EXHIBIT
      10.18

    


    

     

    OPTION
      AGREEMENT

    Dated
      January 10, 2006

     

    THIS
      OPTION AGREEMENT (“Agreement”)
      is
      among Trulite, Inc. (“Trulite”)
      Synexus Energy, Inc. (“Synexus”)
      and
      the shareholders of Synexus (“Shareholders”).
      Synexus and Trulite are sometimes collectively referred to as the “Parties”.

     

    Synexus
      desires to sell, and Trulite desires to buy, the option to purchase the
      ownership of Synexus in exchange for the cash and services described below,
      subject to the terms and conditions set forth below.

     

    
      	1.  	
              Right
                of First Refusal and Option.

            


    

     

    
      	a.  	
              Grant.
                The Shareholders hereby unconditionally and irrevocably grant to
                Trulite
                or its nominee, in exchange for providing integration services and
                related
                costs for the Kitty Hawk project for the Agreement Term specified
                in this
                document, a right of first refusal and an Option to purchase, the
                Interests for the Purchase Price.

            


    

     

    


    
      	b.  	
              Interests.
                The “Interests”
                are (A) all of the ownership rights, title and interest with respect
                to
                Synexus, including but not limited to (i) the certificates (if any)
                representing ownership of Synexus, and all books and records related
                thereto, electronic or otherwise and whether now or hereafter created
                by
                or for the benefit of Synexus, (ii) all rights and privileges of
                Synexus
                with respect to the ownership of Synexus (including without limitation,
                all subscription warrants, rights or options issued with respect
                to
                Synexus and all representations, warranties, registration rights
                and other
                undertakings of any person inuring to the benefit of the Shareholders
                in
                respect thereof) and (iii) all unpaid cash and non-cash dividends
                and all
                other unpaid payments, return of capital, property and distributions
                made
                on or with respect to Synexus and (B) all rights and obligations
                of
                Shareholders related to Synexus, if the “Interests” are in the nature of a
                contract.

            


    

     

    
      	c.  	
              Purchase
                Price.
                The “Purchase
                Price”
                is (i) if the Option Notice is delivered from January 3, 2006 up
                to and
                including April 30, 2006, $4,750,000.00 in cash and Trulite Stock
                (ii) if
                the Option Notice is delivered from May 1, 2006 up to and including
                October 31, 2006, $6,500,000.00 in cash and Trulite Stock. The number
                of
                common shares of Trulite Stock delivered under the proceeding sentences
                shall be equal to the dollar amount of cash divided by a price per
                share
                equal to either (a) if Trulite is not listed on a national exchange
                on the
                day of the delivery of the Option Notice, at the value determined
                by
                [Energy Capital Solutions] in its valuation report delivered to Trulite
                during January 2006 or (b) if such shares of Trulite are traded on
                a
                national exchange on the day of the delivery of the Option Notice,
                the
                average price per share publicly reported as of the close of business
                on
                the 20 days on which the shares were available for trading immediately
                preceding the day of the delivery of the Option
                Notice.

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	d.  	
              Exercise
                of Option.
                At any time during the term of this Agreement, Trulite or its nominee
                may
                make its election to exercise its option to purchase the Interests
                (“Option”)
                by delivering written notice (“Option
                Notice”)
                to the Shareholders referring to the Option and specifying the date
                and
                place of the closing, which must be within 60 days of such notice
                and no
                later than the last day of the term of this Agreement. The Option
                shall be
                deemed exercised upon payment of the Purchase Price. Synexus and
                the
                Shareholders will cooperate and assist with completing the purchase
                of the
                Interests, including executing documents as reasonably requested
                and
                meeting in person to complete the closing.


            


    

     

    
      	e.  	
              Right
                of First Refusal.
                The Shareholders must deliver to Trulite written notice of any direct
                or
                indirect proposed sale, assignment, transfer or encumbrance of the
                Interests or of any entity that directly or indirectly owns or has
                any
                current or contingent interest in the Interests which describes the
                material terms and conditions of such transaction and its proposed
                date,
                which notice must be delivered to Trulite before 60 days before such
                proposed date. Within 20 days of the receipt of such notice by Trulite,
                Trulite shall deliver a written response which either consents to
                such
                proposed transaction or gives notice of Trulite’s exercise of the Option
                (or notice of Trulite’s nominee’s exercise of the Option). If Trulite
                consents to such proposed transaction, the Shareholders may complete
                the
                transaction on or after such proposed date and this Agreement shall
                terminate on the date of such transaction, or such earlier date to
                which
                Trulite may consent in writing.

            


    

     

    
      	f.  	
              If
                this Agreement is terminated with the consent of Trulite without
                Trulite
                having given notice of its election to exercise its Option, then
                the
                ownership of the Interests shall remain with the Shareholders. If
                this
                Agreement is terminated without the consent of Trulite, then Trulite
                may,
                within 20 days of receiving written notice of such termination, give
                notice and Trulite (or its nominee) may specify a closing date that
                is
                after such termination.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	2.  	
              Agreement
                Term.
                

            


    

     

    
      	a.  	
              This
                Agreement shall be effective for the period beginning on January
                3,
                2006 up
                to and including October 31, 2006, unless earlier terminated as herein
                provided or such term is extended by mutual written agreement of
                the
                Parties. At any time while this Agreement is in effect, either Party
                may
                terminate this Agreement, during the occurrence of an Event of Default
                (defined below), by giving written notice to the other Party not
                less than
                [90 days] in advance of the desired termination
                date.

            


    

     

    
      	b.  	
              Upon
                the termination of this Agreement the respective rights and obligations
                of
                the Parties shall cease and be of no further force and effect except
                that:

            


    

     

    
      	i.  	
              If
                the agreement has been terminated by Synexus pursuant to Section
                3 below,
                and Trulite has not delivered the Option Notice under Section 1 on
                or
                before the date of such termination, Trulite shall pay Synexus $750,000
                in
                cash, due [within 10 days of such notice]. If Trulite fails to pay
                such
                amount on such date, such amount shall accrue interest at the highest
                lawful rate until paid.

            


    

     

    
      	ii.  	
              If
                the Agreement has been terminated by Trulite pursuant to Section
                3 below,
                Trulite shall not be obligated to pay any additional
                amount.

            


    

     

    
      	iii.  	
              The
                obligations of Synexus under Section 11 shall survive termination
                for the
                period set forth therein.

            


    

     

    
      	3.  	
              Events
                of Default:

            


    

     

    
      	a.  	
              If
                Synexus breaches a covenant hereunder, Trulite may give written notice
                to
                Synexus and Synexus may attempt to cure such breach. If such breach
                has
                not been cured within 30 days after the delivery of such notice,
                an “Event
                of Default” of Synexus will have occurred, and Trulite may, but is not
                required to, send the notice of termination described in Section
                2.

            


    

     

    
      	b.  	
              If
                Trulite breaches a covenant hereunder, Synexus may give written notice
                to
                Trulite, and Trulite may attempt to cure such breach. If such breach
                has
                not been cured within 30 days after the delivery of such notice,
                an “Event
                of Default” of Trulite will have occurred and Synexus may, but is not
                required to, send the notice of termination described in Section
                2.

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	4.  	
              Governing
                Law.
                This Agreement is expressly subject to all valid laws, regulations,
                rules,
                or orders of governmental authorities with jurisdiction over the
                subject
                matter of this Agreement. This Agreement shall be interpreted under
                the
                laws of the State of Texas, without regard to any choice of law rule
                otherwise requiring application of laws of another
                jurisdiction.

            


    

     

    
      	5.  	
              Confidential
                Information.
                During the term of this Agreement and for a period of five (5) years
                thereafter, Synexus will hold in confidence and not disclose to any
                other
                entity, except as necessary for the performance of the services (and
                then
                only to the extent required for the particular portion of the services
                being performed and on a confidential basis satisfactory to Trulite)
                or
                except as is required by law, any confidential information that is
                disclosed to or acquired by Synexus in performing services hereunder.
                For
                purposes of this Agreement, “confidential information” includes all
                information relating to Trulite’s technology in a documentary or tangible
                form, and (subject to the exclusions set forth below) includes all
                information relating to Trulite, Trulite’s subsidiaries or affiliates, or
                to any other company or person, or to their respective operations,
                plans,
                projections, or interest in power generation matters and/or power
                distribution matters, and any related reports, technical or other
                data,
                analyses, opinions or other materials that: (i) are proprietary to
                Trulite
                or any other person or entity; (ii) constitute a trade secret of
                Trulite
                or any other person or entity; (iii) have been marked proprietary
                or
                confidential by or on behalf of Trulite or any other person or entity,
                or
                (iv) is or have been disclosed to Synexus by Trulite or any other
                person
                or entity with the clear understanding that it is confidential and
                is to
                remain so. 

            


    

     

     

    
      	6.  	
              Entire
                Agreement; Amendments.
                This Agreement constitutes the entire understanding of the Parties
                with
                respect to the subject matter hereof, and supersedes all prior or
                contemporaneous negotiations, understandings and agreements, whether
                written or oral, of the Parties with respect to the subject matter
                hereof.
                Any amendments or modifications to this Agreement shall be enforceable
                only if made in writing and signed by an authorized representative
                of the
                Party against whom enforcement is sought. In particular, the Parties
                agree
                that no term, condition, or provision of any work order, invoice,
                delivery
                ticket, or other document submitted by Synexus to Trulite shall have
                the
                effect of modifying or waiving in any manner the provisions of this
                Agreement unless such document shall be accepted and executed by
                Trulite
                expressly as an amendment to this Agreement.


            


    

     

    
      	7.  	
              Intellectual
                Property.
                The Parties shall be the joint owners of any work product, whether
                completed or not, created, produced, developed or prepared in connection
                with the performance of services under this Agreement, including
                all data,
                information, ideas (whether or not patentable) and expressions of
                ideas
                (“Work
                Product”).
                The Parties shall be the joint owner of all intellectual property
                rights
                in such work product, including all trade secret rights (e.g., the
                right
                of first publication), all patent rights, and all rights of copyright
                (“Intellectual
                Property”).
                It is the intention of the Parties that any work product is a “work for
                hire” as that term is used in the Federal Copyright Act. The Parties agree
                that each may separately use, sell, assign or grant licenses to use,
                on a
                non-exclusive basis, the rights to use and develop the Work Product
                and
                Intellectual Property (collectively “IP”).
                The Parties may separately modify the IP, alone or in combination
                with
                separate intellectual property, and may own, utilize and transfer
                such
                modifications, and such separate intellectual property, on an exclusive
                basis, and may take actions to protect such modifications or separate
                intellectual property, including but not limited to creating patents,
                trademarks or copyrights, but only if such actions do not unreasonably
                interfere with the other Party’s nonexclusive rights to the IP.
                

            


    

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
      	8.  	
              Assignment.
                This Agreement may not be assigned by Synexus in whole or in part.
                This
                Agreement shall be assignable by Trulite, without the consent of
                Synexus,
                to a subsidiary, parent or other affiliate of Trulite and in such
                event
                this Agreement shall bind and inure to the benefit of any such assignee,
                and such assignee shall be substituted for Trulite in all respects
                under
                this Agreement.

            


    

    


    
      	9.  	
              Notices.
                All notices hereunder must be in writing and shall be deemed to have
                been
                given upon receipt of delivery by: (a) personal delivery to the designated
                individual, (b) certified or registered mail, postage prepaid, return
                receipt requested, (c) a nationally recognized overnight courier
                service
                (against a receipt therefor) or (d) facsimile transmission with
                confirmation of receipt. All such notices must be addressed as follows
                or
                such other address as to which any party hereto may have notified
                the
                other in writing: 

            


    

    


    If
      to
      Synexus, to:

    


    12335
      Kingsride, #205

    Houston,
      Texas 77024

    Attention:
      Evan Hughes

    Fax:
      ____________.

    


    If
      to
      Trulite, to:

    


    ADDRESS

    Attention:
      

    Fax:
      

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    With
      a
      copy to: 

    


    Jones,
      Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P. 

    600
      Travis Street, Suite 6601

    Houston,
      Texas 77002

    Attention:
      Jeffrey J. Nichols

    Fax:
      (713) 437-1810

    


    


    


    [SEE
      ATTACHED SIGNATURE PAGES]

     

    
 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	SYNEXUS ENERGY,
              INC.	 	 
	 	 	 
	By:
	 	 
	
              
 	 	
            
	Name:
	 	 
	
              
  	 	 
	Title: 	 	 
	
              
  	 	 
	Address: 	 	 
	
              
 

              
 

              
  	 	 
	Fax: 	 	 
	
              
  	 	 
	E-Mail (but delivery by email shall
              not
              constitute notice): 	 	 
	
              
   	 	 
	Attention: 	 	 
	
              
  	 	 


    

    
      
        
          
            	TRULITE TECHNOLOGIES,
                    INC	 	 
	 	 	 
	By:
	 	 
	
                    
 	 	
                  
	Name:
	 	 
	
                    
  	 	 
	Title: 	 	 
	
                    
  	 	 
	Address: 	 	 
	
                    
 

                    
 

                    
  	 	 
	Fax: 	 	 
	
                    
  	 	 
	E-Mail (but delivery by email
                    shall not
                    constitute notice): 	 	 
	
                    
   	 	 
	Attention: 	 	 
	
                    
  	 	 


          

          
            
              
                	
                        SHAREHOLDERS:

                        


                        CONTANGO
                          CAPITAL PARTNERS, L.P.

                      	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
                        
                          
 By:
                          Contango Capital Partnership Management,
                          L.L.C.

                        By:
                          William J. Berger

                        Managing
                          Partner

                      	 	
                      
	 	 	 


              

            

          

        

      

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      
        	
                
 J.
                KEVIN SHURTLEFF	 	 
	 	 	 
	
              	 	
              
	
                
 ERIC
                J. LADD	 	 
	 	 	 
	 	 	 
	
                
 JAMES
                L.
                SHURTLEFF	 	 
	 	 	 
	
              	 	 
	
                
SANDRA
                W. SHURTLEFF	 	 


      



    
      
        
        

      

      
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