Document:

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                                                                     Exhibit 4.6

                         ENVIRONMENTAL POWER CORPORATION

                            2002 DIRECTOR OPTION PLAN

1.   PURPOSE

     The purpose of this 2002 Director Option Plan (the "Plan") of Environmental
Power Corporation (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.

2.   ADMINISTRATION

     The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic and non-discretionary in accordance with Section 5.
However, all questions of interpretation of the Plan or of the any options
issued under it shall be determined by the Board of Directors and such
determination shall be final and binding upon all persons having an interest in
the Plan.

3.   DIRECTORS ELIGIBLE FOR PARTICIPATION

     Each director of the Company (serving as such on or after the close of
business on the Effective Date of this Plan) who is not an employee of the
Company or any subsidiary of the Company shall be eligible to participate in the
Plan.

4.   STOCK SUBJECT TO THE PLAN

     (a)  The maximum numbers of shares which may be issued under the Plan shall
be two million (2,000,000) shares of the Company's Common Stock, $.01 par value
per share ("Common Stock").

     (b)  If any outstanding option under the Plan for any reason expires or is
terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.

     (c)  All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended to date and as may be amended from time to time (the
"Code").

5.   TERMS, CONDITIONS AND FORM OF OPTIONS

     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:

     (a)  Option Grants and Dates. Upon effectiveness of the Plan, options to
purchase 50,000 shares shall be granted automatically to any eligible director
(as defined in Section 3) on the close of business on the date of his or her
initial election or appointment to the Board of Directors if such initial
election or appointment occurs on or after the date of the 2002 Annual Meeting.
Furthermore, options to purchase 50,000 shares shall be granted automatically to
each eligible director (regardless of whether such eligible director was first
elected or appointed

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before, on or after the date of the 2002 Annual Meeting), upon each anniversary
date of his or her initial election or appointment, which anniversary date
occurs on or after the date of the 2002 Annual Meeting; provided that such
eligible director's service is scheduled to continue beyond such anniversary
date.

     (b)  Reduction of Shares Subject to Option; Exercisability. Notwithstanding
Section 5(a) above, any options which have been granted to an eligible director
under the Company's 1993 Director Option Plan within twelve months prior to any
grant under this Plan shall be deducted from the option grant due such director
under the Plan. All options granted under the Plan will be immediately
exerciseable.

     (c)  Option Exercise Price. The option exercise price per share for each
option granted under the Plan shall equal (i) if the Shares are then listed on a
national securities exchange or reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") OTC Bulletin Board, or
other system reporting a close price, the closing price of a Share on the date
of grant (or, if no such price is reported on such date, such price as reported
on the nearest preceding day) (ii) if the shares are then not so listed or
reported but traded in the over-the-counter market, the average closing bid and
asked prices per share on such date; or (iii) the fair market value of the stock
on the date of grant, as determined by the Board of Directors, if the shares are
not publicly traded.

     (d)  Option Non-Transferable. Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or by
the laws of descent and distribution, or pursuant to a qualified domestic
relations order (as defined in section 414(p) of the Code), and shall be
exercised during the lifetime of the optionee only by him. No option or interest
therein may be transferred, assigned, pledged or hypothecated by the optionee
during his lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.

     (e)  Exercise Period. Except as otherwise provided in the Plan, each option
may be exercised fully on the date of grant of such option, provided, that
subject to the provisions of Section 5(f), no option may be exercised more than
90 days after the optionee ceases to serve as a director of the Company. No
option shall be exercisable after the expiration of ten (10) years from the date
of grant or prior to approval of the Plan by the stockholders of the Company.

     (f)  Exercise Period Upon Disability or Death. Notwithstanding the
provisions of Sections 5(e), any option granted under the Plan:

          (i)   may be exercised in full by an optionee who becomes disabled
     (within the meaning of Section 22(e)(3) of the Code or any successor
     provision thereto) while serving as a Director of the Company; or

          (ii)  may be exercised

                (x)  in full upon the death of an optionee while serving as a
     director of the Company, or

                (y)  to the extent then exercisable upon the death of
     an optionee within 90 days of ceasing to serve as a director of the
     Company,

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     by the person to whom it is transferred by will, by the laws of descent and
     distribution, or by written notice filed pursuant to Section 5(i);

     in each such case within the period of one year after the date the optionee
     ceases to be such a director; provided, that no option shall be exercisable
     after the expiration of ten (10) years from the date of grant.

     (g)  Exercise Procedure. Options may be exercised only by written notice to
the Company at its principal office accompanied by payment of the full
consideration for the shares as to which they are exercised.

     (h)  Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price in cash, by check (bank check, certified
check or personal check), by money order, or with the approval of the Company in
its sole and absolute discretion (and upon such terms and conditions as the
Company may require) (i) by delivering to the Company for cancellation Common
Stock of the Company with a fair market value as of the date of exercise equal
to the option price or the portion thereof being paid by tendering such shares,
(ii) by delivering to the Company the full option price in a combination of cash
and Holder's full recourse liability promissory note with a principal amount not
to exceed eighty percent (80%) of the option price and a term not to exceed five
(5) years, which promissory note shall provide for interest on the unpaid
balance thereof which at all times is not less than the minimum rate required to
avoid the imputation of income, original issue discount or a below-market rate
loan pursuant to Sections 483, 1274 or 7872 of the Code or any successor
provisions thereto or (iii) by delivering to the Company a combination of cash,
the holder's promissory note and Common Stock of the Company with an aggregate
fair market value and a principal amount equal to the option price. The fair
market value of any shares or other non-cash consideration which may be
delivered upon exercise of an option shall be determined by the Board of
Directors.

     (i)  Exercise by Representative Following Death of Director. A director, by
written notice to the Company, may designate one or more persons (and from time
to time change such designation) including his legal representative, who, by
reason of his death, shall acquire the right to exercise all or a portion of the
option. If the person or persons so designated wish to exercise any portion of
the option they must do so within the term of the option as provided herein. Any
exercise by a representative shall be subject to the provisions of the Plan.

6.   ASSIGNMENTS

     The rights and benefits under the Plan may not be assigned except for the
designation of a beneficiary as provided in Section 5.

7.   TAKE TIME FOR GRANTING OPTIONS

     All options for shares subject to the Plan shall be granted, if at all, not
later than December 31, 2007.

8.   LIMITATION OF RIGHTS

     (a)  No Right to Continue as a Director. Neither the Plan, nor the granting
of an option nor any other action taken pursuant to the Plan, shall constitute
or be evidence of any

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agreement or understanding, express or implied, that the Company will retain a
director for any period of time.

     (b)  No Stockholders' Rights for Options. An optionee shall have no rights
as a stockholder with respect to the shares covered by his options under the
date of the issuance to him of a stock certificate therefore, and no adjustment
will be made for dividends or other rights for which the record date is prior to
the date such certificate is issued.

9.   CHANGES IN CAPITAL STOCK

     (a)  If (x) the outstanding shares are increased, decreased or exchanged
for a different number or kind of shares or other securities of the Company, or
(y) additional shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to such shares or
other securities, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company reorganization,
recapitalization, reclassification, stock dividend, stock split, reserve stock
split or other similar transaction with respect to such shares or other
securities, an appropriate and proportionate adjustment shall be made in (i) the
maximum number and kind of shares reserved for issuance under the Plan, and (ii)
the number and kind of shares or other securities subject to then outstanding
options under the Plan and (iii) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. No fractional shares will be
issued under the Plan on account of any such adjustments. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 9 if such
adjustment would cause the Plan to fail to comply with Rule 16b-3 or any
successor rule promulgated pursuant to Section 16 of the Securities Exchange Act
of 1934.

     (b)  In the event that the Company is merged or consolidated into or with
another corporation (in which consolidation or merger the stockholders of the
Company receive distributions of cash or securities of another issuer as a
result thereof), or in the event that all or substantially all of the assets of
the Company are acquired by any other person or entity, or in the event of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the Board of Directors of any corporation assuming the obligations
of the Company, shall, as to outstanding options, take one or more of the
following actions: (i) provide that such options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation (or an
unexercised options will terminate immediately prior to the consummation of such
transaction unless exercised by the optionee within a specified period following
the date of such notice, or (iii) if, under the terms of a merger transactions,
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of shares of Common
Stock subject to such outstanding options (to the extent then exercisable at
prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such outstanding options in exchange for the termination of such options.

10.  AMENDMENT OF THE PLAN

     The Board of Directors may suspend or discontinue the Plan or review or
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company no revision or amendment shall change the number
of shares subject to the Plan or the number of shares issuable to any director
of the Company under the Plan (except as provided in

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Section 9), change the designation of the class of directors eligible to receive
options, or materially increase the benefits accruing to participants under the
Plan. The Plan may not be amended more than once in any six-month period.

11.  WITHHOLDING

     The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee, any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan.

12.  EFFECTIVE DATE AND DURATION OF THE PLAN

     (a)  Effective Date. The Plan shall become effective when approved by the
Board of Directors and the Company's shareholders. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval shall become effective
when adopted by the Board of Directors, but no option granted after the date of
such amendment shall become exercisable (to the extent that such amendment to
the Plan was required to enable the Company to grant such option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any options granted on
or after the date of such amendment shall terminate to the extent that such
amendment to the Plan was required to enable the Company to grant such option to
a particular optionee.

     (b)  Termination. Unless sooner terminated in accordance with Section 9,
the Plan shall terminate upon the earlier of (i) the close of business on
December 31, 2007, or (ii) the date on which all shares available for issuance
under the plan shall have been issued pursuant to the exercise or cancellation
or options granted the Plan. If the date of termination is determined under (i)
above, the options outstanding on such date shall thereafter continue to have
full force and effect in accordance with the provisions of the instruments
evidencing such options.

13.  NOTICE

     Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.

14.  GOVERNMENTAL REGULATION

     The Company's obligation to sell and deliver shares of the Common Stock
under the Plan is subject to the approval of or requirements of any governmental
authority applicable in connection with the authorization, issuance or sale of
such shares.

15.  COMPLIANCE WITH RULE 16B-3

     Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b or its successor promulgated pursuant to Section 16 of
the Securities Exchange Act of 1934. To the extent any provision of the plan or
action by the Board of Directors in administering the

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Plan fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board of Directors.

16.  GOVERNING LAW

     The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.

                                        6<PAGE>

                                                                     Exhibit 4.7
                         ENVIRONMENTAL POWER CORPORATION

                             STOCK OPTION AGREEMENT

This Stock Option Agreement is entered into between Environmental Power
Corporation (the "Company") and Robert I. Weisberg ("Optionee").

I.   NOTICE OF STOCK OPTION GRANT

The undersigned Optionee has been granted an Option to purchase Common Stock of
the Company, subject to the terms and conditions of this Option Agreement, as
follows:

     Grant Number                        _______________________________________

     Date of Grant                                         5/2/01
                                         ---------------------------------------

     Vesting Commencement Date                             5/2/01
                                         ---------------------------------------

     Exercise Price per Share                               $0.43
                                         ---------------------------------------

     Total Number of Shares Granted                       100,000
                                         ---------------------------------------

     Total Exercise Price                                 $43,000
                                         ---------------------------------------

     Type of Option:                            ____   Incentive Stock Option

                                                 X  Nonqualified Stock Option
                                                ---

     Term/Expiration Date:                                 5/2/06
                                         ---------------------------------------

Vesting:

This Option shall be exercisable, in whole or in part, immediately upon the
grant of the Option on May 2, 2001.

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Termination Period:

Upon Optionee's death or disability, this Option may be exercised for one (1)
year after Optionee's death or disability, respectively.

II.  AGREEMENT

     1.  Grant of Option. The Company hereby grants to the Optionee an Option to
purchase the number of Shares set forth in the Notice of Grant, at the Exercise
Price per Share set forth in the Notice of Grant. This Option shall be treated
as a Nonqualified Stock Option ("NSO").

     2. Exercise of Option.

          (a) Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of this Option Agreement.

          (b) Method of Exercise and Payment. This Option shall be exercisable
by delivery of an Exercise Notice in the form attached as Exhibit A which shall
state the election to exercise the Option, the number of Shares with respect to
which the Option is being exercised, and such other representations and
agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all exercised
Shares. Optionee may pay the Exercise Price by cash or check (bank check,
certified check, or personal check) or, with the approval of the Company, by
delivering to the Company the full Exercise Price in a combination of cash, not
less than the par value of one share of Common Stock multiplied by the number of
shares of Common Stock with respect to which the Option is being exercised, and
a full recourse promissory note with a term not to exceed five (5) years, which
promissory note shall provide for interest on the unpaid balance thereof which
at all times is not less than the minimum rate required to avoid the imputation
of income, original issue discount or a below-market rate loan pursuant to
Sections 483, 1274 or 7872 of the Internal Revenue Code of 1986, as amended.
This Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by the aggregate Exercise Price.

          In addition, as an alternative to payment of the Exercise Price in
accordance with the preceding paragraph, the Optionee may elect to effect a
cashless exercise by so indicating on the exercise notice and including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "Cashless Exercise"). In the
event of a Cashless Exercise, the Optionee shall surrender this Option for that
number of shares of Common Stock determined by multiplying the number of shares
of Common Stock for which this Option is being exercised by the difference
between the "Closing Price", as herein defined minus the exercise price in
effect at such time, divided by the Closing Price. The "Closing Price" for each
day shall be

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the last reported sale price regular way or, in case no sale takes place on such
day, the average of the closing bid and asked prices regular way on such day, in
either case as reported on the primary exchange, automated quotation system or
reporting system on which the Common Stock is listed or trades or is reported,
or if no prices shall be so reported, the average of the bid and asked prices
for such day as furnished by any New York Stock Exchange member firm selected
from time to time by the Company for such purpose, or if no such bid and asked
prices can be obtained from any such firm, the fair market value of one share of
the Common Stock on such day as determined in good faith by the Board of
Directors of the Company.

              No Shares shall be issued pursuant to the exercise of an Option
unless such issuance and such exercise complies with applicable federal, state
and local securities laws. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.

      3.  Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.

     4.   Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option.

     5.   Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.

     6.   Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

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          7.  Tax Consequences. Set forth below is a brief summary as of the
date of this Agreement of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

               (a) Exercise of NSO. There may be a regular federal income tax
liability, at ordinary income tax rates, upon the exercise of the Option. If
Optionee is an employee or a former employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

               (b) Disposition of Shares. The disposition of Shares is generally
a taxable event. The tax treatment will depend on the length of time for which
the Shares have been held by Optionee.

          8.  Entire Agreement; Governing Law. This Option Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes in its entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the laws of
the State of New Hampshire.

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Optionee has reviewed this Option Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the Company
upon any questions arising under this Option. Optionee further agrees to notify
the Company upon any change in the residence address indicated below.

OPTIONEE                                    ENVIRONMENTAL POWER CORPORATION

_______________________________________     By:_________________________________

Signature                                   Name:_______________________________

_______________________________________     ____________________________________

Print Name                                  Title:

_______________________________________

_______________________________________

Residence Address

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                                                                       EXHIBIT A

                                 EXERCISE NOTICE

ENVIRONMENTAL POWER CORPORATION
500 Market Street, Suite 1-E
Portsmouth, NH 03801
Attention: _________________

          1. Exercise of Option. Effective as of today, ___________, 20__, the
undersigned Optionee hereby elects to exercise Optionee's option to purchase
________ Shares of the Common Stock of ENVIRONMENTAL POWER CORPORATION (the
"Company") under and pursuant to the Stock Option Agreement dated June ___, 2001
(the "Option Agreement").

          2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement.

          3. Representations of Optionee. Optionee acknowledges that Optionee
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions.

          4. Rights as Shareholder. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance.

          5. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

          6. Restrictive Legends and Stop-Transfer Orders.

               (a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:

          THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
          INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933 (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
          BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED,

                                      A-1

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          PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN
          OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT
          SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND ANY STATE
          SECURITIES LAWS.

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
          ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
          THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
          MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
          RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
          THESE SHARES.

               (b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

               (c) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

          7. Successors and Assigns. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.

          8. Governing Law; Severability. This Exercise Notice is governed by
the laws of the State of New Hampshire.

                                      A-2

<PAGE>

          9. Entire Agreement. The Option Agreement is incorporated herein by
reference. This Exercise Notice, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee's
interest except by means of a writing signed by the Company and Optionee.

Submitted by:                              Accepted by:

OPTIONEE                                   ENVIRONMENTAL POWER CORPORATION

___________________________________        By: ______________________________

Signature                                  Name: ____________________________

Robert I. Weisberg                         Title: ___________________________
-----------------------------------

Print Name

Address:                                   Address:
-------                                    -------

___________________________________        500 Market Street, Suite 1-E
                                           ----------------------------------

___________________________________        Portsmouth, New Hampshire  03801
                                           ----------------------------------

                                           __________________________________

                                           Date Received

                                      A-3

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                                                                      EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:     Robert I. Weisberg

COMPANY:      Environmental Power Corporation

SECURITY:

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

(a)  Optionee is aware of the Company's business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. Optionee is acquiring
these Securities for investment for Optionee's own account only and not with a
view to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").

(b)  Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and any other legend required under applicable
state securities laws.

(c)  Optionee is familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly

                                      B-1

<PAGE>

or indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 144 requires the resale to occur not
less than one year after the later of the date the Securities were sold by the
Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the following conditions:
(1) the resale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended); and, in the case
of an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three-month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.

(d)  Optionee further understands that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                              Signature of Optionee:

                                              __________________________________

                                              Date: __________________________

                                      B-2

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