PROMISSORY NOTE

FOR VALUE RECEIVED, ThermoEnergy Corporation, a Delaware corporation (the “Borrower”), hereby promise to pay to the order of Focus Fund L.P. (the “Holder”), the sum of One Hundred Ten Thousand Dollars ($110,000.00), together with interest on the outstanding principal amount hereof at the rate of  fifteen percent (15%) per annum.  Interest shall be computed on the basis of a 365-day year, using the number of days actually elapsed.  A portion of the principal amount, in the amount of Fifty-Five Thousand Dollars ($55,000.00), together with all interest then accrued and unpaid under this Note, shall be due and payable on September 4, 2009. The entire unpaid principal amount, together with all interest then accrued and unpaid under this Note, shall be due and payable on September 28, 2009 (the “Maturity Date”).

This Note may be prepaid, in whole or in part, without premium or penalty, at the election of the Borrower.  Partial prepayments, if any, shall be applied first to accrued and unpaid interest, and the balance to principal.

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

(i)            The Borrower’s failure to make any payment of principal or interest or any other sums when due under this Note; or

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

(iii)            If an order, judgment or decree shall be entered, or a case shall be commenced, against the Borrower, without its application, approval or consent by any court of competent jurisdiction, approving a petition or permitting the commencement of a case seeking reorganization or liquidation of the Borrower or appointing a receiver, trustee or liquidator of the Borrower, or of all or a substantial part of the assets of the Borrower, and the Borrower, by any act, indicate its approval thereof, consent thereto, or acquiescence therein, or such order, judgment, decree or case shall continue unstayed and in effect for any period of ninety (90) consecutive days or an order for relief in connection therewith shall be entered; or

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

As additional consideration for the making of this loan, the Borrower hereby covenants and agrees that, whether or not any portion of this note then remains outstanding, the Borrower will, upon the initial closing of an equity or convertible debt investment (a “Financing”) in the Borrower yielding gross proceeds to the Borrower of not less than Two Million Dollars ($2,000,000.00), the Borrower will issue to the Holder a warrant (the “Warrant”) entitling the Holder to purchase, at any time on or before the fifth anniversary of the date of the initial closing of the Financing, such number of the securities to be issued in the Financing (the “Financing Securities”) as shall be determined by dividing (i) One Hundred Ten Thousand Dollars ($110,000.00) by (ii) the price per share at which such