Document:

Annual Management Incentive Plan of the Registrant

 Exhibit 10.3 
 ENVIRONMENTAL POWER CORPORATION 
 ANNUAL INCENTIVE MANAGEMENT
PLAN 
 The following represents a summary of the Annual Incentive Management Plan (AIM) for Environmental Power Corporation
(“EPC” or the “Company”), which was adopted by the Compensation Committee of EPC’s Board of Directors to provide for an annual incentive award to eligible positions, based on the performance achieved against short-term
goals. 
  

									
	Plan Objectives	 	 •     Align interests of management with EPC’s performance
goals.
  
 •     Focus on achievement of annual financial and operational objectives with competitive financial incentives.
  
 •     Provide systematic process for establishing definitive performance
goals.

		
	Participation	 	 •     AIM participation is limited to full-time employees not
otherwise participating in any other EPC incentive program.
  
 •     Participation is divided into tiers by level of function.
  
 •     All participants are assigned to an Award Tier as follows:

					
	  	 	 	 	 TIER
	 	 LEVEL
	 	 
		 		 	A	 	CEO	 	
		 		 	B	 	Executive Management	 	
		 		 	C	 	Director	 	
		 		 	D	 	Manager	 	
		 		 	E	 	Professional	 	
		 		 	F	 	Non-Exempt	 	
		
		 	 •     Participants must be actively employed on the payroll by October 1st of any Plan Year to be eligible to participate.

		
	Target Awards	 	 •     Calculated as a percentage of Base Salary earned, with Target Awards designated by
Tier:

				
	  	 	 TIER
	 	 INCENTIVE TARGET
	 	 
	 	A	 	50%	 
	 	B	 	35%	 
	 	C	 	20%	 
	 	D	 	15%	 
	 	E	 	10%	 
	 	F	 	Discretionary (Up to 5%)	 

											
		 	 •     Threshold and Maximum levels of performance will also be
defined, along with corresponding award potentials, which will be established for each Performance Measure and may vary by component.
  
 •     Awards for participants who are transferred/promoted into eligible positions or positions
whose Target Awards differ may be prorated accordingly.
  
 •     Pre-established performance levels must be achieved at least at threshold to earn any Award.
  
 •     Awards are capped at 150% of target.
  
 •     A performance matrix
will be used to determine the equivalent level of performance to be used in calculating AIM Awards.

			
	Performance Measures	 	 •     Corporate: Financial measures as recommended by Top
Management and approved by the Board of Directors annually.
  
 •     Individual: Based on the results of the individual’s annual performance evaluation and other key individual goals, as may be assigned.
	 	
		
	Component Weightings	 	 •     Component weightings will be based on the participant’s AIM Tier and is intended to focus
the participant on critical area(s) of impact, and areas in which the employee has direct control of his/her performance

					
	 	 	 	 	 	 	 COMPONENT WEIGHTING GUIDELINES
	 	 
	 	 	 TIER
	 	 CORPORATE
	 	 INDIVIDUAL
	 	 
	 	 A
	 	100%	 	0%	 
	 	 B
	 	75%	 	25%	 
	 	 C
	 	60%	 	40%	 
	 	 D
	 	50%	 	50%	 
	 	 E
	 	50%	 	50%	 
		 		 	 F
	 	N/A	 	N/A	 
		
		 	 •     Multiple goals within components may also be weighted based on their relative
importance

		
	Funding	 	 •     Target funding will be reached for achieving 100% of the
Corporate performance targets for the Plan Year. Funding at this level is the target amounts attributed to Corporate and Individual goals.
  
 •     No funding will be generated if Corporate performance is below established threshold level.

  
 •     Funding
at each level is not a guarantee of payout at that level. Payout is determined by performance against performance measures.

			
	Award Calculations	 	 •     Awards will be calculated based on the overall level of achievement on
each award component (Corporate and Individual).
  
 •     A participant’s award will be based on actual performance at Company fiscal year-end and based on the most recent performance evaluation on file.
  
 •     All goals will be
measured against written standards.
  
 •     Calculated awards may be further adjusted by ±10% to recognize performance outside of expectations
  
 •     All awards will be rounded to the nearest $10.

		
	Award Distribution	 	 •     Awards must be earned by employees and payment must be justified by
employee performance.
  
 •     Payment of awards will be made following the audit of end-of-year financials.
  
 •     Participant must be employed at time of payout to receive Award.
  
 •     Undistributed incentive
awards will be retained by the Company and are not to be redistributed among the other participants.
  
 •     To insure that no appearance of conflict exists with calculation of awards under the AIM
Plan, non-payment of awards will not enhance the Corporate financials used for calculating these awards.
  
 •     In future years, distribution of awards may take the form of cash and
equity.

		
	General	 	 •     Targets and weightings may be changed based on shift in focus or
industry standards.
  
 •     Plan administered by the President/CEO or designee; provided that the Compensation Committee will administer the plan and determine awards for the President/CEO and other
executives.
  
 •     Plan may be modified or terminated at any time by the Company; however, any awards earned up to the date of modification/termination will be paid based on performance achieved to that date.
  
 •     Participation is not a
guarantee of employment for any specific term.
  
 •     Interpretation of all matters related to this Plan, including but not limited to eligibility, calculation, and determination of awards, as well as the resolution of any questions relating to accounting
procedures of the Plan, shall be at the sole and final determination of the President/CEO for all non-executive participants, and the Compensation Committee, for the President/CEO and all executive participants.

 Adopted by the Compensation Committee of 
 the Board of Directors of Environmental Power Corporation 
 March 21, 2008Long-Term Incentive Plan

 Exhibit 10.4 
 ENVIRONMENTAL POWER CORPORATION 
 LONG-TERM INCENTIVE
PLAN 
 The following represents a summary of the Long-term Incentive Plan (LTIP) for Environmental Power Corporation (“EPC” or
the “Company”), which was adopted by the Compensation Committee of EPC’s Board of Directors pursuant to its discretionary authority under EPC’s 2005 Equity Incentive Plan and 2006 Equity Incentive Plan to provide guidelines
for annual equity awards to eligible positions. 
  

									
	PLAN OBJECTIVES	 	 •     Provide a long-term incentive plan based on the financial
growth of the Company
  
 •     Foster teamwork and entrepreneurial spirit among the participants tied to the achievement of the Company’s growth and financial objectives
  
 •     Provide a long-term
compensation tool to motivate and reward
  
 •     Acts as a retention mechanism.

	PARTICIPATION	 	 •     LTIP participation is limited to full-time employees. •
Participation is divided into tiers by level of function.
  
 •     All participants are assigned to an Award Tier as follows:

					
	 	 	 	 	 TIER
	 	 LEVEL
	  	 
		 		 	A	 	CEO	  
		 		 	B	 	Executive Management	  
		 		 	C	 	CEO Designee	  
		
	TARGET AWARDS	 	 •     Calculated as a percentage of Base Salary earned, with Target Awards designated by
Tier:

				
	 	 	 TIER
	 	 INCENTIVE TARGET
	  	 
	 	A	 	Annually Established by Board	  
	 	B	 	30% of Base Salary	  
	 	C	 	Discretionary	  
		
		 	 •     Value will be determined using Fair Market Value (FMV) at
time of grant utilizing the modified Black-Scholes methodology where appropriate.
  
 •     Grant Awards will be considered annually
  
 •     Vesting will be
three-year vesting with 33 1/3% of each grant vesting annually.
  
 •     Awards for participants who are hired, transferred or promoted into eligible positions are first eligible for the next plan cycle (January 1).

		
	AWARD GRANT MIX	 	 •     Award grants may be a combination of different long-term
vehicles including Restricted Shares, Incentive Stock Options and Stock Appreciation Rights (SAR’s).
  
 •     Grant mix guidelines will be considered by the Board on a yearly basis. For 2008, a grant of
Stock Appreciation Rights will be considered.

																	
	VESTING	 	 •     Rolling class year vesting; each Long-Term award has a 3 year vesting schedule (33.3% per
year), as follows:

		 		 		 		 		 		 		 		  	
	 	 	 2008
	 	 2009
	 	 2010
	 	 2011
	 	 2012
	 	 2013
	  	 
	 	 Grant
	 	33  1/3%	 	66  2/3%	 	100%	 		 		  
	 		 	Grant	 	33  1/3%	 	66  2/3%	 	100%	 		  
	 		 		 	Grant	 	33  1/3%	 	66  2/3%	 	100%	  

			
	SPECIAL DISTRIBUTION	 	 •     Death: Immediate vesting of all units; paid within 12 months.

 

	 	 •     Total Disability: Immediate vesting of all units, paid
within 12 months. “Total Disability” shall be as defined in any employment agreement, Award agreement or offer letter with a participant or, if no such agreement or letter is in effect or no such definition is set forth therein, shall be
determined in accordance with any long-term disability insurance policy covering the participant, or, if no such policy exists, shall mean the inability of the participant, due to a physical or mental disability, for a period of 90 days, whether or
not consecutive, during any 360-day period to perform the services contemplated by such participant’s position, with or without reasonable accommodation as that term is defined under state or federal law.
  
 •     Change of Control:
Immediate vesting of all units, paid as soon as practicable. A “Change-in Control” shall be as defined in any employment agreement, Award agreement or offer letter with a participant or, if no such agreement or letter is in effect or no
such definition is set forth therein, shall mean the sale of all or substantially all of the capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other 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).
  
 •     Voluntary/involuntary terminations: All unvested units forfeited, paid as soon as
practicable.
  
 •     Termination With Cause: All vested and unvested units forfeited. “Cause” shall be as defined in any employment agreement, Award agreement or offer letter with a participant or, if no such
agreement or letter is in effect or no such definition is set forth therein, shall mean any of the following: (i) a participant’s material breach of any agreement between the participant and the Company; (ii) demonstrated and material
neglect of duties, or willful and continued failure or refusal to attempt to perform the material duties of the participant’s position, in each case, following written notice from the CEO and a reasonable opportunity to cure of not less than
twenty (20) days, or the failure to follow a reasonable and lawful instruction of the CEO or any other superior corporate officer following written notice from the CEO or such corporate officer and an opportunity to cure of at least twenty
(20) days (if capable of cure); (iii) willful misconduct, violation of a material Company policy, dishonesty, self-dealing or fraud with regard to the Company; (iv) conviction of, or plea of guilty or nolo contendere to, any
felony; or (v) conviction of, or plea of guilty or nolo contendere to, any misdemeanor involving moral turpitude.

	 
	 
	 

			
	GENERAL	 	 •     Targets and weightings may be changed based on shift in
focus or industry standards.
  
 •     Plan administered by the President/CEO or designee; provided that the Compensation Committee will administer the plan and determine awards for the President/CEO and other executives, and
will otherwise have final approval of all awards recommended by the President/CEO.
  
 •     Plan may be modified or terminated at any time by the Company; however, any awards earned up
to the date of modification/termination will be paid based on performance achieved to that date.
  
 •     Participation is not a guarantee of employment for any specific term.
  
 •     Interpretation of all
matters related to this Plan, including but not limited to eligibility, calculation, and determination of awards, as well as the resolution of any questions relating to accounting procedures of the Plan, shall be at the sole and final determination
of the President/CEO for all non-executive participants, and the Compensation Committee, for the President/CEO and all executive participants.
  
 •     This Plan is solely discretionary and acts strictly as a guideline and is not binding on the
Company.

	 
	 
	 
	 
	 

 Adopted by the Compensation Committee of 
 the Board of Directors of Environmental Power Corporation 
 March 21, 2008

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