underwriter,
      attorney, accountant or agent (pursuant to an appropriate confidentiality
      agreement in the case of any such Seller or agent), unless such disclosure
      is
      made pursuant to judicial process in a court proceeding (after first giving
      the
      Buyer an opportunity promptly to seek a protective order or otherwise limit
      the
      scope of the information sought to be disclosed) or is required by law, or
      such
      records, information or documents become available to the public generally
      or
      through a third party not in violation of an accompanying obligation of
      confidentiality; and provided,
      further,
      that, if
      the foregoing inspection and information gathering would otherwise disrupt
      the
      Buyer’s conduct of its business, such inspection and information gathering
      shall, to the maximum extent possible, be coordinated on behalf of the Sellers
      and the other parties entitled thereto by one firm of counsel designated
      by and
      on behalf of the majority in interest of Sellers and other parties;
      and

     

    (i)Use
      its
      commercially reasonable efforts to cause all Registrable Securities covered
      by
      the registration statement to be listed or qualified for trading on the
      principal trading market, if any, on which the ThermoEnergy Common Stock is
      traded or listed on the effective date of the registration
      statement.

     

    
      
        
        

      

      
        Page
          15
          of 26

        
          

        

      

      
        
        

      

    

     

    12.3 Obligations
      and Acknowledgements of the Sellers.
      In
      connection with the registration of the Thermo Shares and the Warrant Shares
      for
      the account of the Sellers pursuant to Section 12.1, the Sellers shall have
      the
      following obligations and hereby make the following
      acknowledgements:

     

    (a)It
      shall
      be a condition precedent to the obligations of the Buyer to include
      the
      Registrable Securities of a particular Seller
      in the
      registration statement
      that
      such Seller (i) shall furnish to the Buyer such information regarding
      itself, the shares of Thermo Energy Common Stock held by it and the intended
      method of disposition of the Registrable Securities held by it as shall be
      reasonably required to effect the registration of such Registrable Securities
      and (ii) shall execute such documents in connection with such registration
      as the Buyer may reasonably request. At least ten business days prior to the
      first anticipated filing date of a registration statement, the Buyer shall
      notify each Seller of the information the Company requires from such Seller
      (the
“Requested
      Information”)
      if such
      Seller elects to have any of its Registrable Securities included in the
      registration statement. If at least two business days prior to the anticipated
      filing date the Buyer has not received the Requested Information from a Seller
      (a “Non-Responsive
      Seller”),
      then
      the Buyer may file the registration statement without including any Registrable
      Securities for the account of such Non-Responsive Seller and the Buyer shall
      have no further obligations under this Section 12 to the Non-Responsive
      Seller.
      

     

    (b)Each
      Seller agrees to cooperate with the Buyer in connection with the preparation
      and
      filing of a registration statement under this Section 12, unless such Seller
      has
      notified the Buyer in writing of its election to exclude all of its Registrable
      Securities from such registration statement.

     

    (c)Each
      Seller agrees that, upon receipt of any notice from the Buyer of the occurrence
      of any event of the kind described in Section 12.2(e) or 12.2(f), it shall
      immediately discontinue its disposition of Registrable Securities pursuant
      to
      the registration statement until such Seller’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 12.2(e) and, if
      so directed by the Buyer, such Seller shall deliver to the Buyer (at the expense
      of the Buyer) or destroy (and deliver to the Buyer a certificate of destruction)
      all copies in such Seller’s possession, of the prospectus covering such
      Registrable Securities current at the time of receipt of such notice.

     

    (d)Each
      Seller acknowledges that it may be deemed to be a statutory underwriter within
      the meaning of the Securities Act with respect to the Registrable Securities
      being registered for resale by it, and each Seller which includes Registrable
      Securities for offer and sale within a registration statement pursuant to this
      Section 12 hereby consents to the inclusion in such registration statement
      of a
      disclosure to such effect. 

     

    12.4 Expenses
      of Registration.
      All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to this Section 12, including, without limitation, all registration,
      listing, and qualifications fees, legal fees, printing and engraving costs,
      accounting fees, and the reasonable fees and expenses of one counsel to the
      Sellers (other than underwriting discounts and commissions) shall be borne
      by
      the Buyer. 

     

    12.5 Indemnification
      and Contribution.
      

     

    (a) Indemnification
      by the Buyer.
      The
      Buyer shall indemnify and hold harmless each Seller and each underwriter, if
      any, which facilitates the disposition of Registrable Securities for the account
      of the Sellers, and each of their respective officers and directors and each
      person who controls such Seller or underwriter within the meaning of
      Section 15 of the Securities Act or Section 20 of the Securities
      Exchange Act of 1934 (the “Exchange
      Act”)
      (each
      such person being sometimes hereinafter referred to as an “Indemnified
      Person”)
      from
      and against any losses, claims, damages or liabilities, joint or several, to
      which such Indemnified Person may become subject under the Securities Act or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon an untrue statement or alleged
      untrue statement of a material fact contained in any registration statement
      or
      an omission or alleged omission to state therein a material fact required to
      be
      stated therein or necessary to make the statements therein, not misleading,
      or
      arise out of or are based upon an untrue statement or alleged untrue statement
      of a material fact contained in any prospectus or an omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading; and the Buyer hereby agrees to
      reimburse such Indemnified Person for all reasonable legal and other expenses
      incurred by them in connection with investigating or defending any such action
      or claim as and when such expenses are incurred; provided,
      however, that
      the
      Buyer shall not be liable to any such Indemnified Person in any such case to
      the
      extent that any such loss, claim, damage or liability arises out of or is based
      upon (i) an untrue statement or alleged untrue statement made in, or an
      omission or alleged omission from, such registration statement or prospectus
      in
      reliance upon and in conformity with written information furnished to the Buyer
      by such Indemnified Person expressly for use therein or (ii) in the case of
      the occurrence of an event of the type specified in Section 12.2(e), the
      use by the Indemnified Person of an outdated or defective prospectus after
      the
      Buyer has provided to such Indemnified Person an updated prospectus correcting
      the untrue statement or alleged untrue statement or omission or alleged omission
      giving rise to such loss, claim, damage or liability.

     

    
      
        
        

      

      
        Page
          16
          of 26

        
          

        

      

      
        
        

      

    

     

    (b) Indemnification
      by the Sellers and Underwriters.
      Each
      Seller agrees, severally
      and not jointly, as
      a
      consequence of the inclusion of any of its Registrable Securities in a
      registration statement pursuant to this Section 12, and each underwriter, if
      any, which facilitates the disposition of Registrable Securities shall agree,
      severally
      and not jointly, as
      a
      consequence of facilitating such disposition of Registrable Securities to
      (i) indemnify and hold harmless the Buyer, its directors, its officers who
      sign any registration statement and each person, if any, who controls the Buyer
      within the meaning of either Section 15 of the Securities Act or
      Section 20 of the Exchange Act, against any losses, claims, damages or
      liabilities to which the Buyer or such other persons may become subject, under
      the Securities Act or otherwise, insofar as such losses, claims, damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      an
      untrue statement or alleged untrue statement of a material fact contained in
      any
      registration statement or an omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein, not misleading, or arise out of or are based upon an untrue statement
      or alleged untrue statement of a material fact contained in any prospectus
      or an
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading, in each case to the
      extent, but only to the extent, that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in reliance upon and in
      conformity with written information furnished to the Buyer by such Seller or
      underwriter expressly for use therein,
      and
      (ii) reimburse the Buyer for any legal or other expenses incurred by the
      Buyer in connection with investigating or defending any such action or claim
      as
      such expenses are incurred;
      provided,
      however,
      that no
      Seller or underwriter shall be liable under this Section 12.5(b) for any
      amount in excess of the net proceeds paid to such Seller or underwriter in
      respect of Registrable Securities sold by it.

     

    (c) Notice
      of Claims, etc. 
      Promptly
      after receipt by a person seeking indemnification pursuant to this
      Section 12.5 (an “Indemnified
      Party”)
      of
      written notice of any investigation, claim, proceeding or other action in
      respect of which indemnification is being sought (each, a “Claim”),
      the
      Indemnified Party promptly shall notify the person against whom indemnification
      pursuant to this Section 12.5 is being sought (the “Indemnifying
      Party”)
      of the
      commencement thereof; but the omission to so notify the Indemnifying Party
      shall
      not relieve the Indemnifying Party from any liability that it otherwise may
      have
      to the Indemnified Party, except to the extent that the Indemnifying Party
      is
      materially prejudiced and forfeits substantive rights and defenses by reason
      of
      such failure. In connection with any Claim as to which both the Indemnifying
      Party and the Indemnified Party are parties, the Indemnifying Party shall be
      entitled to assume the defense thereof. Notwithstanding the assumption of the
      defense of any Claim by the Indemnifying Party, the Indemnified Party shall
      have
      the right to employ separate legal counsel and to participate in the defense
      of
      such Claim, and the Indemnifying Party shall bear the reasonable fees,
      out-of-pocket costs and expenses of such separate legal counsel to the
      Indemnified Party if (and only if): (i) the Indemnifying Party shall have
      agreed to pay such fees, costs and expenses, (ii) the Indemnified Party
shall
      reasonably have concluded that representation of the Indemnified Party by the
      Indemnifying Party by the same legal counsel would not be appropriate due to
      actual or, as reasonably determined by legal counsel to the Indemnified Party,
      potentially differing interests between such parties in the conduct of the
      defense of such Claim, or if there may be legal defenses available to the
      Indemnified Party that are in addition to or disparate from those available
      to
      the Indemnifying Party, or (iii) the Indemnifying Party shall have failed
      to employ legal counsel reasonably satisfactory to the Indemnified Party within
      a reasonable period of time after notice of the commencement of such Claim.
      If
      the Indemnified Party employs separate legal counsel in circumstances other
      than
      as described in the preceding sentence, the fees, costs and expenses of such
      legal counsel shall be borne exclusively by the Indemnified Party. Except as
      provided above, the Indemnifying Party shall not, in connection with any Claim
      in the same jurisdiction, be liable for the fees and expenses of more than
      one
      firm of counsel for the Indemnified Party (together with appropriate local
      counsel). The Indemnified Party shall not, without the prior written consent
      of
      the Indemnifying Party (which consent shall not unreasonably be withheld),
      settle or compromise any Claim or consent to the entry of any judgment that
      does
      not include an unconditional release of the Indemnifying Party from all
      liabilities with respect to such Claim or judgment or
      contain any admission of wrongdoing.

     

    
      
        
        

      

      
        Page
          17
          of 26

        
          

        

      

      
        
        

      

    

     

    (d) Contribution.
      If the
      indemnification provided for in this Section 12.5 is unavailable to, or
      insufficient to hold harmless, an Indemnified Party in respect of any losses,
      claims, damages or liabilities (or actions in respect thereof) referred to
      herein, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party as a result of such losses, claims, damages
      or
      liabilities (or actions in respect thereof) in such proportion as is appropriate
      to reflect the relative fault of the Indemnifying Party and the Indemnified
      Party in connection with the statements or omissions or
      alleged statements or omissions which
      resulted in such losses, claims, damages or liabilities (or actions in respect
      thereof), as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or omission or alleged omission to state a material fact
      relates to information supplied by such Indemnifying Party or by such
      Indemnified Party, and the parties’ relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission.
      The parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 12.5(d) were determined by pro rata allocation
      (even if the Sellers or any underwriters were treated as one entity for such
      purpose) or by any other method of allocation which does not take account of
      the
      equitable considerations referred to in this Section 12.5(d). The amount
      paid or payable by an Indemnified Party as a result of the losses, claims,
      damages or liabilities (or actions in respect thereof) referred to above shall
      be deemed to include any legal or other fees or expenses reasonably incurred
      by
      such Indemnified Party in connection with investigating or defending any such
      action or claim. No person guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation. The obligations of the Sellers and any underwriters in this
      Section 12.5(d) to contribute shall be several in proportion to the
      percentage of Thermo Shares and/or Warrant Shares registered or underwritten,
      as
      the case may be, by them and not joint.

     

    (e) Limitation
      on Sellers’ and Underwriters’ Obligations.
      Notwithstanding any other provision of this Section 12.5, in no event shall
      any (i) Seller have
      any
      liability under
      this Section 12.5 for any amounts in excess of the dollar amount of the
      proceeds actually
      received
      by such Seller from the sale by such Seller of Registrable Securities (after
      deducting any fees, discounts and commissions applicable thereto) pursuant
      to
      any registration statement under which such Thermo Shares, Conversion Shares
      and/or Warrant Shares are
      registered under the Securities Act and (ii) underwriter be required to
      undertake liability to any person hereunder for any amounts in excess of the
      aggregate discount, commission or other compensation payable to such underwriter
      with respect to the Registrable Securities underwritten by it and distributed
      pursuant to the registration statement.

     

    
      
        
        

      

      
        Page
          18
          of 26

        
          

        

      

      
        
        

      

    

     

    (f) Other
      Liabilities.
      The
      obligations of the Buyer under this Section 12.5 shall be in addition to
      any liability which the Buyer may otherwise have to any Indemnified Person
      and
      the obligations of any Indemnified Person under this Section 12.5 shall be
      in addition to any liability which such Indemnified Person may otherwise have
      to
      the Buyer. The remedies provided in this Section 12 are not exclusive and
      shall not limit any rights or remedies which may otherwise be available to
      an
      indemnified party at law or in equity.

    

    12.6 Floating
      of Shares Outside of the United States.
      In the
      event that the Buyer proposes to issue and/or sell (including for this purpose,
      a sale effected by the Buyer for stockholders other than the Sellers) any shares
      of ThermoEnergy Common Stock to the public under the laws of any sovereign
      jurisdiction outside of the United States, then the provisions of this Section
      12 shall apply to such issuance and/or sale of shares so as to give the Sellers
      as nearly as practicable the same rights and benefits as they would have had
      had
      the Buyer proposed to register shares of ThermoEnergy Common Stock under the
      Securities Act pursuant to Section 12.1(a) above; provided,
      however,
      that
      the Buyer shall not be required to include in any such issuance and/or sale
      any
      shares of ThermoEnergy Common Stock for the benefit of the Sellers if, and
      to
      the extent that, the laws of any jurisdiction in which such offering is to
      made,
      or the rules of any exchange or trading system through which such offering
      is to
      be effected, prohibit the inclusion of shares to be offered by any person or
      entity other than the issuer.

    

    13. Offers
      to Other Holders of Common Stock and Preferred Stock.
      Promptly after the Effective Date, the Buyer shall extend to all holders of
      Common Stock and/or Preferred Stock who are not Sellers under this Agreement
      the
      opportunity to sell to the Buyer their shares of Common Stock and/or Preferred
      Stock on substantially the same terms and conditions, and for substantially
      the
      same consideration, as provided in this Agreement. The Buyer shall keep such
      offer open for a period of not less than 30 days beyond the date of
      Closing.

     

    
      
         

      

      
        Page
          19
          of 26

        
          

        

      

      
         

      

    

     

    14. Board
      of Directors.
      So long
      as any of the Warrants or the Notes remain outstanding, until the sixth
      anniversary of the Closing, Spencer Trask Specialty Group, LLC or any of its
      affiliates (“Spencer Trask”), acting on behalf of the Sellers, shall have the
      right to designate one individual to receive notice of and attend all meetings
      of the Board of Directors of the Buyer (the “Buyer Board”) and any committees
      thereof. The Buyer will permit the Spencer Trask representative, at Spencer
      Trask’s expense, to visit and inspect any of the properties of the Buyer and of
      any subsidiary (including CASTion), and to discuss the affairs, finances and
      accounts of the Buyer and of any subsidiary (including CASTion), with its
      officers, all upon reasonable notice and to such reasonable extent and at such
      reasonable times and intervals as the representative may reasonably request.
      The
      Buyer will reimburse all direct out-of-pocket expenses reasonably incurred
      by
      the Spencer Trask representative in attending meetings of the Buyer Board or
      any
      committee thereof. Notwithstanding the foregoing, the Buyer may require, as
      a
      condition to the Spencer Trask representative’s attendance at meetings of the
      Buyer Board or committees thereof or to the provision to the Spencer Trask
      representative of material non-public information regarding the Buyer that
      Spencer Trask and the Spencer Trask representative execute conventional
      non-disclosure agreements in conformity with Regulation FD promulgated under
      the
      Exchange Act.

    

    15.
       Non-Survival
      of Representations, Warranties and Agreements.
      None of
      the representations, warranties, covenants and agreements in this Agreement
      or
      in any instrument delivered pursuant to this Agreement, including any rights
      arising out of any breach of such representations, warranties, covenants and
      agreements, shall survive the Closing, except for (i) the Sellers’
representations and warranties in Sections 4 and 8, (ii) the Buyer’s
      representations and warranties in Sections 6 and 7, (iii) those covenants and
      agreements contained herein that by their terms apply or are to be performed
      in
      whole or in part at or after the Closing and (iv) Sections 17 through 24 of
      this
      Agreement. 

     

    16. Continued
      Access to Records.
      CASTion
      shall permit the Buyer to have full access to all books, documents, papers
      and
      records relating to CASTion’s assets, stock ownership, properties, operations,
      obligations and liabilities, including, but not limited to, all books of
      account, tax records, minute books of directors and shareholders meetings,
      organizational documents and any other business activities or prospects after
      the Effective Date and Closing.

    

    17. Default.
      In
      addition to any other remedies available to the non-defaulting Parties under
      applicable law (including but not limited to, the right to specific performance
      of this Agreement), any Party hereto who fails to comply with the terms of
      this
      Agreement shall be obligated for, and agrees to pay, all damages, costs, fees,
      and expenses incurred or suffered by the non-defaulting Parties, including
      without limitation all fees and costs incurred by a non-defaulting Party to
      enforce the terms of this Agreement, which fees and costs shall include court
      costs and reasonable attorney's fees.

    

    18. Notices.
      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) at the facsimile number specified
      in
      this Section 18, (b) the next business day, if sent by a nationally recognized
      overnight courier service, (c) the second business day after the date of
      mailing, if sent, postage prepaid, by first class U.S. mail or (d) upon actual
      receipt by the Party to whom such notice is addressed. The address for such
      notices and communications shall be as follows:

    

      
        	
                If
                  to a Seller:

              	
                To
                  such Seller at the address of such Seller set forth on Exhibit
                  A

              

      

       

      
        
          
          

        

        
          Page
            20
            of 26

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to CASTion:

              	
                Mr.
                  Jeffrey L. Powell, President & CEO

              
	 	
                CASTion
                  Corporation

              
	 	
                10
                  New Bond Street

              
	 	
                Worcester,
                  MA 01606

              
	 	
                Fax:
                  (508) 854-1753

              
	 	 
	
                with
                  copies (which

              	 
	
                shall
                  not constitute

              	 
	
                notice)
                  to:

              	
                Donald
                  F. Farley, CEO

              
	 	
                Spencer
                  Trask Specialty Group, LLC

              
	 	
                535
                  Madison Avenue

              
	 	
                New
                  York, NY 10022

              
	 	
                Fax:
                  (508) 854-1753

              
	 	 
	 	
                E.
                  Matthew Gautieri, Controller

              
	 	
                Boston
                  Community Venture Fund

              
	 	
                56
                  Warren Street

              
	 	
                Boston,
                  MA 02119

              
	 	
                Fax:
                  (617) 427-9300

              
	 	 
	 	
                Robert
                  J. Crowley, President

              
	 	
                Massachusetts
                  Technology Development Corporation

              
	 	
                40
                  Broad Street

              
	 	
                Suite
                  818

              
	 	
                Boston,
                  MA 02109

              
	 	
                Fax:
                  (617) 723-5983

              
	 	 
	 	
                and

              
	 	 
	 	
                Carl
                  F. Barnes, Esq.

              
	 	
                Morse,
                  Barnes-Brown & Pendleton, P.C.

              
	 	
                1601
                  Trapelo Road

              
	 	
                Waltham,
                  Massachusetts 02451

              
	 	
                Fax:
                  (781) 622-5933

              
	 	 
	 	 
	
                If
                  to the Buyer:

              	
                Dennis
                  C. Cossey, CEO

              
	 	
                ThermoEnergy
                  Corporation

              
	 	
                124
                  West Capitol Avenue, Suite 880

              
	 	
                Little
                  Rock, Arkansas 72201

              
	 	
                Fax:
                  (501) 375-5249

              
	 	 
	
                with
                  copies (which

              	 
	
                shall
                  not constitute

              	 
	
                notice)
                  to:

              	
                Andrew
                  T. Melton, EVP and CFO

              
	 	
                ThermoEnergy
                  Corporation

              
	 	
                124
                  West Capitol Avenue, Suite 880

              
	 	
                Little
                  Rock, AR 72201

              
	 	
                Fax:
                  (501) 375-5249

              
	 	 
	 	
                and

              

      

       

      
        
          
          

        

        
          Page
            21
            of 26

          
            

          

        

        
          
          

        

      

       

      
        	 	
                William
                  E. Kelly, Esq.

              
	 	
                Nixon
                  Peabody LLP

              
	 	
                100
                  Summer Street

              
	 	
                Boston,
                  MA 02110

              
	 	 
	 	
                Fax:
                  (866) 743-4899

              

      

    

    

    or,
      in
      any case, to such other address as the addressee may, by notice pursuant to
      this
      Section 18, designate.

     

    19. Brokerage.
      No
      brokerage or finder’s fees or commissions are or will be payable by the any
      Party to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other person with respect to the transactions
      contemplated by this Agreement. The Sellers, on the one hand, and the Buyer,
      on
      the other hand, shall indemnify and hold each other harmless from and against
      any claims made by or on behalf of any persons for fees of a type contemplated
      in this Section 19 that may be due in connection with the transactions
      contemplated by this Agreement as a result of any commitment, understanding,
      agreement or arrangement made by it or them.

    

    20. Prior
      Agreements; Amendments and Waivers.
      This
      Agreement supersedes all prior Agreements, offers or communications with respect
      to the matters set forth herein. This Agreement may not be amended except by
      a
      written instrument signed by all Parties hereto. The enforcement of any
      provision of this Agreement may be waived only by a written instrument signed
      by
      the Party against which such waiver is to be effective; waiver of any provision
      in any single instance shall not operate as a waiver of such provision in any
      other instance. No delay in or failure to exercise any right granted herein
      shall impair any such right or shall act as a waiver of any subsequent breach
      by
      any Party.

    

    21. Successors.
      This
      Agreement shall be binding on the Parties hereto and their respective heirs,
      successors and assigns.

    

    22. Governing
      Law.
      This
      Agreement shall be governed exclusively by the provisions hereof and by the
      laws
      of the Commonwealth of Massachusetts as the same may from time to time
      exist.

    

    23. Headings.
      The
      paragraph headings throughout this instrument are for convenience and reference
      only, and the words contained herein shall in no way be held to explain, modify,
      amplify or aid in the interpretation, construction or meaning of the provisions
      of this Agreement.

    

    24. Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed and delivered by all Parties.
      In
      the event that any signature is delivered by facsimile transmission, such
      signature shall create a valid and binding obligation of the Party executing
      and
      transmitting such counterpart with the same force and effect as if such
      facsimile signature page were an original thereof notwithstanding any subsequent
      failure or refusal of such Party to deliver the original thereof.

     

    [The
      remainder of this page has intentionally been left blank.]

     

    
      
        
        

      

      
        Page
          22
          of 26

        
          

        

      

      
        
        

      

    

     

    In
      witness whereof, the Parties have executed this Agreement on the dates
      indicated.

    
      	 	 	 
	 	
              THERMOENERGY
                CORPORATION

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Andrew T. Melton
	 	
              

              Andrew
                T. Melton

              Executive
                Vice President and 

              Chief
                Financial Officer

            
	 	 

      	 	 	 
	 	
              
                CASTION
                  CORPORATION

              

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Jeffreey L. Powell
	 	
              

              Jeffrey
                L. Powell

              President
                and Chief Executive Officer

            
	 	 

      	 	 	 
	 	
              BANCBOSTON
                VENTURES,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	
              MASSACHUSETTS
                TECHNOLOGY 

              DEVELOPMENT
                CORPORATION

                Attorney-in-Fact 

              

            

      	 	 	 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 

      	 	 	 
	 	
              BCLF
                VENTURES
                I,
                LLC

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              E.
              Matthew Gautieri
              
	 	
              

              Name:
                E.
                Matthew Gautieri 

              Title:
                Controller

            

    

    
      	 	 	 
	 	
              ESSEX
                REGIONAL
                RETIREMENT
                BOARD

            
	 
 	 
 	 
 
	
            	By:  	
              MASSACHUSETTS
                TECHNOLOGY 

              DEVELOPMENT
                CORPORATION

              
                Attorney-in-Fact 

              

            

    

     

    
      
        
        

      

      
        Page
          23
          of 26

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 

    

    
      	 	 	 
	 	
              MASSACHUSETTS
                TECHNOLOGY
                DEVELOPMENT
                CORPORATION

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Robert
              J. Crowley
	 	
              
Name:
Robert
              J. Crowley
	 	Title:
              President
	 	 

    

    
      	 	 	 
	 	
              SPENCER
                TRASK
                SPECIALTY
                GROUP,
                LLC 

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Donald F. Farley
	 	
              
Name:
Donald
              F. Farley
	 	Title:
              CEO

    

     

    
      	 	 	 
	 	
              SPENCER
                TRASK
                PRIVATE
                EQUITY
                ACCREDITED

              FUND
                III, LLC 

            
	 
 	 
 	 
 
	
              Date:
                July
                2, 2007

            	By:  	/s/
              Donald F. Farley
	 	
              
Name:
Donald
              F. Farley
	 	Title:
              CEO

    

     

    
      
        
        

      

      
        Page
          24
          of 26

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    
      
        	
                Name
                  and Address of Seller

              	 	
                Class
                  and Number of Shares

              	 	
                Principal
                  Amount of (and interest on) Notes

              	 	
                Cash
                  Payment

              	 	
                Number
                  of ThermoEnergy Shares

              	 	
                Number
                  of Warrants

              	 	
                Principal
                  Amount of Convertible Notes

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                BancBoston
                  Ventures Inc.

              	 	 	
                C-2:
                  3,093.52

              	 	
                $

              	
                0.00

              	 	
                $

              	
                0.00

              	 	 	
                34,450

              	 	 	
                35,969

              	 	
                $

              	
                29,010.17

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                BCLF
                  Ventures I, LLC

              	 	 	
                C-1:
                  33,654.00

                 

                
                

                C-2:
                  21,623.81

              	 	
                $

              	
                715,486

              	 	
                $

              	
                620,683.49

              	 	 	
                723,273

              	 	 	
                619,898

              	 	
                $

              	
                479,808.35

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Essex
                  Regional Retirement Board

                 

              	 	 	
                C-2:
                  1546.81

              	 	
                $

              	
                0.00

              	 	
                $

              	
                0.00

              	 	 	
                17,225

              	 	 	
                17,985

              	 	
                $

              	
                14,505.56

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Massachusetts
                  Technology Development Corporation

              	 	 	
                C-1:
                  56,090.00

                
                

                 

                C-2:
                  45,475.21

              	 	
                $

              	
                703,140

              	 	
                $

              	
                603,480.42

              	 	 	
                1,183,523

              	 	 	
                1,091,034

              	 	
                $

              	
                879,961.77

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Spencer
                  Trask Specialty Group, LLC

              	 	 	
                C-2:
                  115,207.49

                
                

                 

                C-3:
                  125,000

                
                

                 

                C-4:
                  116,808.00

              	 	 	
                484,248

              	 	
                $

              	
                415,613.09

              	 	 	
                2,410,867

              	 	 	
                2,417,539

              	 	
                $

              	
                1,949,840.7

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Spencer
                  Trask Private Equity Accredited Fund III, LLC

              	 	 	
                N/A

              	 	 	
                210,223

              	 	
                $

              	
                210,223.00

              	 	 	
                25,000

              	 	 	
                50,000

              	 	
                $

              	
                0.00

              	 

      

    

    

    
      
        
        

      

      
        Page
          25
          of 26

        
          

        

      

      
        
        

      

    

     

    Addresses
      of Sellers

     

    BancBoston
      Ventures Inc.

    c/o
      Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983

    

    BCLF
      Ventures I, LLC

    c/o
      Boston Community Venture Fund

    56
      Warren
      Street

    Boston,
      MA 02119

    Attn:
      E.
      Matthew Gautieri, Controller

    Fax:
      (617) 427-9300

    

    Essex
      Regional Retirement Board

    c/o
      Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983

    

    Massachusetts
      Technology Development Corporation

    40
      Broad
      Street

    Suite
      818

    Boston,
      MA 02109

    Attn:
      Robert J. Crowley, President

    Fax:
      (617) 723-5983

    

    Spencer
      Trask Specialty Group, LLC

    535
      Madison Avenue

    New
      York,
      NY 10022

    Attn:
      Donald F. Farley, CEO

    Fax: (508)
      854-1753

    

    Spencer
      Trask Private Equity Accredited Fund III, LLC

    c/o
      Spencer Trask Specialty Group, LLC

    535
      Madison Avenue

    New
      York,
      NY 10022

    Attn:
      Donald F. Farley, CEO

    Fax: (508)
      854-1753

     

    
      
        
        

      

      
        Page
          26
          of 26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]