Document:

Exhibit
      10.2

    

    Bonus
      Agreement

    

    This
      Agreement is entered into on July 2, 2007, by ThermoEnergy Corporation, a
      Delaware corporation with offices located at 124 West Capitol Avenue, Suite
      880,
      Little Rock, Arkansas 72201 (the “Buyer”), CASTion Corporation, a Massachusetts
      corporation (“CASTion”), and Donald F. Farley (the “Agent”) as agent for certain
      employees of CASTion whose name and address are set forth at the end of this
      Agreement (the “Employees”). 

    

    WHEREAS,
      CASTion, certain shareholders of CASTion, and the Buyer are parties to that
      certain Agreement for the Purchase and Sale of Securities dated as of July
      2,
      2007, pursuant to which certain shareholders of CASTion will sell to the Buyer
      all of the capital stock of CASTion owned by such shareholders, and all of
      their
      rights under certain promissory notes issued by CASTion, in exchange for a
      combination of cash and securities to be issued by the Buyer (the
“Acquisition”); 

    

    WHEREAS,
      CASTion employs the Employees and the Employees provide services to CASTion;
      

    

    WHEREAS,
      CASTion and the Buyer wish to reward the Employees for their past contributions
      to CASTion; and

    

    WHEREAS,
      the execution and delivery by the Buyer of this Agreement is a condition
      precedent to the consummation of the Acquisition by CASTion and its
      shareholders;

     

    NOW,
      THEREFORE, in consideration of the mutual promises, agreements and provisions
      contained in this Agreement, and for other good and valuable consideration,
      the
      receipt and adequacy of which are hereby acknowledged, the parties agree as
      follows:

     

    1. Allocation
      of Bonuses.
      CASTion
      has allocated an aggregate of $300,000 to the Employees in the respective
      amounts identified on Schedule A hereto (such amounts having been determined
      and
      agreed to by the compensation committee of CASTion’s board of directors prior to
      the consummation of the Acquisition). Such amounts shall be unvested, and no
      Employee shall have any right to receive any amount under this Agreement except
      as set forth herein. 

    

    2. Vesting
      of Bonuses.
      The
      right of each Employee to receive the amount set forth opposite his or her
      name
      on Schedule A shall vest on the first to occur of the following events:

    

    (a) Upon
      the
      consummation by the Buyer, or any of its subsidiaries (including CASTion),
      of a
      Financing Transaction (as defined below), the net proceeds of which to the
      Buyer
      or such subsidiaries, taken together with the net proceeds of all prior
      Financing Transactions, but without taking into account any prepayment of the
      Convertible Notes issued by the Buyer in connection with the Acquisition upon
      the consummation of any Financing Transaction, is greater than $3,000,000.00,
      each Employee shall vest in the right to receive his or her pro rata share
      (as
      determined for each employee by dividing the amount set forth opposite his
      or
      her name on Schedule A by $300,000) of the amount which is 1.875% of the amount
      by which the net proceeds to the Buyer in such Financing Transactions exceed
      $3,000,000 (the “Vested Amount”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)  Upon
      the
      consummation of a Change of Control of the Buyer, each Employee shall vest
      in
      the right to receive the amount set forth opposite his or her name on Schedule
      A.

    

    (c)  The
      vesting of rights under this Agreement shall be cumulative, but in no event
      shall any Employee be entitled to receive more under this Agreement than the
      amount set forth opposite his or her name on Schedule A.

    

    3. Payment
      of Bonuses.
      

    

    (a)  The
      Buyer
      shall pay, or shall cause CASTion to pay, to all Employees the Vested Amounts
      immediately upon the occurrence of an event identified in Section 2(a) above.
      

    

    (b) The
      Buyer
      shall pay, or shall cause CASTion to pay, to all Employees the amounts set
      forth
      opposite their respective names immediately upon the occurrence of an event
      identified in Section 2(b) above, less any amount(s) previously paid under
      Section 3(a). 

    

    4. Definitions.
      For
      purposes of this Agreement:

    

    (a) “Financing
      Transaction” shall have the definition assigned to such term in the Convertible
      Notes.

    

    (b) “Change
      of Control” shall mean (i) the acquisition by any one person, or more than one
      person acting as a group, of ownership of stock of the Buyer 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 Buyer; (ii)
      the sale, conveyance, transfer or other disposition by the Buyer of all or
      substantially all its property, assets or business to another person, or (iii)
      the acquisition by any one person, or more than one person acting as a group
      (whether in one transaction or during the 12-month period ending on the date
      of
      the most recent acquisition by such person or persons) of ownership of stock
      of
      the Buyer possessing 50 percent or more of the total voting power of the stock
      of the Buyer.

     

    5. Reductions
      for Tax Withholding.
      Payment
      of any amounts under this Agreement shall be reduced by all required payroll
      withholding and other taxes, which amounts will be paid over to applicable
      tax
      authorities in payment of such taxes. 

    

    6. Nature
      of Relationship. This
      Agreement is not an employment contract and, subject to the terms of any other
      agreement between an Employee and the Buyer or CASTion, the Buyer and CASTion
      reserve the right to terminate the employment of any Employee at any time with
      or without cause. The termination of an Employee’s employment with Buyer or
      CASTion, with or without cause, however, shall not terminate any of the
      obligations of Buyer or CASTion under this Agreement, all of which shall survive
      the termination of such employment. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    7. Rights
      under this Agreement.
      No
      Employee shall have any rights under this Agreement unless and until Acquisition
      is consummated.

    

    8.  Concerning
      the Agent.
      

    

    (a) As
      soon
      as practicable after the consummation of the Acquisition, the Agent shall
      deliver a copy of this Agreement to each Employee; provided,
      however,
      that in
      lieu of providing a copy of Schedule A hereto, the Agent shall deliver a written
      instrument to each Employee setting forth the amount to which the respective
      Employee has been allocated pursuant to this Agreement. No Employee (with the
      exception of the Agent) shall have any right to obtain a copy of Schedule A
      in
      its entirety or to learn of the amounts allocated to any other
      Employee.

    

    (b)  The
      Agent
      shall be entitled to enforce this Agreement on behalf of the Employees, but
      shall not be obligated to do so. If the Agent declines to enforce this
      Agreement, he shall notify the Employees of their right to do so under Section
      9
      of this Agreement.

    

    (c) The
      Agent
      shall not be responsible to any Employee for the payment of any sums hereunder
      (other than to remit to any Employee any amount which may be paid to the Agent
      on behalf of such Employee) or for any action taken or omitted to be taken
      by
      him hereunder or in connection herewith, except for his own gross negligence
      or
      willful misconduct as determined by a final non-appealable judgment of a court
      of competent jurisdiction.

    

    9. Third
      Party Beneficiaries.
      Each
      Employee, together with his or her administrators, executors, estates and heirs,
      shall be third party beneficiaries of this Agreement and shall have the right
      to
      enforce this Agreement with respect to such Employee. 

    

    10. Miscellaneous.

    

    (a) This
      Agreement may be executed in two or more counterparts, each of which will be
      deemed an original and all of which together will constitute one
      instrument.

     

    (b) If
      any
      provision of this Agreement is invalid, illegal or unenforceable in any respect,
      the validity, legality and enforceability in every other respect of such
      provision and of the remaining provisions shall not in any way be affected
      or
      impaired thereby. If a court determines that any provision herein is invalid,
      illegal or unenforceable, for any reason, such provision shall be deemed amended
      to the extent necessary to comply with such determination, and such provision,
      as so amended, shall be valid and binding as though the invalid, illegal or
      unenforceable portion had not been included herein.

     

    (c) This
      Agreement constitutes the complete, final and exclusive statement of the
      agreement between the parties pertaining to the subject matter hereof and
      supersede all prior agreements, understandings, negotiations and discussions,
      whether oral or written, of the parties. No amendment, supplement, modification,
      rescission or waiver of this Agreement shall be binding unless executed in
      writing by the parties. No waiver of any of the provisions of this Agreement
      shall be deemed or shall constitute a continuing waiver unless otherwise
      expressly provided. The parties expressly acknowledge that they have not relied
      upon any prior agreements, understandings, negotiations and discussions, whether
      oral or written.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) This
      Agreement shall be binding upon and shall inure to the benefit of the parties,
      their successors, assigns and legal representatives. This Agreement shall be
      governed by and construed in accordance with the laws of the Commonwealth of
      Massachusetts. Any action or proceeding arising out of or related to this
      Agreement may be brought in the state or federal courts which have jurisdiction
      over Middlesex County in the Commonwealth of Massachusetts. 

     

    IN
      WITNESS WHEREOF, the parties hereby execute this Agreement as of the date set
      forth below.

     

    
      	THERMOENERGY
              CORPORATION	 	CASTION
              CORPORATION
	 	 	 	 	 
	By:	/s/ Andrew
              T.
              Melton 	 	 By:	/s/ Jeffrey
              L. Powell 
	 	
              
Authorized
              Signature	 	 	
              
Authorized
              Signature
	 	
            	 	 	
            
	Name: 	
               Andrew T. Melton

            	 	 Name: 	Jeffrey L. Powell
	 	 	 	 	 
	Title:	 EVP and CFO	 	Title:	CEO
	 	 	 	 	 

    

     

    /s/
      Donald
      F. Farley

    
      
 Donald
      F.
      Farley
      As
        Agent
        for the Employees

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULE
      A

    

    
      	
              Employee

            	 	
              Amount
                of Bonus

            	 
	 	 	 	 
	
              Jeffrey
                L. Powell

            	 	
              $

            	
              200,000.00

            	 
	
              Steven
                Brown

            	 	 	
              30,000.00

            	 
	
              Mark
                Simon

            	 	 	
              20,000.00

            	 
	
              Phil
                Kemp

            	 	 	
              20,000.00

            	 
	
              George
                Chapas

            	 	 	
              20,000.00

            	 
	
              Ed
                Jablonski

            	 	 	
              10,000.00

            	 
	
              Total

            	 	
              $

            	
              300,000.00Exhibit
      10.3

    

    EMPLOYMENT
      AGREEMENT

    

    KNOW
      ALL
      MEN BY THESE PRESENTS, this contract for services is made this 1st
      day of
      July 2007 by and between the following parties:

    

    ThermoEnergy
      Corporation

    124
      West
      Capitol Avenue, Suite 880

    Little
      Rock, Arkansas 72201

    

    Herein
      after referenced as the “Employer” and,

    

    Jeffrey
      L. Powell

    10
      Bond
      Street

    Worcester,
      MA 01606

    

    Herein
      after referenced as the “Employee”

    

    WHEREAS,
      Employer is desirous of hiring Employee as one of its key employees;

    

    WHEREAS,
      Employee is willing to accept employment as an employee of Employer,
      and

    

    WHEREAS,
      the parties hereto desire to delineate the responsibilities of Employee and
      the
      expectations of Employer;

    

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual covenants and
      obligations herein contained, the parties hereto agree as follows: 

    

    
      	1.	
              EMPLOYMENT.
                Employer hereby employs Employee, and Employee hereby accepts employment
                with Employer, upon the terms and conditions set forth in this
                Agreement.

            

    

    

    
      	2.	
              TERM
                OF EMPLOYMENT. The employment of Employee pursuant to the terms of
                this
                Agreement shall commence as of closing of the CASTion Corporation
                acquisition and shall continue for a period of three (3) years, unless
                sooner terminated pursuant to the provisions hereof; PROVIDED, HOWEVER,
                that this Agreement shall, unless earlier terminated, as of the fifteenth
                of each month of the term of this Agreement, be automatically extended
                for
                an additional month.

            

    

    

    
      	3.	
              DUTIES.

            

    

    

    
      	
            	3.1.	
              BASIC
                DUTIES. Subject to the direction and control of the Chief Executive
                Officer and the Board of Directors of Employer, Employee shall serve
                as
                President and Chief Executive Officer of Employer’s subsidiary, CASTion
                Corporation (“CASTion”) and shall fulfill all duties and obligations of
                such office including but not limited to the
                following:

            

    

     

    
      	
            	(i)	
              Assist
                the Board of Directors of CASTion in administering the corporate
                affairs,

            

    

     

    
      	
            	(ii)	
              Execute
                corporate policy,

            

    

     

    
      
        	
              	(iii)	
                Act
                  as Chief Executive Officer of
                  CASTion,

              

      

    

     

    
      	
            	(iv)	
              Develop
                the business plan for CASTion, 

            

    

     

    
      	
            	(v)	
              Coordinate Marketing Activities,
                

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
            	(vi)	
              Work
                with the CFO to set and monitor operating budgets, and
                

            

    

     

    
      	
            	(vii)	
              Coordinate
                technology development with CTO. 

            

    

    

    
      	
            	3.2.	
              OTHER
                DUTIES OF EMPLOYEE. In addition to the foregoing, Employee shall
                perform
                such other or different duties related to those set forth in Paragraph
                3.1
                as may be assigned to him from time to time by Employer, PROVIDED,
                HOWEVER, that any such additional assignment shall be at a level
                of
                responsibility commensurate with that set forth in Paragraph 3.1
                and
                PROVIDED, FURTHER, that Employee may serve, or continue to serve,
                on the
                boards of directors of and hold any other offices or positions in,
                companies or entities that in the judgment of Employer will not present
                any conflict of interest with Employer or any of its operations or
                adversely affect the performance of Employee’s duties pursuant to this
                Agreement.

            

    

    

    
      	
            	3.3.	
              TIME
                DEVOTED TO EMPLOYMENT. Employee shall devote his full time to the
                business
                of Employer during the term of this Agreement to fulfill his obligations
                hereunder. 

            

    

    

    
      	
            	3.4.	
              PLACE
                OF PERFORMANCE OF DUTIES. The services of Employee shall be performed
                at
                Employer’s place of business, Worcester, MA, and at such other locations
                as shall be designated from time to time by
                Employer.

            

    

    

    
      	
            	3.5	
              SERVICES
                AS OFFICER OR DIRECTOR. During the employment period, Employee shall,
                if
                elected or appointed, serve as a director of Employer and as an officer
                and/or director of all current and future subsidiaries or affiliates
                of
                Employer without any additional compensation for such
                services.

            

    

    

    
      	4.	
              COMPENSATION
                AND METHOD OF PAYMENT.

            

    

    

    
      	
            	4.1.	
              TOTAL
                COMPENSATION. As compensation under this Agreement, Employer shall
                pay and
                Employee shall accept the
                following:

            

    

    

    
      	
            	(1)	
              BASE
                COMPENSATION. For each year of this Agreement, measured from the
                effective
                date hereof, base compensation of $200,000.00 (Two Hundred Thousand
                United
                States Dollars), and further increased as may be approved from time
                to
                time by the Compensation Committee of the Employer. All such increases
                shall be effective as of the beginning of such calendar year in which
                the
                increase becomes effective pursuant to the terms hereof or as approved
                by
                the Employer, as the case may be. Such adjustments may be based on
                the
                performance of Employer, the value of Employee to Employer or any
                other
                factors considered relevant by
                Employer.

            

    

    

    
      	
            	(2)	
              INCENTIVE
                COMPENSATION. For each year the Employer shall pay to Employee as
                incentive compensation (“Incentive Compensation”), in respect of each
                fiscal year or portion thereof included within the Employment Period,
                an
                amount (up to one hundred percent (100%) of his Base Compensation)
                determined in accordance with a formula to be established annually
                in good
                faith by the Compensation Committee of the Board of Directors of
                Employer
                thereof authorized to act on compensation matters and, in the case
                of each
                fiscal year commencing after December 31st.
                

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
            	(3)	
              PERIODIC
                PERFORMANCE COMPENSATION. In addition to Incentive Compensation,
                special
                compensation can be determined periodically by the Compensation Committee
                to be paid for unusual activities such as, but not inclusive of the
                following: 1) complete merger or acquisition of a new business or
                technology, 2) execution of new contracts in excess of twenty percent
                (20%) of existing revenues of Employer, and 5) other unusual events
                that
                are determined to be significant by the Compensation Committee.
                

            

    

     

    
      
        	
              	(4)	
                EXPENSE
                  REIMBURSEMENT. Reimbursement of such discretionary expenses, including
                  travel expenses, as are reasonable and necessary, in the judgment
                  of the
                  Employer, for Employee’s performance of his responsibilities under this
                  Agreement.

              

      

    

    

    
      	
            	(5)	
              STOCK
                OPTIONS. Nonqualified options issued at the discretion of the
                Employer.

            

    

    

    
      	
            	(6)	
              RESTRICTED
                STOCK GRANTS. Restricted stock issued at the discretion of the
                Employer.

            

    

    

    
      
        	
              	(7)	
                EMPLOYEE
                  FRINGE BENEFITS. Participation in Employer’s employee fringe benefit
                  programs in effect from time to time for employees at comparable
                  levels of
                  responsibility. Participation will be in accordance with any applicable
                  policies adopted by Employer. Employee shall be entitled to vacations,
                  absences For
                  illness, and to similar benefits of employment, and shall be subject
                  to
                  such policies and procedures as may be adopted by Employer. Without
                  limiting the generality of the foregoing, it is initially anticipated
                  that
                  such benefits of employment shall include four (4) weeks vacation
                  during
                  each 12-month period of employment with Employer (which shall accrue
                  monthly on a PRO RATA basis and which shall be carried forward
                  for a
                  period not to exceed three (3) years and otherwise in accordance
                  with
                  Employer’s policies); major medical and health insurance; life and
                  disability insurance; and stock option plans for employees and
                  members of
                  the Board of Directors. Employer further agrees that in the event
                  it
                  offers disability insurance to its employees, Employer shall arrange
                  for
                  Employee to be covered by similar
                  insurance.

              

      

    

    

    
      	
            	(8)	
              In
                addition, Employee shall be entitled to a car allowance of $750.00
                per
                month.

            

    

    

    
      	
            	(9)	
              LIFE
                INSURANCE. The Employer shall pay all premiums for one or more life
                insurance policies upon the life of the Employee in an aggregate
                face
                amount equal to two and one-half times (2&1/2) the Base Compensation
                of Employee. The death benefit or benefits shall be payable to such
                beneficiary or beneficiaries as Employee shall designate in writing
                to
                Employer. Employee shall aid Company in procuring such insurance,
                as well
                as in obtaining any other life, health, accident, disability, or
                other
                insurance which Employer should at any time apply for, it its own
                name ant
                its own expense, to ensure Employer’s obligations hereunder, by submitting
                to the usual and customary medical examinations and by completing,
                executing, and delivering such applications and other instruments
                in
                writing as may be reasonably required by any insurance company or
                companies.

            

    

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
            	(10)	
              OTHER
                BENEFITS. Employer shall pay or shall reimburse Employee for his
                reasonable expenses in connection with (i) obtaining from time-to-time
                of
                financial planning advice; (ii) preparation of personal Federal and
                State
                income tax returns; and (iii) cost of annual medical physical
                examinations. While employed, the Employer shall also pay the initiation
                fee and the annual and/or monthly dues and/or assessments for the
                Employee’s membership in social and/or business clubs, business
                organizations, and social and/or civic groups of Employee’s choosing. The
                employer will also provide parking for the Employee at the place
                of
                business at no cost to the
                Employee.

            

    

    

    
      	
            	(11)	
              In
                the event of a Change of Control of Employer (as such term is defined
                in
                Section 4.3 hereof). Employee shall be entitled to receive the balance
                of
                the unpaid base compensation (“Unpaid Base Compensation”) which would
                otherwise be payable to Employee during the remainder of the term
                of this
                Agreement pursuant to Section 4.1(1) hereof within thirty (30) days
                of the
                date of such Change of Control and any and all stock options and/or
                restricted stock grants granted to Employee pursuant to Section 4.1(5)
                and
                4.1(6) hereof and otherwise shall vest immediately upon the date
                of such
                Change of Control; PROVIDED, HOWEVER, in the event of such Change
                of
                Control of Employer, the term of this Agreement shall automatically
                be
                extended to a period of three (3) years from the date of such Change
                of
                Control of Employer for purposes of this
                Section 4.1(11).

            

    

    

    
      	
            	(12)	
              MOVING
                EXPENSES. In the event that during the term of this agreement, Employee
                is
                transferred by Employer to a new principal place of work at least
                100
                miles further from his residence at the time of transfer (“current
                residence’) than his principal place of work at the time of the transfer,
                Employer shall reimburse Employee for all reasonable expenses incurred
                for:

            

    

     

    
      	
            	(i)	
              The
                expenses of two round-trips, including meals and lodging, by Employee
                and
                Employee’s spouse, from the current residence to the general location of
                the new principal place of work for the principal purpose of searching
                for
                a new residence.

            

    

     

    
      	
            	(ii)	
              The
                expenses of a one-way trip, including meals and lodging, by Employee
                and
                Employee’s spouse, from the current residence to the new place of
                residence.

            

    

     

    
      	
            	(iii)	
              Moving
                the household goods and personal effects of Employee and Employee’s spouse
                from the current residence to the new place of
                residence.

            

    

     

    
      	
            	(iv)	
              Meals
                and lodging for Employee and Employee’s spouse for a period of consecutive
                days not in excess of 60 days while occupying temporary quarters
                in the
                general location of the new principal place of
                work.

            

    

     

    
      	
            	(v)	
              “Qualified
                residence sale, purchase, or lease expenses” as defined in Internal
                Revenue Code, subject to any future amendments. Reasonable expenses
                incident to: the sale or exchange of Employee’s former residence (but not
                for work performed on it to assist in its sale); the purchase of
                a
                new
                residence, including the cost of a loan but not including any prepayment
                of interest; the settlement of an unexpired lease held by Employee
                on his
                former residence; and the acquisition of a lease on the new residence
                of
                Employee, but not including any prepayment of rent.
                

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
            	4.2.	
              PAYMENT
                OF COMPENSATION. Employer shall pay the compensation provided for
                in
                Section 4.1 hereof as follows:

            

    

    

    
      	
            	(1)	
              Employer
                shall pay the base compensation in cash in accordance with Employer’s
                payroll practices for all its employees, but in no event less frequently
                than monthly.

            

    

    

    
      	
            	(2)	
              Incentive
                Compensation earned hereunder shall be determined by the Compensation
                Committee as soon as reasonably practicable after the end of each
                fiscal
                year of Employer and shall be paid promptly thereafter to the
                Employee.

            

    

    

    
      	
            	(3)	
              Employer
                shall pay in cash the reimbursement of such discretionary expenses
                provided in Section 4.1(4), 4.1(8) and 4.1(10)
                hereof.

            

    

    

    
      	
            	(4)	
              If
                the Employer in its judgment determines that payment in full of
                compensation due Employee currently would imperil the Employer’s ability
                to remain a going concern, it may give a written notice (a “Deferral
                Notice”) to Employee to the effect that all or a designated percentage of
                his compensation for such fiscal year in excess of the then-applicable
                minimum wage shall be deferred until the first to occur of (i) a
                Change of
                Control or (ii) the first anniversary of the date of the Deferral
                Notice;
                provided, however, that if on the first anniversary of the date of
                the
                Deferral Notice, the Employer determines that payment of the deferred
                compensation would imperil the Employer’s ability to remain a going
                concern, then payment of the deferred compensation shall be further
                deferred until such time as the Employer determines that such payment
                would not imperil the Employer’s ability to remain a going concern.
                Deferred Base Compensation and deferred Incentive Compensation shall
                bear
                interest on the unpaid balance thereof from the last day of the fiscal
                year in respect of which it was earned at the Prime Rate as published
                in
                The
                Wall Street Journal
                on
                the date of the deferral. Such interest shall be computed annually
                in
                arrears, and shall be added as of the last day of each fiscal year
                of
                Employer. 

            

    

    

    
      	
            	4.3	
              A
                CHANGE OF CONTROL OF EMPLOYER. For all purposes of this Agreement,
                a
                “Change of Control” shall mean: (i) the acquisition by any person, entity
                or groups of persons, within the meaning of Section 13(d) or 14(d),
                or any
                comparable successor provisions of the Securities Exchange Act of
                1934
                (the “Act”) of beneficial ownership (within the meaning of Rule 13d-3
                promulgated under the Act) of at least twenty-five percent (25%)
                of either
                the outstanding shares of common stock or the combined voting power
                of
                Employer’s then outstanding voting securities entitled to vote generally,
                or (ii) the approval by stockholders of Employer of a reorganization,
                merger or consolidation, in which persons who were stockholders of
                Employer immediately prior to such reorganization, merger or consolidation
                do not, immediately thereafter, own or control more than fifty percent
                (50%) of the combined voting power entitled to vote generally in
                the
                election of directors of the surviving corporation of such reorganization
                merger or consolidation, or a liquidation or dissolution of Employer
                or of
                the sale of all or substantially all of Employer’s assets, or (iii) in the
                event Employer terminates Employee pursuant to this Agreement for
                any
                reason other than the occurrence of any of the events set forth in
                Sections 5.2(2), (3), (4), (6), (7) or (9) hereof, or (iv) in the
                event
                any person shall be elected by the stockholders of Employer to the
                Board
                of Directors of Employer who shall not have been nominated for election
                by
                a majority of the Board of Directors of Employer or any duly appointed
                committee thereof.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	5.	
              TERMINATION
                OF AGREEMENT.

            

    

    

    
      	
            	5.1.	
              BY
                NOTICE. This agreement, and the employment of Employee hereunder,
                may be
                terminated by Employee or Employer upon ninety (90) days written
                notice of
                termination; PROVIDED, HOWEVER, in the event Employer terminates
                this
                Agreement for any reason other than the occurrence of any of the
                events
                set forth in Sections 5.2(2), (3), (4), (6), (7) or (9), and subject
                to
                Section 4.1(11) hereof, Employee shall be entitled to receive the
                balance
                of the unpaid base salary which would otherwise be payable to Employee
                during the remainder of the term of this Agreement pursuant to Sections
                4.1(1), 4.1(8) and 4.1(10) hereof within thirty (30) days after such
                ninety (90) day notice period.

            

    

    

    
      	
            	5.2.	
              OTHER
                TERMINATION. This Agreement and the employment of Employee hereunder,
                shall terminate immediately upon the occurrence of any one of the
                following events:

            

    

    

    
      	
            	(1)	
              The
                death or mental or physical incapacity of
                Employee.

            

    

    

    
      	
            	(2)	
              The
                loss by Employee of legal capacity (other than as described in Section
                5.2(1) hereof).

            

    

    

    
      	
            	(3)	
              The
                failure by Employee to devote substantially all of his available
                professional time to the business of Employer or the willful and
                habitual
                neglect of duties.

            

    

    

    
      	
            	(4)	
              The
                willful engaging by Employee in an act of dishonesty constituting
                a felony
                under the laws of the state in which Employer’s principal place of
                business is located, resulting or intending to result in gain or
                personal
                enrichment at the expense of Employer or to the detriment of Employer’s
                business and to which Employee is not legally
                entitled.

            

    

    

    
      	
            	(5)	
              The
                continued incapacity in excess of one hundred eighty (180) days on
                the
                part of Employee to perform his duties, unless waived by
                Employer.

            

    

    

    
      	
            	(6)	
              The
                mutual written agreement of Employee and
                Employer.

            

    

    

    
      	
            	(7)	
              The
                expiration of the term of this
                Agreement.

            

    

    

    
      	
            	(8)	
              The
                involuntary termination of Employee as a director of
                Employer.

            

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
            	(9)	
              Employee’s
                breach of this Agreement.

            

    

    

    
      	
            	5.3.	
              EFFECT
                OF TERMINATION BY REASON OF DEATH OR INCAPACITY. In the event of
                the
                termination of Employee’s employment pursuant to Sections 5.2(1) or (5) of
                this Agreement prior to the completion of the term of employment
                specified
                herein, and subject to Section 4.1 (11) hereof, Employee shall be
                entitled
                to receive the balance of the unpaid compensation (including any
                Incentive
                Compensation pursuant to Section 4.1(2) hereof) which is not covered
                by
                disability or other insurance and which would otherwise be payable
                to
                Employee during the term of this Agreement pursuant to Section 4.1(1)
                hereof within 60 days after such termination.

            

    

    

    
      	
            	5.4.	
              REMEDIES.
                No termination of the employment of Employee pursuant to the terms
                of this
                Agreement shall prejudice any other remedy to which any party to
                this
                Agreement may be entitled either at law, in equity, or under this
                Agreement.

            

    

    

    
      	6.	
              PROPERTY
                RIGHTS AND OBLIGATIONS OF EMPLOYEE.

            

    

    

    
      	
            	6.1.	
              TRADE
                SECRETS. For purposes of this Agreement, “trade secrets” shall include
                without limitation any and all financial, cost and pricing information
                and
                any and all information contained in any drawing, designs, plan,
                proposals, customer lists, records of any kind, data, formulas,
                specifications, concepts or ideas, where such information is reasonably
                related to the business of Employer and has not previously been publicly
                released by duly authorized representatives of Employer or Parent
                or
                otherwise lawfully entered the public
                domain.

            

    

    

    
      	
            	6.2.	
              PRESERVATION
                OF TRADE SECRETS. Employee will preserve as confidential all trade
                secrets
                pertaining to Employer’s business that have been or may be obtained or
                learned by him by reason of his employment or otherwise. Employee
                will
                not, without the written consent of Employer, either use for his
                own
                benefit or purposes or disclose or permit disclosure to any third
                parties,
                either during the term of his employment hereunder or thereafter
                (except
                as required in fulfilling the duties of his employment), any trade
                secret
                connected with the business of
                Employer.

            

    

    

    
      	
            	6.3.	
              TRADE
                SECRETS OF OTHERS. Employee agrees that he will not disclose to Employer
                or induce Employer to use any trade secret belonging to any third
                party.

            

    

    

    
      	
            	6.4.	
              PROPERTY
                OF EMPLOYER. Employee agrees that all documents, reports ` files,
                analyses, drawings, designs tools, equipment, plans (including, without
                limitation, marketing and sales plans), proposals, customer lists,
                computer software or hardware, patents, license agreements, and similar
                materials that are made by him or come into his possession by reason
                of
                his employment with Employer are the property of Employer and shall
                not be
                used by him in any way adverse to Employer’s interests. Employee will not
                allow any such documents or things, or any copies, reproductions
                or
                summaries thereof to by delivered to or used by any third party without
                the specific consent of Employer. Employee agrees to deliver to the
                Board
                of Directors of Employer or its designee, upon demand, and in any
                event
                upon the termination of Employee’s employment, all of such documents and
                things which are in Employee’s possession or under his control.
                

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
            	6.5.	
              NONCOMPETITION
                BY EMPLOYEE. During the term of Employee’s employment under this
                Agreement, and for a period of one (1) year following the termination
                of
                such employment for any reason, Employee shall not, directly or
                indirectly, either as an employee, employer, consultant, agent, principal,
                partner, principal stockholder, corporate officer, director, or in
                any
                other individual or representative capacity: (i) engage or participate
                in
                any business that is in competition in any manner with the business
                of
                Employer; (ii) divert, take away or attempt to divert or take away
                (and
                during the one year period, call on or solicit) any of Employer’s clients
                within the United States. For purposes of this Agreement, the term
                “Employer’s clients” shall mean clients who had a business relationship
                with Employer prior to Employee’s employment with Employer and those who
                develop a business relationship with Employer, during Employee’s
                employment with Employer; (iii) undertake planning for or organization
                of
                any business within the United States or in any other country in
                which
                Employer is engaged in business activity competitive with Employer’s
                business within the United States or in any other country in which
                Employer is engaged in business or combined or conspire with employees
                or
                other representative of Employer’s business within the United States or in
                any other country in which Employer is engaged in business for the
                purpose
                of organizing any such competitive activity within the United States
                or in
                any other country in which Employer is engaged in business; or (iv)
                induce
                or influence (or seek to induce or influence) any person who is engaged,
                as an employee, agent, independent contractor or otherwise by Employer
                within the United States or in any other country in which Employer
                is
                engaged in business to terminate his or her employment or engagement.
                Employee acknowledges that the Employer’s business is broad in geographic
                scope and agrees that, in light thereof, the geographic scope of
                the
                restrictions set forth in this Section 6.5 is reasonable. Employee
                also
                acknowledges that, as an executive officer of CASTion and of the
                Employer,
                he will be directly involved in the development and implementation
                of the
                Employer’s business strategy and agrees that, in light thereof, the
                duration and subject matter scope of the restrictions set forth in
                this
                Section 6.5 are reasonable.

            

    

    

    
      	
            	6.6.	
              SURVIVAL
                PROVISIONS AND CERTAIN REMEDIES. Unless otherwise agreed to in writing
                between the parties hereto, the provisions of this Section 6 shall
                survive
                the termination of this Agreement. The covenants in this Section
                6 shall
                be construed as separate covenants and to the extent any covenant
                shall be
                judicially unenforceable, it shall not affect the enforcement of
                any other
                covenant. In the event Employee breaches any of the provisions of
                this
                Section 6, Employee agrees that Employer may be entitled to injunctive
                relief in addition to any other remedy to which Employer may be
                entitled.

            

    

    

    
      	7.	
              GENERAL
                PROVISIONS:

            

    

     

    
      	
            	7.1.	
              NOTICES.
                Any notices or other communications required or permitted to be given
                hereunder shall be given sufficiently only if in writing and served
                personally or sent by certified mail, postage prepaid and return
                receipt
                requested, addressed as follows:

            

    

    
      

        
          	
                  If
                    to Employer: 

                	
                  ThermoEnergy
                    Corporation

                
	 	
                  124
                    West Capitol Avenue, Suite 880

                
	 	
                  Little
                    Rock, Arkansas 72201

                
	 	
                  Attn:
                    Chief Financial Officer

                
	 	
                  Tel:
                    501.376.6477

                
	 	
                  Fax:
                    501.375.5249

                

        

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        
          	
                  If
                    to Employee: 

                	
                  Jeffrey
                    L. Powell

                
	 	
                  10
                    Bond Street

                
	 	
                  Worcester,
                    MA 01606

                
	 	
                  Tel:
                    508.854.1628

                
	 	
                  Fax:
                    508.854.1753

                

        

      

    

    

    However,
      either party may change his/its address for purposes of this Agreement by giving
      written notice of such change to the other party in accordance with this
      Paragraph 7.1. Notices delivered personally shall be deemed effective as of
      the
      day delivered and notices delivered by mail shall be deemed effective as of
      three days after mailing (excluding weekends and federal holidays).

    

    
      	
            	7.2.	
              CHOICE
                OF LAW AND FORUM. Except as expressly provided otherwise in this
                Agreement, this Agreement shall be governed by and construed in accordance
                with the laws of the Commonwealth of Massachusetts. The parties agree that
                any dispute arising under this Agreement, whether during the term
                of this
                Agreement or at any subsequent time, shall be resolved exclusively
                in the
                courts of the State of Arkansas and the parties hereby submit to
                the
                jurisdiction of such courts for all purposes provided
                herein.

            

    

    

    
      	
            	7.3.	
              ENTIRE
                AGREEMENT; MODIFICATION AND WAIVER. This Agreement supersedes any
                and all
                other agreements, whether oral or in writing, between the parties
                hereto
                with respect to the employment of Employee by Employer and contains
                all
                covenants and agreements between the parties relating to such employment
                in any manner whatsoever. Each party to this Agreement acknowledges
                that
                no representations, inducements, promises, or agreements, oral or
                written,
                have been made by any party, or anyone acting on behalf of any party,
                which are not embodied herein, and that no other agreement, statement,
                or
                promise not contained in this Agreement shall be valid or binding.
                Any
                modification of this Agreement shall be effective only if it is in
                writing
                signed by the party to be charged. No waiver of any of the provisions
                of
                this Agreement shall be deemed, or shall constitute, a waiver of
                any other
                provision, whether or not similar, nor shall any waiver constitute
                a
                continuing waiver. No waiver shall be binding unless executed in
                writing
                by the party making the waiver.

            

    

    

    
      	
            	7.4.	
              ASSIGNMENT.
                Because of the personal nature of the services to be rendered hereunder,
                this Agreement may not be assigned in whole or in part by Employee
                without
                the prior written consent of Employer. However, subject to the foregoing
                limitation, this Agreement shall be binding on, and shall inure to
                the
                benefit of, the parties hereto and their respective heirs, legatees,
                executors, administrators, legal representative, successors and
                assigns.

            

    

    

    
      	
            	7.5.	
              SEVERABILITY.
                If for any reason whatsoever, any one or more of the provisions of
                this
                Agreement shall be held or deemed to be inoperative, unenforceable,
                or
                invalid as applied to any particular case or in all cases, such
                circumstances shall not have the effect of rendering any such provision
                inoperative, unenforceable, or invalid in any other case or of rendering
                any of the other provisions of this Agreement inoperative, unenforceable
                or invalid.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
            	7.6.	
              CORPORATE
                AUTHORITY. Employer represents and warrants as of the date hereof
                that
                Employer’s execution and delivery of this Agreement to Employee and the
                carrying out of the provisions hereof have been duly authorized by
                Employer’s Board of Directors and authorized by Employer’s shareholders
                and further represents and warrants that neither the execution and
                delivery of this Agreement, nor the compliance with the terms and
                provisions thereof by Employer will result in the breach of any state
                regulation, administrative or court order, nor will such compliance
                conflict with, or result in the breach of, any of the terms or conditions
                of Employer’s Articles of Incorporation or Bylaws, as amended, or any
                agreement or other instrument to which Employer is a party, or by
                which
                Employer is or may be bound, or constitute an event of default thereunder,
                or with the lapse of time or the giving of notice or both constitute
                an
                event of default thereunder.

            

    

    

    
      	
            	7.7.	
              ATTORNEY’S
                FEES. In any action at law or in equity to enforce or construe any
                provisions or rights under this Agreement, the unsuccessful party
                or
                parties to such litigation, as determined by the courts pursuant
                to a
                final judgment or decree, shall pay the successful party or parties
                all
                costs, expenses, and reasonable attorneys’ fees incurred by such
                successful party or parties (including, without limitation, such
                costs,
                expenses, and fees on any appeals), and if such successful party
                or
                parties shall recover judgment in any such action or proceedings,
                such
                costs, expenses, and attorneys’ fees shall be included as part of such
                judgment.

            

    

    

    
      	
            	7.8.	
              COUNTERPARTS.
                This Agreement may be executed simultaneously in one or more counterparts,
                each of which shall be deemed an original, but all of which together
                shall
                constitute one and the same
                instrument.

            

    

    

    
      	
            	7.9.	
              HEADING
                AND CAPTIONS. Heading and captions are included for purposes of
                convenience only and are not a part
                hereof.

            

    

    

    
      	
            	7.10.	
              CONSULTATION
                WITH COUNSEL. Employee acknowledges that he has had the opportunity
                to
                consult with counsel independent of Employer or Employer’s counsel,
                regarding the entering into of this Agreement and has done so to
                the
                extent he sees fit.

            

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement effective
      as of
      the day and year first written above at Little Rock, Arkansas.

     

    
      	
              “Employer”

            	 	 	 
	 	 	 	 
	
              ThermoEnergy
                Corporation

            	 	 	 
	 	 	 	 
	By: 
              /s/
              Andrew T. Melton	 	 	7/2/07
	
              
                
Andrew
                T. Melton, Chief Financial Officer 

            	 	 	
              Date

            

    

    
      	 	 	 	 
	
              “Employee”

            	 	 	 
	 	 	 	 
	By:  /s/
              Jeffrey L. Powell	 	 	6-28-07
	
              
                
Jeffrey
                L. Powell

            	 	 	
               Date
                

            

    

     

    
      
        
        

      

      
        10

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