TEPS LICENSE AGREEMENT

This is a License Agreement dated as of February 25, 2009 (the “ Agreement ”), by and among Babcock-Thermo Carbon Capture LLC, a Delaware limited liability company (the “ Company ”), Thermo Energy Power Systems LLC, a Delaware limited liability company (“ TEPS ”), and, as to Sections 4.2, 7.1, 13.4, and Articles 11-13 only, Babcock Power Development LLC, a Delaware limited liability company (“ Babcock ”).

WHEREAS, TEPS and Babcock have formed the Company pursuant to that certain Limited Liability Company Agreement dated as of February 25, 2009 (the “ LLC Agreement ”).

WHEREAS, in the LLC Agreement TEPS and Babcock agreed that TEPS and the Company would enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TEPS and the Company agree as follows:

In addition to the defined terms found elsewhere in this Agreement, as used in this Agreement the following terms shall have the following meanings:

“Affiliate” means, with respect to any referenced Person (i) such Person or member of his immediate family; and (ii) any Person directly or indirectly Controlling, Controlled by, or under direct common Control with the Person in question.

“Babcock License Agreement” has the meaning set forth in the LLC Agreement.

“Bankruptcy” means, with respect to any Person, (i) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code, or corresponding provisions of future laws (or any other federal or state insolvency law), (ii) the filing by such Person of an answer consenting to or acquiescing in any such petition, (iii) the making by such Person of any assignment for the benefit of its creditors or the admission by such Person in writing of its inability to pay its debts as they mature, (iv) the filing of an involuntary petition against such Person under Title 11 of the United States Code (or corresponding provisions of future laws), an application for the appointment of a receiver for the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal or state insolvency law, provided that the same shall not have been vacated, set aside or stayed within a 60-day period after the occurrence of such event, or (v) the entry against such Person of a final non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect.

“Board of Managers” means the Board of Managers formed pursuant to the LLC Agreement to govern the Company.

“Company” has the meaning set forth in the preamble.

“Controls”, “Controlled” and “Controlling”, means, as applied to a referenced Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through ownership of voting securities, by contract or otherwise.

“Dispute Resolution Agreement” has the meaning set forth in the LLC Agreement.

“Existing Patents” means the patents listed on Annex A to this Agreement, as well as any reissues, divisions, continuations, continuations-in-part, and extensions thereof, and any foreign counterparts to any of the foregoing.

“Existing Patent Applications” means the patent applications listed on Annex B to this Agreement, any patent applications to which the patent applications listed on Annex B claim priority, and any patent applications that claim priority to the patent applications listed on Annex B , and any foreign counterparts to any of the foregoing.

“Existing Trademarks” means the Trademarks listed on Annex C to this Agreement.

“Improvements” means any improvements, developments, updates, upgrades, enhancements, additions, revisions, corrections, fixes and other modifications to the TEPS Licensed Property that TEPS, the Company or Babcock may acquire, discover, invent, originate, conceive or have a right to develop or manufacture, whether or not the same is patentable, commercially useful or reducible to writing or practice.

“Infringements” has the meaning set forth in Section 7.1.

“Intellectual Property” means all patents, inventions, patent applications, patent rights, trademarks, trademark registrations, trade names, brand names, all other names and slogans embodying business or product goodwill (or both), copyright registrations, copyrights (including those in computer programs, software, including all source code and object code, development documentation, programming tools, drawings, specifications and data), software, trade secrets, know-how, mask works, industrial designs, formulae, processes and technical information, including confidential and proprietary information, whether or not subject to statutory registration or protection.

“Licensed Copyrights” means any and all copyright protection of TEPS covering any of the Licensed Software Programs, the Licensed Know-How or any Improvements thereto.

“Licensed Know-How” means any information possessed by TEPS or, subject to Section 2.2, licensed to TEPS, reasonably related to or necessary to practice the TIPS, whether or not considered proprietary and whether or not subject to statutory registration or protection, including, without limitation, inventions disclosed in the Existing Patent Applications, invention records, research records and reports, development reports, experimental and other engineering reports, pilot plant designs, production plant designs, production specifications, raw material specifications, quality control reports and specifications, drawings and photographs, models, tools and parts, manufacturing and production techniques, processes, methods and marketing surveys.  If any information or material qualifies for purposes of this Agreement both as Licensed Know-How and as any of the Licensed Patents, Licensed Copyrights, Licensed Software Programs or Licensed Trademarks, such information or material shall not be treated as Licensed Know-How for purposes of this Agreement but shall be treated, as applicable, as part of the Licensed Patents, Licensed Copyrights, Licensed Software Programs or Licensed Trademarks.

“Licensed Patent Applications” means the Existing Patent Applications and any U.S. or foreign patent applications filed or acquired by or, subject to Section 2.2, licensed to TEPS during the term of this Agreement, to the extent such patent applications relate to TIPS.

“Licensed Patents” means the Existing Patents and any U.S. or foreign patents granted to, acquired by, or, subject to Section 2.2, licensed to TEPS during the term of this Agreement, to the extent such patents relate to TIPS.

“Licensed Software Programs” means any computer programs the copyrights to which are owned by or, subject to Section 2.2, licensed to TEPS during the term of this Agreement, to the extent such programs relate to TIPS.

“Licensed Trademarks” means the Existing Trademarks and any Trademarks developed or acquired by or, subject to Section 2.2, licensed to TEPS during the term of this Agreement, to the extent such Trademarks relate to TIPS and do not relate to TEPS’ corporate identity.

“LLC Agreement” has the meaning set forth in the preamble.

“Master Non-Disclosure Agreement” has the meaning set forth in Section 4.2.

“Person” means any individual, partnership, corporation, association, trust, limited liability company, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof.

“Related Agreements” means this Agreement, the LLC Agreement, the Babcock License Agreement, the Master Non-Disclosure Agreement, and the Dispute Resolution Agreement, and any other agreement between or among any of TEPS and its Affiliates, Babcock and its Affiliates or the Company relating to the Company which specifies that it is a Related Agreement for purposes of this Agreement.

“Related Technology” has the meaning set forth in Section 5.1.

“Subsidiary” means a corporation, company or other entity:

“TEPS” has the meaning set forth in the preamble.

“TEPS Infringement Claim” has the meaning set forth in Section 7.3.

“TEPS Licensed Property” means the Licensed Patents, the Licensed Patent Applications, the Licensed Trademarks, the Licensed Software Programs, the Licensed Copyrights and the Licensed Know-How.

“TIPS” means the clean energy technology known as the ThermoEnergy Integrated Power System, including the TIPS Process and as covered by or described in the TEPS Licensed Property.

“TIPS Process” means any pressurized oxy fuel combustion process.

“TIPS Product” means any component or other product designed or manufactured to practice any of the TEPS Licensed Property.

“TIPS Plant” means any power generation plant designed or manufactured using any of the TEPS Licensed Property.

“Trademarks” shall mean:

2.1.          Grant of License .  Subject to the terms and conditions of this Agreement, TEPS hereby grants to the Company an exclusive (even as to TEPS), irrevocable (except as otherwise provided in this Agreement), world-wide, fully paid up and royalty-free license to the TEPS Licensed Property to make, have made, use, sell, have sold, import and have imported TIPS Products, including the right to sublicense in accordance with Article 6.

2.2.          Third Party Limitations on License Grants .  The licenses granted by TEPS pursuant to Section 2.1 above, insofar as they relate to technology, property or rights that are developed or acquired with or from any third party in the future, may become subject to any applicable restrictions and consents relating to such technology, property or rights under any license or similar agreement to which TEPS may in the future become a party.  In the event that any such license or other agreement imposes restrictions that may apply to the transactions contemplated by this Agreement, TEPS will make reasonable efforts to obtain license rights as contemplated by this Agreement for the Company.  If TEPS is unable to so obtain such rights, it will cooperate to make available to the Company such rights as the third party is willing to grant to or for the Company.  As part of the foregoing, TEPS shall use reasonable efforts to assure that the Company enjoys license or other rights no less favorable with respect to the applicable Intellectual Property acquired from such third parties than other licensees of TEPS generally.

3.1.          Access to Technology .

4.1.          Title to TEPS Licensed Property .  Title to all TEPS Licensed Property shall at all times remain and vest solely with TEPS.  The Company agrees that it will not claim or assert any right, title or interest in or to any such TEPS Licensed Property or, except for sublicensing effected in accordance with Article 6, attempt to transfer any right, title or interest in or to any TEPS Licensed Property to any third parties, or challenge the validity of or assert the invalidity of any Licensed Copyrights or Licensed Trademarks.  Nothing in this Section 4.1 shall affect the rights of TEPS or the Company to assert a claim under this Agreement for any breach by any other party of any representation or warranty in this Agreement.

4.2.          Confidentiality Obligations of TEPS, Babcock and the Company .  Pursuant to the LLC Agreement, TEPS, Babcock, the Company, Babcock Power Inc. and ThermoEnergy Corporation will enter into a Master Non-Disclosure Agreement in the form of Exhibit 5 to the LLC Agreement (the “ Master Non-Disclosure Agreement ”).  All information exchanged between the parties pursuant to this Agreement shall be subject to the terms of the Master Non-Disclosure Agreement.

4.3.          Disclosure to Government Authorities .  The Board of Managers shall promptly establish and implem