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EXHIBIT 8
July 11, 2002
Xx. Xxxxxxxx X. Xxxxx
0000 X. Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Re: Stock Option and Right of First Refusal Agreement
(the "Option Agreement") dated as of May 2, 2002
between Environmental Power Corporation ("EPC")
and Xxxxxxxx X. Xxxxx ("Xxxxx")
-------------------------------------------------
Dear Xxxxxxxx:
Reference is made to the Option Agreement. Capitalized terms used in this
letter agreement without definition shall have the definitions contained in the
Option Agreement.
EPC understands that Xxxxx would like to encourage purchase of a
substantial portion or all of the Option Shares over the short term and is
willing to provide inducements therefor. On its part, EPC is interested in
seeking to arrange for the purchase by EPC and/or designees of EPC of a
substantial portion or all of the remaining Option Shares on the modified terms
provided herein.
This letter agreement confirms EPC's and Xxxxx'x agreement to the following
terms:
(a) During the sixty day period (the "Special Period") commencing on the
date of Xxxxx'x agreement to the terms of this letter agreement, EPC and/or its
designee(s) may exercise the Option to purchase between one million and all of
the then remaining Option Shares at a reduced purchase price equal to $0.25 per
Option Share. Furthermore, during the Special Period, Xxxxx agrees that EPC
and/or its designee(s), shall have an option (the "Standstill Option") to
purchase 50,000 of the Standstill Shares at a price of $0.25 per share. During
the Special Period, Xxxxx shall not sell or otherwise transfer or encumber
50,000 of the Standstill Shares except pursuant to the exercise of the
Standstill Option.
(b) The exercise of the Option and the Standstill Option on the terms set
forth in paragraph (a) above is conditioned on EPC and/or its designee(s)
exercising the Option for at least one million of the then remaining Option
Shares during the Special Period.
(c) The parties agree that as of the date of the letter (giving effect to
EPC's June 2002 exercise of the Option) there are 1,641,966 remaining Option
Shares and 753,066 Standstill Shares.
(d) Concurrently with the execution hereof, the parties shall furnish the
Escrow Agent the joint written instruction attached hereto as Exhibit A.
(e) To take advantage of the reduced exercise price during the Special
Period, the Option shall be exercised by delivery of the exercise price for at
least one million of the remaining Option Shares to the Escrow Agent by EPC
and/or its designee(s). EPC and any designee(s) may coordinate separate
exercises and payments which, in the aggregate, cover at least 1 million of the
then remaining Option Shares. Furthermore, if EPC and/or its designees exercise
the remaining Option in its entirety during the Special Period, EPC and/or its
designee(s) may exercise the Standstill Option for up to 50,000 Standstill
Shares by the tender of the exercise price for such Standstill Shares by EPC
and/or its designees against delivery of the certificate therefore (accompanied
by duly executed stock power(s)) by Xxxxx.
(f) EPC and Xxxxx agree that in the event of the exercise of the Option in
accordance with the terms provided in this letter agreement, they shall promptly
give all appropriate instructions to the Escrow Agent and EPC's transfer agent
to implement such exercises in accordance with the terms of this letter
agreement.
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(g) The Standstill Shares not subject to the Standstill Option remain
subject to the Option Agreement in all respects. If the Option and Standstill
Option are not exercised within the Special Period as provided herein, the
Option Shares and 50,000 Standstill Shares shall continue to remain subject to
the Option Agreement in all respects.
(h) Except as modified hereby, the Option Agreement shall remain in full
force and effect. Except to the extent inconsistent with the terms of this
letter agreement, the provisions of the Option Agreement shall apply to this
letter agreement as if set forth herein.
(i) Xxxxx acknowledges that EPC makes no representations as to the
prospects of EPC and/or its designee(s) exercising the Option and/or the
Standstill Option during the Special Period.
(j) EPC's designee(s) shall be third party beneficiaries of this letter
agreement.
If the foregoing correctly sets forth our understanding, please acknowledge
by signing below, whereupon this letter shall become a binding agreement.
Very truly yours,
ENVIRONMENTAL POWER CORPORATION
By:
-----------------------------
Agreed and Acknowledged:
----------------------------------
Xxxxxxxx X. Xxxxx
Dated: July 11, 2002
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EXHIBIT A
July 11, 2002
US Bank
Corporate Trust Services
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Re: Environmental Power Corporation ("EPC")/Xxxxx;
Escrow Account No. 00000000
----------------------------------------------
Dear Xx. Xxxxxx:
The undersigned hereby give a Joint Written Direction under the Escrow
Agreement among us dated May 3, 2002. Notwithstanding Schedule II to the Escrow
Agreement, if during the period ending on September 9, 2002 (the "Special
Period") EPC and/or its designee(s) (i) exercise the Option to purchase, in the
aggregate, at least one million of the remaining shares of EPC Common Stock in
escrow with you, the price for the exercise of such portion (equal to at least
one million) of the remaining shares in escrow with you as to which EPC and/or
its designee(s) have exercised the Option during the Special Period shall be
reduced from $0.35 to $0.25 per share. For example, EPC and/or its designees
could exercise the Option during the Special Period to purchase one million
shares for $250,000 or 1,500,000 shares for $375,000.
For exercise of less than one million of the remaining shares during the
Special Period (i.e. a July monthly exercise for 20,260 shares) and for
exercises after the Special Period, the $0.35 per share price shall apply.
Thank you very much for your assistance.
Very truly yours,
ENVIRONMENTAL POWER CORPORATION
By:
---------------------------------
---------------------------------
Xxxxxxxx X. Xxxxx
