Employment Offer Letter between the Registrant and John F. O'Neill



 Exhibit 10.4 
  

					
	[Environmental Power Corporation Logo]	 	 Environmental Power Corporation
 One Cate Street, 4th Floor
 Portsmouth, New Hampshire 03801
 Tel. (603) 431-1780
 Fax (603)
431-2650


  
 June 29, 2005 
  
 Mr. John F. O’Neill 
 61 Melrose Street 
 Melrose, MA 02176 
  
 Dear John: 
  
 I am pleased to confirm our offer to you to join Environmental Power Corporation (“EPC”) as Chief Financial Officer commencing on July 1, 2005 (the
“Start Date”). Please be advised that this offer does not constitute a contract of employment for any specified duration. 
  
 The following is an outline of the terms of your employment with EPC: 
  

			
	 Title and
 Responsibilities:
	  	You will serve as Chief Financial Officer and Treasurer of EPC. In this capacity, you will report to EPC’s President and Chief Executive Officer.
		
	Base Salary:	  	Your base salary will be $7,692.31 for each two-week pay period, which equates to $200,000 on an annualized basis.
		
	Bonus:	  	You will be eligible to participate at the same level as other executives reporting directly to the Chief Executive Officer of EPC in any bonus plan adopted by EPC from time to time, subject
to the terms of any such plan.
		
	Equity Compensation:	  	Subject to the approval of EPC’s Board of Directors and the approval of EPC’s 2005 Equity Incentive Plan (the “2005 Plan”) by EPC’s stockholders, you will be granted
a non-qualified stock option under the 2005 Plan to purchase 150,000 shares of EPC’s Common Stock at a price per share equal to the fair market value of a share of EPC’s Common Stock as determined by the Board of Directors in accordance
with the terms of the 2005 Plan (the “Option”). The Option will be vested as to 50,000 shares immediately, with the remaining 100,000 shares vesting in two equal annual installments beginning on July 1, 2006, and will be exercisable for a
period of 10 years from the date of grant, subject to your continued employment with EPC. In the event that your employment is terminated without Cause (as defined below), the Option will be exercisable (to the extent vested at the time of
termination) for a period of 12 months following such termination.
		
	Benefits:	  	You will be entitled to such medical, dental, retirement, vacation and other benefits as are made available from time to time to other similarly situated employees of EPC. In addition, you
will be entitled to a car allowance comparable to that afforded to other senior executives of EPC.
		
	Termination:	  	 You will be an employee-at-will, and EPC may terminate your employment at any time and for any reason or no reason.
  
 Notwithstanding the foregoing, if EPC terminates your employment without Cause (as defined
below), you will be entitled to severance equal to 12 months of your then-current base salary, paid in accordance with EPC’s normal payroll practices. “Cause” shall mean willful misconduct by you or willful failure by you to perform
your responsibilities to EPC (including, without limitation, failure to relocate as contemplated below, breach by you of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other









 Mr. John F. O’Neill 
 June 29, 2005 
 Page 2 
  

			
		
	 	  	 similar agreement between you and EPC).
  
 In addition, if your employment with EPC is terminated by EPC without Cause within six months following a “Change-in-Control” (as defined below) and you are not
offered a comparable position with the acquiring entity or any of its affiliates, then you will be entitled to (a) severance equal to 12 months of your then-current base salary, paid in accordance with EPC’s normal payroll practices and (b) the
acceleration of vesting of the Option, such that the Option will be exercisable in full. A “Change-in-Control” shall mean the sale of all or substantially all of the capital stock, assets or business of EPC, by merger, consolidation, sale
of assets or otherwise (other than (i) than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the outstanding voting stock of EPC, immediately prior to such transaction
beneficially own, directly or indirectly, more than 50% of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction or (ii) a sale of any of the
capital stock or assets of either of EPC’s subsidiaries involved in the waste coal business, EPC Corporation or Buzzard Power Corporation).
  
 Any payment of severance will be conditioned upon your execution of a full release of all claims in form and substance satisfactory to EPC.

		
	Location of Employment:	  	You will initially be required to work out of EPC’s headquarters in Portsmouth, New Hampshire. However, you acknowledge that EPC is exploring a change in the location of EPC’s
headquarters, such as New York City, and that you will relocate to such location as EPC determines to establish such headquarters. In the event that you are required to relocate, you will be reimbursed for your reasonable, out-of-pocket moving
expenses, upon presentation of documentation therefor.
		
	Additional Agreements:	  	As a condition to your employment, you will be required to execute the Company’s standard form of Employee Proprietary Information and Invention Agreement, a copy of which has been
provided to you along with this letter.

  
 Your signature below will indicate
your acceptance of this offer of employment on the terms set forth in this letter. Please return a signed copy to me at your earliest convenience. 
  
 We look forward to working with you. 
  
 Very truly yours, 
  
 /s/ Kamlesh R. Tejwani 
  
 Kamlesh R. Tejwani 
 President and Chief Executive Officer 
 Environmental Power Corporation 
  
 ACCEPTED: 
  
 /s/ John F.
O’Neill                                 
 John F. O’Neill 
  
 Dated: June 29, 2005