0001144204-13-020407.txt : 201304050001144204-13-020407.hdr.sgml : 2013040520130405164433ACCESSION NUMBER:0001144204-13-020407CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:21CONFORMED PERIOD OF REPORT:20130405ITEM INFORMATION:Termination of a Material Definitive AgreementITEM INFORMATION:Unregistered Sales of Equity SecuritiesITEM INFORMATION:Amendments to Articles of Incorporation or Bylaws; Change in Fiscal YearITEM INFORMATION:Financial Statements and ExhibitsFILED AS OF DATE:20130405DATE AS OF CHANGE:20130405

FILER:

COMPANY DATA:COMPANY CONFORMED NAME:THERMOENERGY CORPCENTRAL INDEX KEY:0000884504STANDARD INDUSTRIAL CLASSIFICATION:HAZARDOUS WASTE MANAGEMENT [4955]IRS NUMBER:710699511STATE OF INCORPORATION:DEFISCAL YEAR END:1231

FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:033-46104-FWFILM NUMBER:13746455

BUSINESS ADDRESS:STREET 1:10 NEW BOND STREETCITY:WORCHESTERSTATE:MAZIP:01606BUSINESS PHONE:(508) 854-1628

MAIL ADDRESS:STREET 1:10 NEW BOND STREETCITY:WORCHESTERSTATE:MAZIP:01606

FORMER COMPANY:FORMER CONFORMED NAME:INNOTEK CORPORATIONDATE OF NAME CHANGE:19930328

8-K1v340656_8-k.htmFORM 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,DC 20549

FORM 8-K

CURRENTREPORT Pursuant

toSection 13 or 15(d) of the

SecuritiesExchange Act of 1934

Date of Report (Date of earliest eventreported): April 5, 2013

ThermoEnergyCorporation

(Exact name of registrant as specified inits charter)

Delaware

(State or other jurisdiction of incorporation)

33-46104-FW 71-0659511

(Commission File Number) (IRS Employer Identification No.)

10 New Bond Street, Worcester, Massachusetts 01606

(Address of principal executive offices) (Zip Code)

(508)854-1628

(Registrants telephone number, includingarea code)

Check the appropriatebox below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of thefollowing provisions (see General Instruction A.2. below):

oWrittencommunications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSolicitingmaterial pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.02 -- Termination of a Material Definitive Agreement.

Effective April 5, 2013,the Voting Agreement (the Voting Agreement) dated as of November 19, 2009 among us and certain holders of sharesof our Series B Convertible Preferred Stock (namely, The Quercus Trust; Focus Fund L.P.; Empire Capital Partners, LP; Empire CapitalPartners, Ltd; Empire Capital Partners Enhanced Master Fund, Ltd; Scott A. Fine and Peter J. Richards (both of whom are affiliatesof Empire Capital Partners); and Robert S. Trump) (the Series B Investors) was terminated. The Voting Agreement,which had been entered into by the Series B Investors in connection with their initial purchase of shares of our Series B ConvertiblePreferred Stock, was filed as Exhibit 10.3 to our Current Report on Form 8-K filed on November 24, 2009. Pursuant to the VotingAgreement, the Series B Investors had been obligated to vote all of their shares of our Series B Convertible Preferred Stock (which,as a class, was at the time entitled to elect four members of our Board of Directors) for the election to our Board of Directorsof three persons designated by The Quercus Trust and one person designated by Robert S. Trump.

Item 3.02 Unregistered Sales of Equity Securities.

Issuance of Series C Convertible Preferred Stock in Satisfactionof Bridge Loans

On April 5, 2013, following filing of the Certificate of Amendmentreported in Item 5.03 below, we issued and sold to the Investors identified below, in satisfaction of our obligation to repay anaggregate of $4,950,000.00 principal amount of, and an aggregate of $314,177.40 of accrued interest on, bridge loans from suchInvestors in the amounts set forth opposite their names below, an aggregate of 6,926,553 shares of our Series C Convertible PreferredStock (the Shares) and Warrants for the purchase of the an aggregate of 69,265,530 shares of our Common Stock, asset forth opposite the names of such Investors:

Investor

Loan Amount

(Principal and Interest)

Number of Shares Number of Warrant Shares

Robert S. Trump $2,418,195.20 3,181,837 31,818,370

Empire Capital Partners, L.P. $812,489.90 1,069,066 10,690,660

Empire Capital Partners, Ltd $665,886.99 876,168 8,761,680

Empire Capital Partners Enhanced Master Fund, Ltd $647,780.65 852,344 8,523,440

Focus Fund L.P. $462,920.55 609,106 6,091,060

The Quercus Trust $256,904.11 338,032 3,380,320

The effective issuance price of the Shares was $0.76per share (or $0.076 per Common Share-equivalent), a premium of $0.0356or 88.12% over the closing price for our Common Stock in the over-the-counter market on April 4, 2013 (the trading day immediatelyprior to the date on which the Shares were issued).

The Warrants entitle the holders thereof to purchase, at anytime on or before April 5, 2018 , shares of our Common Stock at a purchase price of $0.114 per share (subject to adjustment forcertain extraordinary corporate events as set forth in the Warrants, the Exercise Price). The Exercise Price representsa premium of $0.0736 or 182.18% over the closing price for our Common Stock in the over-the-counter market on April 4, 2013 (thetrading day immediately prior to the date on which the Warrants were issued).

The Warrants contains other conventional terms, including provisionsfor adjustment in the Exercise Price and/or the securities issuable upon exercise in the event of certain specified extraordinarycorporate events, such as stock splits, combinations, and stock dividends.

The form of Warrant isfiled as Exhibit 4.1 to this Current Report on Form 8-K, and the foregoing description of the Warrants is qualified in its entiretyby reference to such Exhibit.

When the Investors made the bridge loans, each of themrepresented that he or it was an accredited investor (as such term is defined in Rule 501 of Regulation D) and thathe or it was acquiring his or its bridge note and, upon satisfaction of the conditions precedent for the conversion of the bridgeloans into equity, would acquire his or its Shares and Warrant and the shares of Common Stock issuable upon exercise of his orits Warrant for investment for his or its own account and not with a plan or present intention to distribute such shares.

The Shares and Warrants were issued to the Investorsin transactions not involving a public offering and without registration under the Securities Act in reliance on the exemptionfrom registration provided by Section 4(2) of such Act. We are using the proceeds from the sale of the Shares and Warrants forgeneral working capital purposes.

Exchange of Series B Shares for Series C Shares

As additional consideration to the Investors for their participationin the bridge loans and their acceptance of the Shares and Warrants in satisfaction of our repayment obligations thereunder, onApril 5, 2013, for each $100 of principal and interest converted into Shares and Warrants, each Investor exchanged 41.67 sharesof our Series B Convertible Preferred Stock held by him or it (the number of shares of Series B Convertible Preferred Stock havinga basis of $100) for 131.58 additional shares of Series C Convertible Preferred Stock (the number of shares of Series C ConvertiblePreferred Stock that would be purchased for $100 at a purchase price of $0.76 per share). Accordingly, on April 5, 2013, we issuedto the Investors an aggregate of 6,926,553 additional shares of Series C Convertible Preferred Stock in exchange for an aggregateof 2,193,414 previously-outstanding shares of Series B Convertible Preferred Stock, as set forth opposite the Investorsnames below:

Investor Series C Shares Issued Series B Shares Exchanged

Robert S. Trump 3,181,837 1,007,583

Empire Capital Partners, L.P. 1,069,066 338,539

Empire Capital Partners, Ltd 876,168 277,454

Empire Capital Partners Enhanced Master Fund, Ltd 852,344 269,910

Focus Fund L.P. 609,106 192,884

The Quercus Trust 338,032 107,044

The additional shares of Series C Convertible PreferredStock were issued to the Investors without Warrant coverage. The shares of Series B Convertible Preferred Stock surrendered tous by the Investors in exchange for the newly-issued shares of Series C Convertible Preferred Stock have been cancelled and areno longer outstanding.

Anti-Dilutive Issuance to PIPE Investors

Because the effective issuance price of the Shares wasless than $0.10 per Common Share-equivalent, we were obligated pursuant to the several Securities Purchase Agreements with theindividuals and entities (the PIPE Investors) who purchased shares of our Common Stock and Common Stock PurchaseWarrants at closings on July 11, 2012, August 9, 2012 and October 9, 2012 (as reported in our Current Reports on Form 8-K, filedon July 17, 2012 and August 15, 2012, and in Part II, Item 2 of our Quarterly Report on Form 10-Q for the Quarter ended September30, 2012, filed on November 14, 2012), (the PIPE), to issue to the PIPE Investors, for no additional consideration,a sufficient number of additional shares of our Common Stock so that the effective price per share of Common Stock paid by thePIPE Investors equals the effective issuance price of the Shares ($0.076). Accordingly, on April 5, 2013, we issued to the PIPEInvestors, as additional consideration for the purchase price paid by the PIPE Investors in the PIPE, an aggregate of 9,274,364shares of our Common Stock.

Exchange of Series B Shares for Series B-1 Shares

In 2011, as an inducement to holders of Common Stock PurchaseWarrants to exercise such warrants or to surrender such warrants in exchange for shares of our Common Stock, we agreed with suchholders, subject to shareholder approval of an amendment to our Certificate of Incorporation, to allow such holders to exchangetheir shares of Series B Convertible Preferred Stock for an equal number of shares of Series B-1 Convertible Preferred Stock andthereby to obtain priority in liquidation over the holders of Series B Convertible Preferred Stock who elected not to exerciseor surrender their warrants. All of the warrant holders to whom we extended this offer are accredited investors who had acquiredtheir warrants in private placements in connection with their purchase of shares of Series B Convertible Preferred Stock and throughtheir exercise and surrender of warrants we raised an aggregate of $7,676,900 in cash to fund operations. On April 5, 2013, weissued an aggregate of 6,031,577 shares of our Common Stock as consideration for the surrender of warrants for the purchase ofan aggregate of 39,205,234 shares.

As reported in Item 5.03 below, the requisite amendment to ourCertificate of Incorporation was approved by our shareholders on March 20, 2013 and the Certificate of Amendment effecting suchamendment was filed with the Secretary of State of the State of Delaware on April 5, 2013. Accordingly, on April 5, 2013, to satisfyour commitment to exchange shares of Series B-1 Convertible Preferred Stock for shares of Series B Convertible Preferred Stock,we issued an aggregate of 8,839,500 shares of Series B-1 Convertible Preferred Stock, following which issuance, 551,725 sharesof Series B Convertible Preferred Stock will remain issued and outstanding.

Item 5.03 -- Amendments to Articles of Incorporation or Bylaws;Change in Fiscal Year.

On April 5, 2013, we filed with the Secretary of State of theState of Delaware a Certificate of Amendment to our Certificate of Incorporation. The Certificate of Amendment, which was approvedby our shareholders at the Special Meeting in lieu of the 2012 Annual Meeting on March 20, 2013, effects three changes to our Certificateof Incorporation:

First, the amendmentincreases the number of authorized shares of Common Stock to 800,000,000 and increases the number of authorized shares of PreferredStock to 50,000,000. The additional authorized shares of Common Stock are a part of the existing class of Common Stock and, ifand when issued, would have the same rights and privileges as the shares of Common Stock now issued and outstanding. The additionalauthorized shares of Preferred Stock are undesignated, to be issued, from time to time in one or more series, with such votingpowers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or otherspecial rights, and such qualifications, limitations or restrictions thereof, as shall be determined by our Board of Directors.

Second, the amendmentreduces the number of shares designated as Series B Convertible Preferred Stock from 12,000,000 to 1,000,000 andre-designates the remaining 11,000,000 shares heretofore designated as Series B Convertible Preferred Stock as SeriesB-1 Convertible Preferred Stock, with the shares in each sub-series having identical voting powers, designations, preferencesand relative, participating, optional or other special rights, and qualifications, limitations and restrictions except that theshares of Series B-1 Convertible Preferred Stock shall have priority in liquidation. In addition to bifurcating Series B ConvertiblePreferred Stock into two sub-series, the amendment reduces from $0.24 to $0.10 the price per share at which the issuance or deemedissuance of shares of Common Stock would trigger anti-dilution adjustment to the conversion price of the Series B Convertible PreferredStock and the Series B-1 Convertible Preferred Stock.

Third, the amendmentdesignates 15,000,000 shares of the previously authorized but undesignated shares of Preferred Stock as Series C ConvertiblePreferred Stock, with the voting powers, designations, preferences and relative, participating, optional or other specialrights, and qualifications, limitations and restrictions set forth in the Description of the Series C Convertible Preferred Stockattached to the Certificate of Amendment and summarized below.

Bifurcation of Series B Convertible Preferred Stock

The amendment to our Certificate of Incorporation splits thepreviously-authorized Series B Convertible Preferred Stock into two sub-series, designated Series B Convertible PreferredStock and Series B-1 Convertible Preferred Stock respectively. Of the 12,000,000 authorized shares of SeriesB Convertible Preferred Stock, 11,000,000 shares have been re-designated as Series B-1 Convertible Preferred Stockand the balance of 1,000,000 shares will remain as Series B Convertible Preferred Stock.

Shares of Series B-1 Convertible Preferred Stock and sharesof Series B Convertible Preferred Stock are identical in every respect, having the rights, privileges and relative preferencesdescribed above, except that, in the event of any voluntary or involuntary liquidation, dissolution or winding-up of ourcorporation, after satisfaction of the claims of creditors and payment or distribution of assets is made on any senior securities,the holders of the Series B-1 Convertible Preferred Stock shall receive a liquidation preference equal to the Stated Value of theirshares ($2.40 per share) plus all declared and unpaid dividends with respect thereto prior to any distribution to the holders ofshares of Series B Convertible Preferred Stock.

Our principal reason for proposing the bifurcation of the SeriesB Convertible Preferred Stock is that in 2011, as an inducement to holders of Common Stock Purchase Warrants to exercise such warrantsor to surrender such warrants in exchange for shares of our Common Stock, we agreed with such holders, subject to shareholder approvalof the proposed amendment to our Certificate of Incorporation, to allow such holders to exchange their shares of Series B ConvertiblePreferred Stock for an equal number of shares of Series B-1 Convertible Preferred Stock and thereby to obtain priority in liquidationover the holders of Series B Convertible Preferred Stock who elected not to exercise or surrender their warrants. All of the warrantholders to whom we extended this offer are accredited investors who had acquired their warrants in private placements in connectionwith their purchase of shares of Series B Convertible Preferred Stock and through their exercise and surrender of warrants we raisedan aggregate of $7,676,900 in cash to fund operations. As reported in Item 3.02 above, to satisfy our commitment to exchange sharesof Series B-1 Convertible Preferred Stock for shares of Series B Convertible Preferred Stock, on April 5, 2013 we issued an aggregateof 8,839,500 shares of Series B-1 Convertible Preferred Stock in exchange for shares of Series B Convertible Preferred Stock, followingwhich issuance, 551,725 shares of Series B Convertible Preferred Stock remain issued and outstanding.

Series C Convertible Preferred Stock

The amendment also establishes a new series of Preferred Stockdesignated as Series C Convertible Preferred Stock.

In liquidation, the Series C Convertible Preferred Stock willrank junior to the Series A Convertible Preferred Stock and senior to all other classes and series of capital stock, includingthe Series B Convertible Preferred Stock, the Series B-1 Convertible Preferred Stock and the Common Stock. The holders of SeriesC Convertible Preferred Stock will be entitled to a liquidation preference of $1.52 per share, plus all accrued and unpaid dividendsthereon.

The Series C Convertible Preferred Stock will be convertibleinto shares of Common Stock at an initial rate of 10-for-1, subject to conventional weighted-average anti-dilution adjustment inthe event we issue or are deemed to issue shares of Common Stock at a price less than $0.076 per share. The Series C ConvertiblePreferred Stock will be redeemable, at a price equal to $0.76 per share, plus all accrued and unpaid dividends thereon, at theelection of the holders of 66-% of the then-outstanding shares, in three equal annual installments on or after December31, 2017.

The holders of the Series C Convertible Preferred Stock willvote together with the holders of the Series B Convertible Preferred Stock and the Series B-1 Convertible Preferred Stock, as asingle class, to elect four of the seven members of our Board of Directors. On all other matters brought to the shareholders fora vote, except for matters affecting only the rights of the holders of the Series C Convertible Preferred Stock, or as otherwiserequired under the Delaware General Corporation Law, the holders of the Series C Convertible Preferred Stock will vote togetherwith the holders of the Series B Convertible Preferred Stock, the Series B-1 Convertible Preferred Stock, and the Common Stock,as a single class (with each share having the number of votes equal to the number of shares of Common Stock into which it is thenconvertible).

As reported in Item 3.02 above, to satisfy our obligation torepay an aggregate of $5,264,177.40 in principal and accrued interest on certain Bridge Loans, on April 5, 2013 we issued an aggregateof 6,926,553 shares of Series C Convertible Preferred Stock.

To raise cash to fund on-going operations, we may offer andsell additional shares of Series C Convertible Preferred Stock to a limited number of other accredited investors in a private placementexempt from the registration requirements of the Securities Act of 1933, although we have not entered into any agreements withany investors and do not know whether we will be successful in our efforts to offer and sell such additional shares.

TheCertificate of Amendment setting forth the amendment to our Certificate of Incorporation reported in this Current Report onForm 8-K is filed as Exhibit 3(i) hereto. The foregoing description of the amendment to our Certificate of Incorporation isqualified in its entirety by reference to such Exhibit.

Item 9.01

Financial Statements and Exhibits

(c) Exhibits

Exhibit
No. Description

3(i) Certificate of Amendment to the Certificate of Incorporation of ThermoEnergy Corporation, as filed with the Secretary of State of the State of Delaware on April 5, 2013

4.1 Form of Common Stock Purchase Warrant issued to Investors purchasing shares of Series C Convertible Preferred Stock

SIGNATURES

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 5, 2013

THERMOENERGY CORPORATION

(Registrant)

By: /s/ Gregory M. Landegger

Name: Gregory M. Landegger

Title: Chief Operating Officer and Interim Chief Financial Officer

EX-3.I2v340656_ex3i.htmEXHIBIT 3(I)

v340656_ex99-3i -- Converted by SECPublisher 2.1.1.8, created by BCL Technologies Inc., for SEC Filing

EX-4.13v340656_ex4-1.htmEXHIBIT 4.1

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

Warrant No. W13-__

COMMON STOCK PURCHASE WARRANT

To Purchase Common Stock of

ThermoEnergyCorporation

ThisIs To Certify That _________________________, or its registered assigns, is entitled, at any time from the ClosingDate (as hereinafter defined) to the Expiration Date (as hereinafter defined), to purchase, in whole or in part, from ThermoEnergyCorporation, a Delaware corporation (the Company), at a purchase price of $0.114 per share (subject to adjustmentas hereinafter provided, the Exercise Price) up to ____________ shares (subject to adjustmentas hereinafter provided) of Common Stock (as hereinafter defined), all on the terms and conditions and pursuant to the provisionshereinafter set forth.

1.DEFINITIONS

Anyterms used but not defined herein shall have the meaning ascribed to them in the Purchase Agreements. As used in thisCommon Stock Purchase Warrant (this Warrant), the following terms shall have the respective meanings set forthbelow:

BusinessDay shall mean any day that is not a Saturday or Sunday or a day on which banks in New York City, New York are requiredor permitted to be closed in the City of New York.

ClosingDate shall mean April 5, 2013.

Commissionshall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federalsecurities laws.

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

ConvertibleSecurities 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 uponthe occurrence of a specified date or a specified event.

ExercisePeriod shall mean the period during which this Warrant is exercisable pursuant to Section 2.1.

ExpirationDate shall mean the fifth anniversary of the Closing Date.

FundamentalCorporate Change shall have the meaning set forth in Section 4.4.

Holdershall mean the Person in whose name the Warrant is registered on the books of the Company maintained for such purpose.

Market Priceshall mean, on any date of determination, (i) the closing price of a share of Common Stock on such day as reported on the principalTrading Market on which the Common Stock is listed or traded, or (ii) if the Common Stock is not listed on a Trading Market, theclosing 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 closingbid 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 Propertyshall have the meaning set forth in Section 4.4.

Personshall 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).

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

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

Trading Marketmeans whichever of the New York Stock Exchange, the American Stock Exchange, the Nasdaq Stock Market, the Nasdaq Bulletin Boardor such other market on which the Common Stock is listed or quoted for trading on the date in question.

Transfershall mean any disposition of any Warrant or Warrant Shares or of any interest in either thereof, which would constitute a salethereof within the meaning of the Securities Act.

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

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Warrantsshall mean (i) this Warrant. (ii) the several warrants issued as part of the series of which the Warrant is one, and (iii) allwarrants issued upon transfer, division or combination of, or in substitution for, any thereof. All Warrants shall at all timesbe 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

2.1Manner of Exercise

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

In order to exercisethis Warrant, in whole or in part, the Holder shall surrender this Warrant to the Company at 10 New Bond Street, Worcester, Massachusetts01606, or at the office or agency designated by the Company pursuant to Section 12, together with a written notice of the Holderselection to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, and shall beaccompanied by payment of the Exercise Price in cash or wire transfer or cashiers check drawn on a United States bank; provided,however, that if, on the date of such notice, all of the Warrant Sharesare not eligible for resale to the public pursuant to a Registration Statement filed with the Commission and declared effectivepursuant to the Securities Act, then at the option of the Holder the Exercise Price may be paid by written direction to the Companyto cancel a portion of this Warrant sufficient to satisfy the cashless exercise provisions of this Section 2.1.Such notice shall be substantially in the form of the subscription form appearing at the end of this Warrant as Exhibit A, dulyexecuted by the Holder or its agent or attorney. Upon receipt of the items referred to above, the Company shall, as promptly aspracticable, and in any event within three Business Days thereafter, execute or cause to be executed and deliver or cause to bedelivered to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuableupon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificatesso delivered shall be, to the extent possible, in such denomination or denominations as the Holder shall request in the noticeand 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, andthe Holder or any other Person so designated to be named therein shall be deemed to have become the holder of record of such sharesfor all purposes, as of the date the notice, together with the cash or check or wire transfer of funds (ordirection to cancel a portion of this Warrant pursuant to the cashless exercise provisions) and this Warrantis received by the Company as described above and all taxes required to be paid by the Holder, if any, pursuant to Section 2.2prior to the issuance of such shares have been paid. If this Warrant shall have been exercised in part, the Company shall, at thetime of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencingthe rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shallin all other respects be identical with this Warrant, or, at the request of the Holder, appropriate notation may be made on thisWarrant and the same returned to the Holder. Notwithstanding any provision herein to the contrary, the Company shall not be requiredto register shares in the name of any Person who acquired this Warrant (or part hereof) or any Warrant Shares otherwise than inaccordance with this Warrant.

In lieu of paymentof the Exercise Price in cash, the Holder may direct the Company to cancel a portion of this Warrant having a value equal to theExercise Price for the number of Warrant Shares as to which the Holder exercises this Warrant, determined by multiplying the numberof Warrant Shares as to which this Warrant is directed to be cancelled by an amount equal to the difference between (i) the MarketPrice on the date of exercise and (ii) the Exercise Price then in effect. Payment by such cancellation is referred to herein ascashless exercise.

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2.2Payment of Taxes and Charges

All shares of CommonStock 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 othergovernmental charges that may be imposed with respect to, the issuance or delivery thereof, unless such tax or charge is a taxon income imposed by law upon the Holder, in which case such taxes or charges shall be paid by the Holder.

2.3Fractional Shares

The Company shallnot be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to any fraction of a share which theHolder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such fractionin an amount equal to the same fraction of the Market Price per share of Common Stock as of the date of exercise of the Warrantgiving rise to such fraction of a share.

3.TRANSFER, DIVISION AND COMBINATION

3.1Transfer

Subject to compliancewith Section 9, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of theCompany to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to inSection 2.1 or the office or agency designated by the Company pursuant to Section 12, together with a written assignment of thisWarrant substantially in the form of Exhibit B hereto duly executed by the Holder or its agent or attorney and funds sufficientto pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Companyshall, subject to Section 9, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in thedenomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion ofthis Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly assigned in compliance with Section9, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new warrant issued.

3.2Division and Combination

Subject to Section9, this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of theCompany, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed bythe Holder or its agent or attorney. Subject to compliance with Sections 3.1 and 9, as to any transfer which may be involved insuch division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrantsto be divided or combined in accordance with such notice.

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3.3Expenses

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

3.4Maintenance of Books

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

4.ADJUSTMENTS

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

4.1Stock Dividends, Subdivisions and Combinations

If at any time theCompany shall:

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

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

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

then (i) the number of shares of CommonStock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the numberof shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisableimmediately 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 sharesof Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares forwhich this Warrant is exercisable immediately after such adjustment.

4.2Certain Other Distributions

If at any time theCompany 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 anyother 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 evidencesof its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever (other than cash, ConvertibleSecurities 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 thedate of such dividend or distribution. A reclassification of the Common Stock (other than a change in par value, or from par valueto 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 bedeemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within themeaning of this Section 4.2 and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number ofshares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the casemay be, of the outstanding shares of Common Stock within the meaning of Section 4.1.

4.3Other Provisions Applicable to Adjustments under this Section

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

(a)When Adjustments to be Made. The adjustments required by thisSection 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of anyadjustment, 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 thisSection 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 arecord of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscriptionor purchase rights and shall, thereafter and before the distribution to the holders thereof, legally abandon its plan to pay ordeliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reasonof 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 Boardof Directors of the Company shall be required to make a determination in good faith of the fair value of any item under this Section4, such determination may be challenged in good faith by the Holder, and any dispute shall be resolved by an investment bankingfirm of recognized national standing selected by the Company and acceptable to the Holder. The fees and expenses of such investmentbanking firm shall be paid by the Company.

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4.4Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets

In case the Companyshall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another Person (where the Companyis not the survivor or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, convey,transfer or otherwise dispose of all or substantially all its property, assets or business to another Person, or effectuate a transactionor series of related transactions in which more than 50% of the voting power of the Company is disposed of (each, a FundamentalCorporate Change) and, pursuant to the terms of such Fundamental Corporate Change, shares of common stock of the successoror acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrantsor other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (OtherProperty), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shallhave the right thereafter to receive, upon exercise of the Warrant, such number of shares of common stock of the successor or acquiringcorporation or of the Company, if it is the surviving corporation, and Other Property as is receivable upon or as a result ofsuch Fundamental Corporate Change by a holder of the number of shares of Common Stock for which this Warrant is exercisableimmediately prior to such Fundamental Corporate Change. In case of any such Fundamental Corporate Change, the successor or acquiringcorporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and everycovenant 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 equivalentas practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.5, common stock of thesuccessor or acquiring corporation shall include stock of such corporation of any class which is not preferred as todividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also includeany 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 subscribefor or purchase any such stock. The foregoing provisions of this Section 4.4 shall similarly apply to any successive FundamentalCorporate Change of the successor corporation.

4.5Other Action Affecting Common Stock

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

4.6Certain Limitations

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

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5.NOTICES TO THE HOLDER

5.1Notice of Adjustments

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

5.2Notice of Corporate Action

If at any time:

(a)the Company shall take a record of the holders of its Common Stockfor the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidencesof 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 reclassificationor recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transferor 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, liquidationor winding up of the Company;

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

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6.NO IMPAIRMENT

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

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

7.RESERVATION AND AUTHORIZATION OF WARRANT SHARES

From and after theClosing Date, the Company shall at all times reserve and keep available for issuance upon the exercise of Warrants such numberof 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 accordancewith the terms of such Warrant, shall be duly and validly issued and fully paid and nonassessable and not subject to preemptiverights.

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

Before taking anyaction which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or inthe then-current Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, asmay 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 alldividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of Section4 refers to the taking of record of such holders, the Company will in each case take such a record and will take such record asof the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding upof the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exerciseor transfer of any Warrant.

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9.RESTRICTIONS ON TRANSFERABILITY

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

10.SUPPLYING INFORMATION

The Company shallcooperate with the Holder in supplying such information as may be reasonably necessary for the Holder to complete and file anyinformation reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemptionfrom registration requirements of the Securities Act for the resale of any Warrant or Warrant Shares.

11.LOSS OR MUTILATION

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

12.OFFICE OF THE COMPANY

As long as any ofthe Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices ofthe Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided inthis 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 rightsor privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Stock oras a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. Nothing in theforegoing shall be construed in any manner to limit or deny the liability of a Holder in any other capacity, including, withoutlimitation, as a director of the Company.

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14.MISCELLANEOUS

14.1Nonwaiver and Expenses

No course of dealingor any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwiseprejudice the Holders 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 sufficientto 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 remedieshereunder.

14.2Notice Generally

Except as may be otherwise provided herein, anyand all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shallbe deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered viae-mail, facsimile or other means of electronic communication prior to 6:00 p.m. (New York City time) on a Trading Day (providedthe sender sends a copy of such notice or communication to the recipient by a nationally recognized overnight courier service nolater than the Trading Day immediately following the date of transmission), (b) the next Trading Day , if such notice or communicationis delivered via e-mail, facsimile or other means of electronic communication on a day that is not a Trading Day or later than6:00 p.m. (New York City time) on a Trading Day (provided the sender sends a copy of such notice or communication to the recipientby a nationally recognized overnight courier service no later than the Trading Day immediately following the date of transmission),(c) the next Trading Day if sent by a nationally recognized overnight courier service, (d) the third Business Day after mailingif sent by U.S. Mail, or (e) upon actual receipt. The address for such notices and communications shall be (i) in the case of theCompany, 10 New Bond Street, Worcester, Massachusetts 01606, fax: (508) 854-1753,

e-mail: Cary.Bullock@thermoenergy.com and (ii) in the case of theHolder, the Holders last business or residential address shown on the records of the Company; or such other address as maybe designated in writing hereafter, in the same manner, by such addressee.

14.3Indemnification

The Company agreesto 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 assertedagainst the Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any materialrespect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, thatthe 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 bya court to have resulted from the Holders gross negligence, bad faith or willful misconduct in its capacity as a stockholderor warrantholder of the Company.

14.4Remedies

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

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14.5Successors and Assigns

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

14.6Amendment

This Warrant may bemodified or amended or the provisions hereof waived only with the written consent of the Company and the Holder.

14.7Severability

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

14.8Headings

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

14.9Governing Law

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

InWitness Whereof, the Company has caused this Warrant to be duly executed by its duly authorized President and Chief ExecutiveOfficer and the Seal of the Company to be affixed hereto.

Dated: April 5, 2013

ThermoEnergy Corporation

By:

James F. Wood

Chairman and Chief Executive Officer

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Exhibit A

SUBSCRIPTION FORM

[To be executed only upon exercise ofWarrant]

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

whose address is

and, if such shares of Common Stockshall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor anddate 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

ForValue Received the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee namedbelow 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 constituteand appoint

attorney-in-fact to register such transferon 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)

(Witnesss Signature)

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

B-1

GRAPHIC4v340656_ex99-3ix1x1.jpgGRAPHIC

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