Document:

ex10-7.htm

Exhibit
    10.7
    

    

    

    

    

    

    

    

    

    ENERGY
      MANAGEMENT AGREEMENT

    

    Between

    

    Texoga
      Tech

    

    and

    

    Fulcrum
      Power Services L.P.

    

    

    

    

    Dated

    January
      11, 2007

    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    TABLE
      OF CONTENTS

    

     

    
      
        	
                ARTICLE
                  I

              	DEFINITIONS
                AND INTERPRETATION	4
	
                1.1

              	
                Definitions

              	4
	
                1.2

              	
                Interpretation

              	7
	 	 	 
	
                ARTICLE
                  II

              	NATURE
                OF RELATIONSHIP AND TERM	8
	
                2.1

              	
                Standard
                  of Care

              	8 
	
                2.2

              	
                Directives

              	8 
	
                2.3

              	
                Non-Exclusivity;
                  Freedom to Pursue Opportunities

              	8 
	
                2.4

              	
                Reliance
                  on Information

              	8 
	
                2.5

              	
                Compliance
                  with Laws

              	8 
	
                2.6

              	
                Term

              	8 
	 	 	 
	
                ARTICLE
                  III

              	AUTHORIZATIONS
                AND DUTIES	9
	
                3.1

              	
                Authorizations
                  and Duties

              	9 
	
                3.2

              	
                Scope
                  of Services

              	9 
	
                3.3

              	
                Record
                  Keeping and Reports

              	12 
	
                3.4

              	
                Staffing

              	12 
	 	 	 
	
                ARTICLE
                  IV

              	FULCRUM'S
                REPRESENTATIONS AND WARRANTIES	12
	 	 	 
	
                ARTICLE
                  V

              	TEXOGA’S
                REPRESENTATIONS AND WARRANTIES	13
	 	 	 
	
                ARTICLE
                  VI

              	COMPENSATION	13
	
                6.1

              	
                Set
                  Up Fees

              	13
	
                6.2

              	
                Reimbursable
                  Expenses

              	13 
	
                6.3

              	
                Monthly
                  Fee

              	14 
	
                6.4

              	
                Payment

              	14 
	
                6.5

              	
                Sales
                  and Use Taxes

              	14 
	
                6.6

              	
                Monthly
                  Settlement of ERCOT Revenues

              	14 
	
                6.7

              	
                Payment
                  Disputes

              	14 
	
                6.8

              	
                Interest
                  on Late Payments

              	14 
	 	 	 
	
                ARTICLE
                  VII

              	SUSPENSION
                OF TERM OR EARLY TERMINATION	15
	
                7.1

              	
                Suspension
                  of Term

              	15 
	
                7.2

              	
                Resumption
                  of Operations

              	15 
	
                7.3

              	
                Early
                  Termination

              	15 
	
                 

              	 	 
	
                ARTICLE
                  VIII

              	INDEMNITY	15
	
                8.1

              	
                “Claims”
                  Defined

              	15 
	
                8.2

              	
                Fulcrum
                  Indemnification Obligations

              	15 
	
                8.3

              	
                Texoga
                  Indemnification Obligations

              	15 
	
                8.4

              	
                Cooperation
                  Regarding Claims

              	16 
	
                8.5

              	
                Defense
                  of Claims and Limitation on Indemnity

              	16 
	
                8.6

              	
                Concurrent
                  Misconduct

              	16 
	
                8.7

              	
                No
                  Consequential Damages

              	16 
	
                8.8

              	
                Limitation
                  of Liability

              	16 
	
                 

              	 	 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	 	 
	
                ARTICLE
                  IX

              	DEFAULTS,
                REMEDIES AND DISPUTE RESOLUTION	17
	
                9.1

              	
                Events
                  of Default

              	17 
	
                9.2

              	
                Remedies
                  for Default

              	18 
	
                9.3

              	
                Termination

              	18 
	
                9.4

              	
                Rights
                  and Remedies in Law or Equity

              	18 
	
                9.5

              	
                Dispute
                  Resolution

              	19 
	 	 	 
	
                ARTICLE
                  X

              	MISCELLANEOUS
                PROVISIONS	20
	
                10.1

              	Successors
                and Assigns	20 
	
                10.2

              	Notices	20 
	
                10.3

              	
                Entirety

              	22 
	
                10.4

              	
                Governing
                  Law

              	22 
	
                10.5

              	
                Counterparts

              	22 
	
                10.6

              	
                Scope
                  of Authority

              	22 
	
                10.7

              	
                Third
                  Parties

              	22 
	
                10.8

              	
                Confidentiality

              	22 
	
                10.9

              	
                Survival
                  of Obligations

              	22 
	
                10.10

              	
                Severability

              	22 
	
                10.11

              	
                Force
                  Majeure

              	23 
	
                10.12

              	No
                Implied Warranties	23 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    ENERGY
      MANAGEMENT AGREEMENT

    

    

    This
      Energy Management Agreement (this
“Agreement”) by and between Fulcrum Power Services L.P., a Texas limited
      liability partnership (“Fulcrum”), and Texoga Technologies< Inc.
      (“Texoga”), a Texas Corporation, sometimes hereinafter
      referred to collectively as the “Parties” and individually as a “Party” is made
      effective as of January 11, 2007 (the “Effective Date”).

    

    RECITALS:

    

    WHEREAS,
      Texoga is the process of
      developing a 5.4 MW biodiesel generating facility located in  the City
      of Oak Ridge North, TX (the “Facility”); and

    

    WHEREAS
      Fulcrum is engaged in the
      business of providing Energy Management Services (as defined herein) for its
      customers to assist them in the scheduling of energy and ancillary services
      through the bilateral markets and the markets run by regional independent system
      operators of the electricity transmission grid; and

    

    WHEREAS,
      Texoga desires to engage
      Fulcrum to provide Energy Management Services in accordance with the duties
      outlined in Section 3 as its non-exclusive agent of this Agreement, and Fulcrum
      is willing to provide such Energy Management Services.

    

    NOW,
      THEREFORE, in consideration of the mutual promises contained herein, and other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, Fulcrum and Texoga agree as follows:

    

    I.

    

    DEFINITIONS
      AND INTERPRETATION

    

    1.1           Definitions.  The
      following terms when used herein shall have the meanings set forth
      below.  Any other capitalized terms used but not defined herein shall
      have the meanings ascribed to them in Section 2 of the ERCOT
      Protocols.

    

    "Affiliate"
      means, with respect to any
      Party, any other person (other than an individual) that directly or indirectly,
      through one or more intermediaries, controls, is controlled by, or is under
      common control with, such Party.  For purposes of the foregoing
      definition, “control” means the direct or indirect ownership of fifty percent
      (50%) or more of the outstanding capital stock or other equity interests having
      ordinary voting power

    

    "Agreement"
      means this Energy
      Management Agreement, including all exhibits, amendments and supplements hereto,
      all as the same may be amended or supplemented from time to time.

    

    “Ancillary
      Services” means the
      ancillary services described in the ERCOT Protocols.

    

    "Applicable
      Laws" means any act,
      statute, law, regulation, permit, license, ordinance, rule, judgment, order,
      decree, directive, guideline, protocol or policy (to the extent mandatory)
      or
      any similar form of decision or determination by, or any interpretation or
      administration of, any of the foregoing by any government authority with
      jurisdiction over Texoga, or the Energy Management Services to be performed
      under this Agreement.

    

    "Business
      Days" means all Days except
      Saturdays, Sundays or holidays that banks observe in Texas.

    

    "Confidential
      Information" has the
      meaning given such term in Section 10.8.

    

    "CPT"
      means the current prevailing time
      in Houston, Texas.

    

    “Customer
      Effective Date” means the
      first Day Texoga produces and schedules energy.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     "Day"
      means a consecutive 24-hour
      period commencing at the beginning of the HE 0100 CPT and ending at the end
      of
      the HE 2400 CPT.

    

    “Defaulting
      Party” has the meaning set
      forth in Section 9.2.

    

    “Effective
      Date" means the date first
      set forth above in this Agreement.

    

    "Energy
      Management Services" means
      services to assist Texoga in QSE scheduling for Texoga’s generation Facility
      consistent with ERCOT Protocols, Applicable Laws, and includes the services
      specifically enumerated in Section 3.2.

    

    “ERCOT
      Protocols” means the ERCOT
      Operating Guides and the ERCOT Market Guides, as may be revised from time to
      time.

    

    "ERCOT”
means
      the entity that is
      charged with the nondiscriminatory coordination of market transactions,
      system-wide transmission planning, and network reliability within ERCOT, known
      as the ERCOT independent system operator (ISO), or its successor.

    

    “Event
      of Default” has the meaning set
      forth in Section 9.

    

    “Facility”
means
      the  3
      Caterpillar diesel generating sets with a rated capacity of 1.8 MW each,
      aggregated as a 5.4 MW biodiesel power generation facility, located in the
      City
      of Oak Ridge North TX, owned by Texoga.

    

    “Forecast”
shall
      mean the report
      generated by Texoga on a day-ahead and hourly basis outlining expected hourly
      Power production for the Facility.

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    "Fulcrum"
      means Fulcrum Power Services
      L.P., and its permitted successors, affiliates and assigns.

    

    "Fulcrum
      Liaison" means the person
      designated by Fulcrum under Section 3.4 hereof, who shall have full authority
      to
      bind Fulcrum in all matters relating to the performance and administration
      of
      this Agreement.

    

    "Generation
      Manager" means the
      person(s) designated by Texoga under Section 3.1(c) for the general management
      of the Texoga Facility, who shall have full authority to bind Texoga in all
      matters relating to the performance and administration of this
      Agreement.

    

    “Generator”
      means a power generation facility that produces power .

    

    “Governmental
      Authority” means any
      federal, state, local, municipal or other government, any governmental,
      regulatory or administrative agency, commission or other authority lawfully
      exercising or entitled to exercise jurisdiction over the Parties or any
      Transaction contemplated herein.

    

    "HE"
      means "hour ending."

    

    “Texoga”
means
      Texoga Tech and its
      permitted successors, affiliates and assigns.

    

    "Month"
      means the period beginning at
      the start of the HE 0100 CPT on the first Day of a calendar month and
      terminating at the end of the HE 2400 CPT on the last Day of such calendar
      month.

    

    "Power"
      means electrical energy
      generated, purchased or sold by Texoga.

    

    "Power
      Contract(s)" means the contracts
      entered into, or to be entered into, by Texoga for the purchase or sale of
      Power
      and/or Ancillary Services from third parties.

    

    “PUCT”
means
      the Public Utility
      Commission of Texas.

    

    “QSE”
shall
      mean Qualified Scheduling
      Entity as certified by ERCOT.

    

    

    “Resource” is
      a
      generation facility capable of providing electrical power to the ERCOT
      grid.

    

    “Resource
      Imbalance Charges” shall have
      the meaning defined in the ERCOT Protocols.

    

    “Resource
      Plan” shall mean a plan
      provided by a QSE to ERCOT indicating the forecasted
      state of Resources including information on availability, limits and forecasted
      Power generation of each Resource.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

    “Schedule
      or Scheduling” when used as a
      verb, means to notify, request and confirm with ERCOT or a counterparty that
      a
      quantity of Power or Ancillary Services is to be made available, delivered
      or
      received at a particular delivery point, and to provide such information and
      take such other action as may be necessary to cause such Person to recognize
      and
      confirm the delivery with respect of that energy.  A “Schedule” is the
      schedule under which a quantity of Power or Ancillary Services are to be made
      available, delivered or received together with all such information as may
      be
      necessary to implement the delivery or receipt of such energy.

    

    "Term" means
      the
      period of this Agreement as specified in Section 2.5(a).

    

    “Timely
      Notice,” as contemplated within
      Section 8.2 and 8.3, shall mean such notice by a party as would be required
      to
      enable the other party effectively to assert and prosecute appropriate defenses
      relative to a Claim or legal action.

    

    “Written
      Communication” includes
      electronic means via verified email transmissions, facsimile transmissions
      and
      other documents sent via mail services as attachments (see section
      10.2).

    

    1.2           Interpretation.  Except
      as otherwise expressly provided, the rules of interpretation and construction
      set forth below shall apply to this Agreement:

    

    (a)           all
      defined terms in the singular shall have the same meaning when used in the
      plural and vice versa;

    

    (b)           the
      terms "hereof," "herein," "hereto," and similar words refer to this entire
      Agreement and not to any particular Article, Section, Exhibit or any other
      subdivision of this Agreement;

    

    (c)           references
      to "Article," "Section" or "Exhibit" are to this Agreement unless specified
      otherwise;

    

    (d)           references
      to any law, statute, rule, regulation, notification or statutory provision
      (including Applicable Laws) shall be construed as a reference to the same as
      it
      applies to this Agreement and may have been, or may from time to time be,
      amended, modified or re-enacted;

    

    (e)           references
      to "includes," "including" and similar phrases shall mean "including, without
      limitation";

    (f)           the
      captions, section numbers and headings in this Agreement are included for
      convenience of reference only and shall not in any way affect the meaning or
      interpretation of this Agreement; and

    

    (g)           "or"
      may not be mutually exclusive, and can be construed to mean "and" where the
      context requires there to be a multiple rather than an alternative
      obligation.

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    

    II.

    

    NATURE
      OF RELATIONSHIP AND TERM

    

    

    2.1           Standard
      of Care.  Fulcrum shall perform Energy Management
      Services for Texoga in accordance with (i) Applicable Laws, and, to the extent
      not inconsistent with Applicable Laws, (ii) this Agreement, (iii) the Power
      Contracts, and (iv) ERCOT Protocols.

     

    2.2           Directives.  Fulcrum
      will follow directives issued to it by Texoga, provided that, in Fulcrum’s sole
      reasonable discretion, doing so will not endanger health, safety, the
      environment, or will result in a legal violation.  Fulcrum will not be
      liable to Texoga for any damages resulting from implementation of any such
      directives, and Texoga will indemnify Fulcrum from and against any Claims
      (defined in Section 8 below) arising in connection with Fulcrum’s carrying out
      of Texoga’s directives.

     

    2.3           Non-Exclusivity;
      Freedom to Pursue
      Opportunities. Fulcrum
      shall provide the Energy Management Services to Texoga in a manner consistent
      with industry standards.  Texoga and Fulcrum each acknowledge that the
      engagement of Fulcrum pursuant to this Agreement is non-exclusive with respect
      to other arrangements that Texoga or Fulcrum may wish to enter into and Texoga
      or Fulcrum may, notwithstanding this Agreement, engage in whatever activities
      each may choose including, without limitation, providing or contracting for
      services in the same geographic region (or other competing activities) for
      its
      own account (or for the account of others), regardless of whether the same
      are
      competitive with the other Party.  Subject to the standard of care set
      forth above, neither this Agreement nor any activity undertaken pursuant hereto
      shall prevent Fulcrum from engaging in such activities, or require Fulcrum
      to
      disclose the same.  Furthermore, Texoga shall provide Fulcrum the
      right to provide similar energy management services to additional generation
      assets that Texoga develops within the ERCOT region by allowing Fulcrum to
      match
      any offer made by another prospective provider of energy management
      services.

    

    2.4           Reliance
      on Information.

    

                   
      (a)          The Parties agree
      and acknowledge that Fulcrum is not acting as a commodity trading advisor (as
      defined in the Commodity Exchange Act). Any energy commodity
      market information or opinions provided by Fulcrum to Texoga during the course
      of the relationship subject to this Agreement are collateral to the contracted
      relationship; such information
      or opinions are the subjective views of Fulcrum and should not be construed
      by
      Texoga as investment or commodity hedging advice designed to meet the needs
      of
      Texoga.

    

    (b)          Texoga
      shall provide accurate and timely information to Fulcrum including, but not
      limited to, that needed by ERCOT in connection with services rendered hereunder
      and needed by Fulcrum to otherwise perform its obligations under this
      Agreement.  Such information shall include Forecasts of expected power
      production by the Facility in a timely manner prior to the ERCOT scheduling
      deadlines.  If Fulcrum has actual knowledge that information provided
      by Texoga is inaccurate or incomplete, Fulcrum shall, as part of the Energy
      Management Services provided, inform Texoga of such circumstance and advise
      Texoga of the specific inaccuracy.

    

    (c)           To
      the extent that Texoga is utilizing services provided by a third party to manage
      all or a portion of its generation, and all or a portion of these services
      will
      be utilized by Fulcrum for the provision of Energy Management Services, Texoga
      shall cause its third party service provider to coordinate the provision of
      specifically related services with Fulcrum.  Fulcrum shall not be
      responsible for, and Texoga shall hold Fulcrum harmless from (i) any failure
      of
      the third party provider to provide all reasonably necessary information or
      services that Fulcrum requests and (ii) any loss, liability, cause of action,
      claim, or remedy that arises out of, or in connection with the actions or
      inactions of any third party service provider.

    

    2.5           Compliance
      with Laws. Fulcrum
      and Texoga shall
      at all times comply with all Applicable Laws.  This Agreement shall
      automatically terminate on any date on which any change in Applicable Law
      renders this Agreement illegal, null or void, or in the event that any
      Governmental Authority with jurisdiction over a Party issues a rule, regulation
      or order that has a materially adverse effect on one or more of the Parties’
ability to realize the anticipated economic benefits originally contemplated
      by
      the Parties at the time of execution of this Agreement; provided, however,
      that
      prior to exercising any right to terminate pursuant to this Section 2.5, the
      Parties shall undertake good faith negotiations in an effort to modify this
      Agreement to avoid or minimize the adverse impact of the statute, regulation,
      order or decision on any Party.  If the Parties are unable to
      negotiate a satisfactory modification to this Agreement within thirty (30)
      Business Days following the issuance of the order giving rise to such
      renegotiation efforts, then this Agreement shall terminate at the close of
      such
      thirty (30) Business Day period.

    

    

    2.6           Term
      The term of this Agreement shall commence on the Effective Date, and shall
      remain in effect until its expiration at the end of HE 2400 CPT on December
      31,
      2016, unless terminated earlier as provided in Section 9.3.

    

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    III.

    

    AUTHORIZATIONS
      AND DUTIES

    3.1          Authorizations
      and Duties.

    

    (a)           Texoga
      will grant Fulcrum authority to perform the Energy Management Services as the
      non-exclusive agent of Texoga, such agency authority to be limited to the
      Scheduling of Power, subject to Written Communications and limitations given
      by
      Texoga from time to time; provided, however, that Texoga's instructions must
      comply with the Scheduling deadlines as prescribed in the ERCOT
      Protocols.

    

    (b)           Nothing
      contained in this Agreement shall require Fulcrum to institute any legal or
      regulatory proceeding with any Governmental Authority, or to pursue remedies
      in
      any venue or with any third party on behalf of Texoga in connection with any
      of
      the Energy Management Services provided under this
      Agreement.  Provided however, Fulcrum shall provide a commercially
      reasonable amount of information and technical support to Texoga to assist
      in
      the filing of any of Texoga’s disputes with ERCOT, TDSPs, or other related third
      parties.  If Texoga’s efforts to resolve a dispute require a level of
      support from Fulcrum that, in the sole discretion of Fulcrum, is deemed more
      than commercially reasonable, Fulcrum will notify Texoga and if desired by
      Texoga, Texoga shall compensate Fulcrum for its continued support for dispute
      resolution.

    

    (c)           Texoga
      will select a Generation Manager who shall be authorized, subject to any
      necessary approvals, to act for and on behalf of Texoga on all matters
      concerning this Agreement.  In all such matters, Texoga shall be bound
      by the written or oral communications, directions, requests and decisions made
      by the Generation Manager. Texoga shall promptly notify Fulcrum in writing
      as to
      the selection of the Generation Manager and any replacements
      thereof.

    

    3.2           Scope
      of Services.

    

    The
      Energy Management Services to be performed by Fulcrum shall include the
      obligations and scope of work as follows:

    

    (a)           Set
      Up Services.  Upon the Effective Date of this Agreement,
      Fulcrum shall work with Generation Manager to:

    

    
      	
               

            	
              (i)

            	
              Incorporate
                Texoga’s generation Facility into Fulcrum’s QSE with ERCOT for the purpose
                of representing Texoga’s generation Facility;
                and

            

    

    
      	
               

            	
              (ii)

            	
              Install
                and manage the necessary communications, hardware and software
                applications to meet the telemetry, voice and data requirements of
                Fulcrum’s QSE as it relates to Texoga’s generation facility in accordance
                with ERCOT Protocols.

            

    

    

    (b)           Scheduling
      Services.  Upon the Customer Effective Date, Fulcrum
      shall provide the following services to support Texoga’s generation
      Facility:

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (i)

            	
              Assist
                Texoga in making the economic decision to sell energy into the ERCOT
                Balancing Energy Market based upon information provided by Texoga
                and
                recent ERCOT Balancing Energy Clearing Prices.  In accordance
                with strategic direction from Texoga, Fulcrum will submit schedules
                to
                ERCOT for each Settlement Interval based upon (i) the Forecast of
                energy
                to be produced from the Texoga generation Facility, (ii) the fuel
                and
                operating cost parameters set by Texoga.  All energy produced by
                Texoga will be sold and scheduled into the ERCOT Balancing Energy
                Market,
                unless the Parties by mutual agreement determine that changes in
                the ERCOT
                market warrant undertaking sales in other ERCOT market
                categories.  Any changes mutually agreed to will be codified in
                an amendment to this agreement and will detail the duties to be performed
                and the new compensation structure associated with the associated
                duties.

            

    

    

    
      	
               

            	
              (ii)

            	
              Maintain
                a 24-hour-per-day, seven-day-per-week scheduling center with qualified
                personnel and shall be responsible for maintaining communication
                equipment
                between itself and ERCOT.  To the extent that there is an impact
                to Texoga, Fulcrum shall use commercially reasonable efforts to notify
                Texoga of congestion alerts, scheduling discrepancies, and emergency
                conditions as soon as practicable after ERCOT notifies Fulcrum of
                the
                same.  Any change in Texoga’s schedule in response to such
                notification shall be submitted to ERCOT if received by Fulcrum at
                least
                15 minutes before the applicable ERCOT deadline.  Fulcrum will
                use commercially reasonable efforts to communicate schedules or changes
                to  ERCOT within the time periods set forth herein, but Fulcrum
                is not required to submit a schedule or change to ERCOT if ERCOT
                or Texoga
                does not inform Fulcrum sufficiently in advance for Fulcrum to submit
                the
                same before the applicable ERCOT
                deadline.

            

    

    

    
      	
               

            	
              (iii)

            	
              Submit
                a Resource Plan to ERCOT on behalf of Texoga sufficient to accommodate
                the
                quantity of energy scheduled by Fulcrum from Texoga’s
                Resource.

            

      	 	 	 

      	 	
              (iv)

            	
              Submit
                Balancing Energy Service Down bid curves if required by
                ERCOT.  The bid curves will include (1) a dollar per megawatt,
                (2) Quantity (MW), (3) Congestion Zone, and (4) Ramp
                Rate.

            

      	 	 	 

      	 	
              (v)

            	
              Administer
                the distribution of any funds/revenues received by Fulcrum’s QSE from
                ERCOT related to the sale of Balancing Energy from Texoga’s generating
                Facility to ERCOT.  Fulcrum will also provide analysis of
                related ERCOT financial settlements and provide information and technical
                assistance in the filing of any
                disputes.

            

      	 	 	 

      	 	
              (vi)

            	
              Inform
                ERCOT of any event during which Texoga's generation Facility is incapable
                of meeting its obligations in accordance with the ERCOT Protocols,
                and to
                the extent commercially practical, provide assistance to Texoga in
                mitigating any damages in connection
                therewith.

            

    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              Operating
                Services. Upon the Customer Effective Date, Fulcrum shall
                operate Texoga’s generating Facility by remote control and dispatch
                electricity in accord with the schedules submitted to ERCOT by Fulcrum
                as
                QSE.

            

    

     

    (c)           Commencement
      of Services. Fulcrum’s obligations under this
      Agreement shall not commence until Texoga submits the information required
      by
      Section 3.2(d)(i) hereof.

    

    (d)          
      Texoga’s
      Obligations.  Texoga shall have the following
      obligations:

    

    
      	
               

            	
              (i)

            	
              As
                soon as practicable following the Effective Date, Texoga shall (i)
                complete and submit to PUCT a resource application and an asset
                registration for the Facility (ii) complete and submit appropriate
                documentation to ERCOT registering the Facility as a distributed
                generation and designating Fulcrum as Texoga’s QSE (iii) enter into a
                resource agreement with ERCOT for the Facility and (iv) complete
                and
                submit any and all documentation required by ERCOT authorizing Fulcrum
                to
                perform QSE services as set forth herein on Texoga’s
                behalf.

            

    

    

    
      	
               

            	
              (ii)

            	
              Texoga
                shall be responsible for installing the necessary telemetry hardware,
                telecommunications, materials, programming time, etc. related to
                SCADA,
                voice and/or data communications to allow Fulcrum to monitor the
                energy
                produced by the Facility in real
                time.

            

    

    

    
      	
               

            	
              (iii)

            	
              Texoga
                shall provide Fulcrum adequate information to make informed decisions
                regarding the provision of QSE services under this Agreement and
                shall
                provide such information sufficiently in advance of any ERCOT scheduling
                or other deadline to allow Fulcrum to meet its obligations to
                ERCOT.

            

    

    

    

    
      	
               

            	
              (iv)

            	
              Texoga
                shall at all times operate using Prudent Utility Practice and comply
                with
                and be bound by all ERCOT Protocols as they pertain to the subject
                matter
                herein and the service provided.

            

    

     

    
      	
               

            	
              (v)

            	
              Texoga
                shall confer with Fulcrum no later than 9:00 a.m. CPT each Business
                Day to
                discuss the strategy for ERCOT Balancing Energy sales and shall provide
                a
                written Forecast for the Facility for the subsequent Day(s) and any
                intra-day energy Forecast revisions for the current operating
                Day.  Texoga shall also provide Fulcrum with an estimate of fuel
                cost and any other operating cost parameters under which it wishes
                dispatch decisions to be made.

            

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (vi)

            	
              Texoga
                shall timely acknowledge the receipt of any messages transmitted
                by
                Fulcrum relating to the QSE services provided
                hereby.

            

    

     

    
      	
               

            	
              (vii)

            	
              Texoga
                shall provide accurate and complete information to Fulcrum for any
                submission to ERCOT to enable a timely submission acceptable to ERCOT;
                provided, however, if such information by Texoga relating to the
                scheduling of delivery of any quantity of Energy by Fulcrum on behalf
                of
                Texoga to another QSE is incorrect, Texoga shall indemnify Fulcrum
                and
                agrees to pay Fulcrum any charges, costs, or penalties incurred by
                Fulcrum
                resulting from Texoga’s failure to comply with the terms and conditions
                set forth in this Agreement

            

      	 	 	 

      	 	
              (viii)

            	
              Texoga
                shall monitor the Facility on a 24-hour-per-day, seven-days-a-week
                basis,
                and shall timely inform Fulcrum of any outages and with any changes
                in
                notice names, addresses, or telephone
                numbers.

            

    

     

    3.3           Record
      Keeping and Reports.  Fulcrum shall keep and maintain
      books, records, accounts and other documents necessary to accurately reflect
      the
      services performed pursuant to this Agreement in accordance with good business
      practices, and generally accepted accounting principles.  Fulcrum
      shall prepare and distribute to Texoga such ERCOT information, as well as
      reports regarding operational and contractual matters with respect to Texoga,
      as
      reasonably required by Texoga.  All records and accounts maintained by
      Fulcrum on behalf of Texoga pursuant to this Agreement shall be made available
      by Fulcrum for inspection and copying by Texoga and its representatives upon
      reasonable advance notice of seven (7) Business Days, and Fulcrum shall keep
      and
      preserve all such records and accounts for a period of at least two (2) years
      from and after the close of the calendar year in which the events or
      transactions recorded therein occurred.

    

    3.4           Staffing.  All
      individuals retained by Fulcrum in the performance of the Energy Management
      Services shall be the employees or subcontractors of Fulcrum, and their working
      hours, rates of compensation and all other matters relating to their employment
      or engagement shall be determined by Fulcrum.  Fulcrum will designate
      one person as Fulcrum Liaison to oversee its activities and carry out its
      obligations under this Agreement.  Fulcrum Liaison shall visit with
      the Generation Manager as necessary to carry out his or her duties as set forth
      in this Agreement and shall have full authority to bind Fulcrum in all matters
      regarding the performance and administration of this
      Agreement.  Fulcrum Liaison shall report to Texoga through the
      Generation Manager.

    

    IV.

    

    FULCRUM'S
      REPRESENTATIONS AND WARRANTIES

    

    Fulcrum
      represents and warrants as
      follows:

    

    (a)           Fulcrum
      has, or by the time performance hereunder is to commence, will have, and will
      continue to have throughout the Term, all permits, licenses, orders and
      approvals of federal, state and local governmental and regulatory bodies
      necessary to perform its obligations under this Agreement;

    

    (b)           The
      execution, delivery and performance of this Agreement by Fulcrum (i) have been
      duly and effectively authorized and this Agreement constitutes the valid and
      binding obligation and agreement of Fulcrum; (ii) will not violate any provision
      of any Applicable Law to which Fulcrum or this Agreement is subject; (iii)
      will
      not violate any judgment, order, decree or writ of any court; and (iv) will
      not
      require any consent, authorization or approval of, or exemption by, any
      governmental regulatory body or other authority;

    

    (c)           Fulcrum
      is a limited partnership duly formed and organized, validly existing and in
      good
      standing under the laws of the State of Texas, and in good standing in all
      places where necessary in light of the business it conducts and will conduct
      hereunder and the properties it owns;

    

    (d)           Fulcrum
      is authorized to conduct business in the State of Texas;

    

    (e)           Fulcrum
      is solvent and has not sought protection from its creditors in
      Bankruptcy;

    

    (f)           There
      are no impediments of any sort to Fulcrum entering into this Agreement and
      performing its obligations hereunder; and

    

    (g)           The
      party executing this Agreement on behalf of Fulcrum is duly authorized and
      empowered to bind Fulcrum hereto.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    V.

    

    TEXOGA'S
      REPRESENTATIONS AND WARRANTIES

    

    Texoga
      represents and warrants as follows:

    

    (a)           Texoga
      has or will have prior to the Customer Effective Date, all permits, licenses,
      orders and approvals of federal, state and local governmental and regulatory
      bodies necessary to perform its obligations under this Agreement;

    

    (b)           The
      execution, delivery and performance of this Agreement by Texoga (i) have been
      duly and effectively authorized and this Agreement constitutes the valid and
      binding obligation and agreement of Texoga; (ii) will not violate any provision
      of any Applicable Law to which
      Texoga is subject; (iii) will not violate any judgment, order, decree or writ
      of
      any court; and (iv) will not require any consent, authorization or approval
      of,
      or exemption by, any governmental regulatory body or other
      authority;

    

    (c)           Texoga
      is a limited liability partnership  duly formed and organized and
      validly existing under the laws of the State of Texas and is in good standing
      in
      all places where necessary in light of the business it conducts and the
      properties it owns;

    

    (d)           Texoga
      is authorized to conduct business in the State of Texas;

    

    (e)           Texoga
      is solvent and has not sought protection from its creditors in
      Bankruptcy;

    

    (f)           
      Texoga has provided to Fulcrum executed and complete copies of the Power
      Contracts existing as of the Effective Date;

    

    (g)           There
      are no impediments of any sort to Texoga entering into this Agreement;
      and

    

    (h)           The
      party executing this Agreement on behalf of Texoga is duly authorized and
      empowered to bind Texoga hereto.

    

    VI.

    

    COMPENSATION

    

    6.1           Set
      Up Fees.   Upon execution of this Agreement, Texoga
      shall pay Fulcrum a set up fee of $10,000. Texoga shall also be responsible
      for
      any costs incurred by Fulcrum for telemetry hardware, telecommunications,
      materials, programming time, etc. related to  SCADA, voice and/or data
      communications for QSE operations.

    

    6.2           Reimbursable
      Expenses.  If Texoga requests support that requires
      Fulcrum to incur travel expenses or any third party service fees, Texoga shall
      reimburse Fulcrum for its  reasonably incurred out of pocket expenses
      related to such support.  Any discretionary reimbursable expense of
      Fulcrum in excess of $5,000 must be approved in advance by Texoga.  To
      the extent Fulcrum incurs any cost related to ERCOT charges, credit, or other
      expenses, Texoga will reimburse Fulcrum for the entire cost on a pass through
      basis upon presentation of receipts or other evidence of
      payment.  Such cost may include, but are not limited to, Uninstructed
      Resource Charges, Resource Imbalance Charges and any liabilities that Fulcrum
      incurs on behalf of Texoga in connection with any interaction undertaken on
      Texoga’s behalf (a) with ERCOT, as may be directed or required by ERCOT
      consistent with ERCOT Protocols or (b) as a result of Texoga’s failure to follow
      Texoga’s schedules or ERCOT deployment instructions.

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

                    6.3           Monthly
      Fee. Fulcrum
      will charge a
      $6,000 fixed monthly fee for the first year of this Agreement.  The
      fee will be escalated by 5% each successive year for the term of the
      Agreement.  In addition, Fulcrum’s actual cost of ongoing monthly
      telecommunication expenses shall be passed through to Texoga without any
      additional markup.

    

    6.4           Payment.  Fulcrum
      will prepare and submit an invoice to Texoga by the tenth (10th) Business
      Day
      following the Month in which Energy Management Services were rendered setting
      forth the Monthly Fee, and reimbursable costs and expenses owed by Texoga to
      Fulcrum.  Such invoice shall include reasonable detail as to the
      calculation of the amounts invoiced and supporting documentation.

    

    6.5           Sales
      and Use Taxes.  All fees for services provided by Fulcrum
      under this Agreement are exclusive of any state or federal sales and use taxes,
      which may be applicable.  Fulcrum reserves the right to bill and
      collect applicable Sales and Use Taxes from Texoga.

    

    6.6           Monthly
      Settlement of ERCOT Revenues. The Parties
      acknowledge
      that the ERCOT Balancing Energy revenues related to the Texoga generation
      Facility received by the Fulcrum QSE will be administered in accordance with
      the
      financial settlement process in the ERCOT Protocols.  Fulcrum will
      prepare a monthly settlement statement based upon the initial ERCOT settlement
      statements received by its QSE and distribute the ERCOT Balancing Energy
      revenues, net of any ERCOT charges, short payments, adjustments, or
      resettlements.  The Parties acknowledge that ERCOT’s initial
      settlement statement and the related ERCOT Balancing Energy revenues or ERCOT
      charges may be reduced or increased in subsequent settlement
      statements.  The Parties agree that any ERCOT adjustments subsequent
      to the initial ERCOT settlement statement shall be remitted to the Party
      owed.   Fulcrum will remit any ERCOT revenues, net of ERCOT
      charges due to Texoga by the 10th Business
      Day of
      the Month following the receipt of any revenues.  Any amounts due to
      ERCOT, including any amounts in dispute, shall be paid to Fulcrum within 10
      days
      of receipt of an invoice from Fulcrum.  This Section shall survive
      termination of this Agreement until accounting and billing for all third party
      settlement statements related to the Energy Management Services under this
      Agreement have been resolved.  Any fees due Fulcrum under Section 6.4
      of this Agreement shall be netted against any monies due to Texoga under this
      Section 6.6.

    

    6.7           Payment
      Disputes.  In the event of a dispute or question
      regarding amounts that appear on the Texoga invoice submitted by Fulcrum, (i)
      all amounts not in dispute or in question shall be promptly paid as and when
      required by Section 6.6, (ii) the Party disputing an invoice shall promptly
      transmit to the other Party an explanation of the dispute, (iii) Texoga and
      Fulcrum shall immediately and amicably seek to resolve the dispute or question
      and (iv) a resettlement payment shall be made within three (3) Business Days
      following the resolution of the dispute.  In the event the Parties are
      unable to resolve the dispute, either Party may submit the matter for dispute
      resolution in accordance with Section 9.6 hereof.

    

    6.8           Interest
      on Late Payments.  If any payment is not remitted and
      received in full on or before the due date therefore, the overdue amount shall
      bear interest at the lesser of (a) two percent
      (2%) per annum over the prime lending rate as may be published from time to
      time
      in the Wall Street Journal on such day, or if not published on such day then
      the
      most recent preceding day on which published, or (b) the maximum rate permitted
      by applicable law.

    

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    VII.

    

    SUSPENSION
      OF TERM OR EARLY TERMINATION

    

    7.1           SUSPENSION
      OF TERM.  This Agreement is predicated on the ability of
      Texoga to operate biodiesel-fueled electric generators to produce electricity
      to
      be sold into the ERCOT competitive wholesale market.  Texoga may at
      any time with written notice to Fulcrum suspend electric production and its
      obligations to market electricity under this Agreement for a minimum period
      of
      30 days and a maximum period not to exceed one year if, in Texoga’s sole
      judgment, it is not reasonable to operate generating facilities due
      to:

    

    
      	
               

            	
              1.

            	
              breakdown
                of essential equipment that make operations
                impossible,

            

    

    
      	
               

            	
              2.

            	
              inability
                to meet applicable rules for air emissions at a reasonable
                cost,

            

    

    
      	
               

            	
              3.

            	
              injunctions
                or other orders of a court or regulatory authority with
                jurisdiction,

            

    

    
      	
               

            	
              4.

            	
              any
                rule or order of a regulatory authority with jurisdiction that cannot
                be
                complied with at a reasonable cost,
                or

            

    

    
      	
               

            	
              5.

            	
              the
                failure of available market prices in ERCOT to permit the recovery
                of all
                operating expenses and payment of interest and principal on the debt
                associated with the generators.

            

    

    

    In
      the
      event of a suspension of term Texoga will pay to Fulcrum the sum of one half
      (1/2) the then current Monthly Fee for each month there is a
      suspension.

    

    7.2           RESUMPTION
      OF OPERATIONS. At any time within the period of suspension under
      the provisions of Section 7.1 Texoga may give written notice of its intention
      to
      resume operations at least thirty days prior to such resumption of
      operations.  When operations are resumed, all the provisions of the
      Agreement shall be in effect once more and the initial term will be extended
      by
      the length of the period of suspended operations.

    

    7.3           EARLY
      TERMINATION. In the event that a period of suspension shall last in
      excess of one year, this Agreement will be deemed to have been terminated unless
      both Fulcrum and Texoga agree otherwise in writing.  Upon early
      termination each party shall promptly pay any balances due under the provisions
      of the Agreement.  In addition, Fulcrum shall be entitled to a payment
      of liquidated damages for early termination in the sum of one third (1/3) the
      then current Monthly Fee for each of the remaining months in the initial term
      of
      the Agreement.

    

    VIII.

     

    INDEMNITY

    

    8.1           “Claims”
      Defined.  For purposes of this Agreement, “Claims” means
      all claims or actions by third parties threatened or filed, that directly or
      indirectly relate to the subject matter of the indemnity being provided and
      the
      resulting losses, damages, expenses, attorney’s fees and costs, whether incurred
      by settlement or otherwise, and whether such claims or actions are threatened
      or
      filed before or after the termination of this Agreement.

    

    8.2           Fulcrum
      Indemnification Obligations.  Fulcrum will indemnify, defend and
      hold harmless Texoga, and their managers, members, partners, directors,
      officers, employees, agents successors and assigns (collectively, the “Texoga
Indemnitees”) from and against any and all Claims, to the extent caused
      by or arising out of the gross negligence or willful misconduct of Fulcrum
      Power
      in connection with the performance of Fulcrum Power’s obligations hereunder;
provided that in no event shall Fulcrum Power be liable under this
      Section for Claims to the extent caused by or arising out of the negligence,
      willful misconduct or strict liability of one or more of the Texoga
      Indemnitees.

    

    8.3           Texoga
      Indemnification Obligations.  Texoga shall indemnify, defend and
      hold harmless Fulcrum Power, and its affiliates and their respective managers,
      members, partners, directors, officers, employees, agents, successors and
      assigns (collectively, the “Fulcrum Power Indemnitees”) from and against
      any and all Claims to the extent caused by or arising out of (a) the gross
      negligence or willful misconduct of Texoga or any other Texoga Indemnitee in
      connection with the performance of Texoga obligations hereunder: or (b) the
      performance of Fulcrum Power or its obligations hereunder and in accordance
      herewith: provided that in no event shall Texoga be liable under this
      Section for Claims to the extent caused by or arising out of the gross
      negligence, willful misconduct or strict liability of one or more of the Fulcrum
      Indemnitees.

    

    Texoga
      also will indemnify, hold harmless and defend the Fulcrum Power Indemnitees
      from
      and against any and all Claims to the extent caused by or arising in any way
      out
      of remote dispatch activities (including but not limited to the start-up, ramp
      down, variation, interruption or cessation of power being generated by the
      Facility) relating to any of Texoga’s facilities and equipment, except to the
      extent that such Claim results entirely from the gross negligence or willful
      misconduct of the Fulcrum Power Indemnitees.  Texoga understands that
      Fulcrum Power may from time to time start, stop, restore or interrupt the
      transmission of electric power and energy to the Texoga Facility or equipment,
      with or without notice to Texoga, and agrees that such activities do not in
      themselves result from the gross negligence or willful misconduct of the Fulcrum
      Power Indemnitees.]

    

    Notwithstanding
      the foregoing, and without limiting its obligation to indemnify Fulcrum, Texoga
      shall not be entitled to assume responsibility for or control of any defense
      of
      a Claim if an Event of Default has occurred and is continuing with respect
      to
      Texoga.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

                  
      8.4           Cooperation
      Regarding Claims. If any party shall
      receive notice or have knowledge of any Claim for indemnification by any Texoga
      Indemnitee or Fulcrum Power Indemnitee (each, an “Indemnified Party”)
      against the other party (the “Indemnifying Party”)
pursuant hereto, such Indemnified Party shall, as
      promptly as possible,
      give the Indemnifying Party notice of such Claim, including a reasonably
      detailed description of the facts and circumstances relating to such Claim
      and
      the basis for its potential demand for indemnification with respect thereto,
      and
      a complete copy of all notices, pleadings and other papers related thereto:
      provided that failure to give such prompt notice 9or to provide such
      information and documents shall not be a reason for the Indemnifying Party
      to
      resist or refuse indemnification unless such failure shall materially diminish
      the ability of the Indemnifying Party to respond to or to defend the Indemnified
      Party against such Claim.

    

    8.5           Defense
      of Claims and Limitation on Indemnity. 

    

    (a)           The
      Indemnifying Party shall be entitled, at its option and expense and with counsel
      of its selection (subject to the prior approval of the Indemnifying Party,
      which
      approval shall not unreasonably be withheld, delayed or conditioned) , to assume
      and control the defense of any Claim, provided, that the Indemnifying
      Party gives prompt notice of its intention to do so top the Indemnified Party
      and reimburses the Indemnified Party for the reasonable costs and expenses
      incurred by the Indemnified Party prior to the assumption by the Indemnifying
      Party of such defense.

    

    (b)           Notwithstanding
      the provisions of this Section, unless and until the Indemnifying Party
      acknowledges in writing its obligation to indemnify the Indemnified Party and
      assumes control of the defense of a Claim in accordance with paragraph (a)
      of
      this Section, the Indemnified Party may contest, defend and litigate, with
      counsel of its own selection, any Claim resulting from, related to or arising
      out of any matter for which it is entitled to be indemnified hereunder, and
      the
      reasonable costs and expenses thereof shall be subject to the indemnification
      obligations of the Indemnifying Party hereunder.

    

    (c)           No
      Indemnifying Party shall be entitled to settle or compromise any such Claim
      without the prior written consent of the Indemnified Party: provided that
      after agreeing in writing to indemnify the Indemnified Party, the Indemnified
      Party may settle or compromise any Claim without the approval of the Indemnified
      Party; (i) such Claim is solely for monetary damages that are paid in full
      by
      the Indemnified Party; (ii) the agreement resolving the Claim makes clear that
      such agreement is a compromise of disputed claims and that neither the agreement
      nor any provision thereof, nor any consideration given thereunder is to be
      construed as, or offered as evidence of, an admission or an acknowledgement
      of
      the validity or merit, or lack thereof, of the disputed Claim; and (iii) the
      Indemnified Party is fully released from liability by the claimant.

    

    (d)           The
      Indemnified Party shall have the right to employ its own counsel and such
      counsel may participate in such Claim, but the fees and expenses of such counsel
      shall be at the
      expense of the Indemnified Party, when and as occurred, unless (i) the
      employment of counsel by the Indemnified Party has been authorized in writing
      by
      the Indemnifying Party and the Indemnifying Party has agreed to pay such fees
      and expenses, (ii) the Indemnified Party shall have reasonably concluded, upon
      advise of counsel, that there would be a conflict of interest between the
      Indemnifying Party and the Indemnified Party in the conduct of the defense
      of
      such Claim, (iii) the Indemnifying Party shall not in fact have employed
      independent counsel reasonably satisfactory to the Indemnified Party to assume
      the defense of such Claim; or (iv) the Indemnified Party shall have reasonably
      concluded, upon advise of counsel, and specifically notified the Indemnifying
      Party either that there may be specific defenses available to it that are
      different from those available to the Indemnifying Party or the Claim involves
      matters beyond the scope hereof or could have a material adverse affect upon
      it
      beyond the scope itself.  If the preceding sentence shall be
      applicable, then counsel for the Indemnified Party shall have the right to
      direct the defense of such Claim on behalf of the Indemnified Party and the
      reasonable fees and disbursements of such counsel shall be at the cost and
      expense of the Indemnifying Party.

    

    8.6           Concurrent
      Misconduct.  If
      Claims against Fulcrum or Texoga arise from the joint or concurrent misconduct
      of each, each Party’s indemnity obligation to the other shall be limited to the
      proportion that each Party’s misconduct contributed to the Claim.

    

    8.7           No
      Consequential Damages.  FOR BREACH OF ANY PROVISION OF
      THIS AGREEMENT FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED,
      THE LIABILITY OF THE BREACHING PARTY SHALL BE LIMITED AS SET FORTH IN THAT
      PROVISION, AND ALL OTHER DAMAGES OR REMEDIES ARE HEREBY WAIVED.  IF NO
      REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED, THE LIABILITY OF THE
      BREACHING PARTY SHALL BE LIMITED TO DIRECT, ACTUAL DAMAGES ONLY AND ALL OTHER
      DAMAGES AND REMEDIES ARE WAIVED.  In no event shall either Party be
      liable under any provision of this Agreement, whether in contract, in tort
      (INCLUDING NEGLIGENCE, STRICT LIABILITY) or otherwise, for any indirect,
      special, incidental, punitive or consequential damages resulting from the
      performance or nonperformance of its obligations under the Agreement or from
      termination of the Agreement (except if due to the fraud, willful misconduct
      or
      self-dealing of a Party).

    

    8.8           Limitation
      of Liability.  Fulcrum shall have no liability for any
      failure to obtain the best, highest or most competitive price in connection
      with
      this agreement.  Notwithstanding anything to the contrary contained in
      the Agreement, in no circumstances shall the total aggregate liability of
      Fulcrum for the term of this Agreement exceed the total compensation earned
      by
      Fulcrum under this Agreement during the Month immediately preceding the date
      of
      the occurrence of the event giving rise to liability.

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    IX.

    

    DEFAULTS,
      REMEDIES AND DISPUTE RESOLUTION

     

                   
      9.1           Events
      of Default.  Each of the following shall constitute an
      Event of Default under this Agreement:

    

    
      	
               

            	
              (a)

            	
              Material
                Breach.  Either Texoga or Fulcrum shall fail in any material
                respect to comply with, observe or perform the terms and conditions
                of
                this Agreement.  The failure of Texoga or Fulcrum to comply
                with  Applicable Laws shall not constitute an Event of Default
                if such failure is not likely to subject the other Party to material
                liability;

            

    

    

    
      	
               

            	
              (b)

            	
              Continued
                Non-payment.  Either Texoga or Fulcrum shall fail to make
                payment of any amount due and owing;  and such failure is not
                remedied within 7 Business Days after written notice given by the
                non-defaulting party to the defaulting
                party;

            

    

    

    
      	
               

            	
              (c)

            	
              Material
                Misrepresentation.  Any representation made by Texoga or
                Fulcrum hereunder proves to have been false or incorrect in any material
                respect when made;

            

    

    

    
      	
               

            	
              (d)

            	
              Voluntary
                Bankruptcy. Either Texoga or Fulcrum shall (i) apply for or consent to
                the appointment of a trustee, receiver, liquidator, custodian, or
                the like
                for itself, its assets or its properties, (ii) be unable, or admit
                in
                writing the inability, to pay its debts as they mature, (iii) make
                a
                general assignment for the benefit of its creditors, (iv) commence
                a
                voluntary case under a chapter of the Bankruptcy Reform Act of 1978
                or
                other applicable Legal Requirement, or file a petition, answer, or
                consent
                seeking reorganization or an answer admitting the material allegations
                of
                a petition filed against it in any bankruptcy, reorganization, or
                insolvency proceeding, or fail to controvert in a timely and appropriate
                manner (or acquiesce in writing to) any such petition, or (v) take
                any
                corporate or partnership action for the purposes of effecting any
                of the
                foregoing; or

            

    

    

    
      	
               

            	
              (e)

            	
              Involuntary
                Bankruptcy. A proceeding or case shall be commenced, without the
                application or consent of Texoga or Fulcrum against which the proceeding
                or case was commenced, in any court of competent jurisdiction,
                seeking:  (i) its liquidation, reorganization of its debts,
                dissolution, or winding-up, or the composition or readjustment of
                its
                debts; (ii) the appointment of a receiver, custodian, liquidator,
                or the
                like of Texoga or Fulcrum or of all or any substantial part of its
                assets;
                or (iii) similar relief in respect of any such Party under any law
                relating to bankruptcy, insolvency, reorganization of its debts,
                winding-up, composition or adjustment of debt, and such proceeding
                shall
                remain in effect, for a period of thirty (30)
                Days.

            

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    9.2           Remedies
      for Default.  Except to the extent more limited rights
      are provided elsewhere in this Agreement, if an Event of Default occurs and
      Fulcrum is the Defaulting Party (defined below), then Texoga shall provide
      Fulcrum with notice of the Event of Default. Except to the extent more limited
      rights are provided elsewhere in this Agreement, if an Event of Default occurs
      and Texoga is the Defaulting Party, then Fulcrum shall provide Texoga with
      notice of the Event of Default.  For purposes of the foregoing the
      "Defaulting Party" shall mean Texoga where Texoga has failed to perform or
      otherwise breached the terms of this Agreement under the conditions specified
      in
      Section 9.1 and shall mean Fulcrum where Fulcrum has failed to perform or
      otherwise breached the terms of this Agreement under the conditions specified
      in
      Section 9.1.  Following receipt of a notice of an Event of Default,
      the Defaulting Party shall have a period of time in which to cure the Event
      of
      Default as follows:

    

    
      	
               

            	
              (a)

            	
              If
                the Event of Default is the event described in Section 9.1(a), (b)
                or (c),
                the Defaulting Party shall have five (5) Days to cure such Event
                of
                Default after receipt of notice thereof from the other Party, provided
                that if such failure is not capable of being cured within such five
                (5)
                Day period with the exercise of reasonable diligence, then such cure
                period shall be extended for an additional reasonable period of time,
                not
                to exceed ten (10) Days, so long as the Defaulting Party is exercising
                reasonable diligence to cure such failure;
                or

            

    

    

    
      	
               

            	
              (b)

            	
              If
                the Event of Default is the event described in Section 9.1(d) or
                (e), the
                Defaulting Party shall have thirty (30) Days to cure such Event of
                Default
                after receipt of notice thereof from the other
                Party.

            

    

    

    9.3           Termination.  Upon
      the occurrence of any default, the Party not in default may, in addition to
      any
      other rights and remedies available to it under this Agreement, terminate this
      Agreement upon written notice of at least fifteen (15) Days to the Defaulting
      Party.  Upon termination of this Agreement, neither Party shall have
      any further obligation or liability hereunder to the other Party, except for
      liabilities that are incurred prior to or upon termination and any other rights,
      obligations or liabilities that expressly survive termination of this
      Agreement.

     

    9.4           Rights
      and Remedies in Law or Equity.

    

    (a)           Except
      as limited by this Agreement, in the case of a breach by either Party of its
      representations or warranties or non-performance of its obligations hereunder,
      or an event of default, in addition to the right to terminate this Agreement
      pursuant to Section 9.3, each Party shall have all rights and remedies provided
      in law or equity.

    

    (b)           Any
      fines, late fees, interest or penalties incurred by Fulcrum for noncompliance
      with Applicable Laws shall not be reimbursed by Texoga but shall be the sole
      responsibility
      of Fulcrum (unless such noncompliance is the result of action or inaction on
      the
      part of Texoga or its designated representatives, or the noncompliance is a
      result of Fulcrum following the directions of Texoga in which case such fines,
      late fees, interest or penalties shall be the sole obligation of Texoga and
      Texoga shall indemnify and hold harmless Fulcrum from and against any and all
      potential exposure as further defined in Section VIII of this
      document).

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    
 

    9.5           Dispute
      Resolution.

    

    (a)           Any
      controversy or claim arising under this Agreement shall be submitted to binding
      arbitration by either Party filing a notice of intent to arbitrate with the
      other Party and the American Arbitration Association (“AAA”) office in Houston,
      Texas, in the manner described for initiation of arbitration under the AAA
      Arbitration Rules.  The Arbitration Rules applicable to arbitration
      under this Agreement shall be subject to the provisions of this Section 9.6
      and
      its subparts.  Arbitration shall be initiated within a reasonable time
      after the failure to resolve the claim or dispute but, in any event, before
      the
      claim would be barred in court by the applicable statute of
      limitation.

    

    (b)           Disputes
      involving claims in the amount of $100,000 or less (exclusive of claimed
      interest, arbitration fees and costs) shall be resolved by one (1) arbitrator
      selected in accordance with the provisions of the Arbitration
      Rules.

    

    (c)           Disputes
      involving claims in excess of $100,000 (exclusive of claimed interest,
      arbitration fees and costs) shall be resolved by three (3) arbitrators selected
      by the Parties from the AAA's roster of neutrals in accordance with the
      procedure specified below.  Each Party shall have ten (10) Days after
      the circulation by the AAA of a list of proposed arbitrators to designate
      arbitrators.  In addition to challenges for cause, each Party shall
      have five (5) peremptory challenges to the list of arbitrators circulated by
      the
      AAA.

    

    (d)           The
      arbitrator(s) shall render their award in writing and sign the
      award.  In those instances where three (3) arbitrators are appointed,
      any award, order, or relief of the arbitrators shall be determined by majority
      decision of the arbitrators, and submitted to the Parties in writing signed
      by a
      majority of the arbitrators.  The arbitrator(s) shall state in writing
      the reasons for their award.

    

    (e)           The
      arbitrator(s) shall not have the power to award punitive, treble or exemplary
      damages.

    

    (f)           The
      costs and expenses of arbitration, including, without limitation, attorneys'
      fees, the costs of the arbitration proceeding, and the costs and expenses of
      the
      arbitrators, shall be borne by the losing Party or in such proportions as the
      arbitrator(s) shall determine in their discretion.

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

                  
      (g)           Where
      common or related questions of law or fact favor the expeditious and complete
      resolution of disputes in a single proceeding involving all interested persons,
      as determined in the discretion of the arbitrator(s), the arbitrator(s) shall
      have authority to allow the participation as parties of persons other than
      Texoga and Fulcrum in arbitration proceedings under this Agreement, to
      consolidate claims of Texoga and Fulcrum in a single arbitration proceeding
      under this Agreement, and to order claims and disputes under this Agreement
      be
      resolved in other pending dispute resolution proceedings involving other
      persons.  Claims and disputes under this Agreement resolved in other
      pending dispute resolution proceedings, where such resolution has been ordered
      by the arbitrator(s), shall be binding on the Parties as fully as if decided
      by
      arbitration under this Agreement.

    

    (h)           The
      arbitrator(s) shall have authority to order discovery in their discretion,
      including the subpoena of witnesses and documents, such orders to be enforced
      by
      a court otherwise having jurisdiction over the Parties in accordance with
      Section 9.5(l).

    

    (i)           If
      the Parties fail to appoint arbitrators in the manner and within the two
      limitations described at subparagraphs (b) and (c) above, the AAA shall promptly
      make the appointment of neutral, qualified arbitrator(s).  The Parties
      shall notify the AAA, by telephone within two (2) Days, of any objection by
      a
      Party to the arbitrator(s) so selected.  Any objection by a Party to
      an arbitrator(s) shall be confirmed in writing to the AAA with a copy to the
      other Party.  After consideration of such objection, the AAA may
      either confirm the appointment or may appoint a different
      arbitrator(s).

    

    (j)           The
      arbitrator(s) shall have authority to interpret and apply the terms and
      conditions of this Agreement and to order any remedy allowed by this Agreement,
      but may not change any term or condition of this Agreement, deprive either
      Party
      of a remedy expressly provided hereunder, or provide any right or remedy that
      has been excluded hereunder.

     

    (k)           Any
      interim relief or decision ordered by the arbitrator(s) may be immediately
      and
      specifically enforced by a court otherwise having jurisdiction over the
      Parties.

    

    (l)           The
      location for any commenced arbitration under these provisions shall be Houston,
      Texas.

    

    (m)           Unless
      earlier terminated pursuant to Section 9.3, the Parties shall continue to
      perform their obligations under this Agreement pending final resolution pursuant
      to this Section 9.6 of any controversy or claim arising out of or relating
      to
      this Agreement or the breach hereof.

    

    X.

    

    MISCELLANEOUS
      PROVISIONS

     

    10.1           Successors
      and Assigns.  Neither Party shall assign this Agreement
      or any of the agreements attached as Exhibits hereto, nor any part thereof,
      without the prior written consent of the other Party.  Such consent is
      not to be unreasonably withheld.  Except as permitted herein, any
      purported assignment without such prior written consent shall be null and
      void.

    

    10.2           Notices.

    

    (a)           Except
      as otherwise provided herein or in written procedures that Texoga and Fulcrum
      develop with respect to Power transactions, any notice and other communication
      to a Party required or authorized by this Agreement shall be in writing and
      addressed as set forth below, and shall be deemed given (i) when delivered
      in
      person, (ii) whether actually received or not, four (4) Business Days after
      it
      is deposited in any U.S. post office or mail receptacle, certified or registered
      mail, return receipt requested, postage prepaid, or (iii) on the next delivery
      Day after it is placed with an expedited delivery service and designated for
      next-day service with proof of delivery.

    

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    
      	
              Texoga:

            	Fulcrum:
	
              Texoga
                Technologies Inc

            	
              Fulcrum
                Power Services L.P.

            
	
              9390
                Forest Lane

            	5120
              Woodway, Suite 10010
	
              Conroe,
                Texas 77385

            	Houston,
              TX 77056
	 	 
	
              Attention:

            	Attention: 
	
              Steve
                McGuire

            	Kim
              Casey
	 	 
	
              Telephone:

            	Telephone:
	
              832-813-7079

            	713-297-4523
	 	 
	Facsimile:	
              Facsimile:

            
	281-364-7591	
              713-993-0096

            

    

    

    Either
      Party may, by written notice to the other, change the representative or the
      address to which such notices and communications are to be sent.

    

    (b)           All
      routine operational notices and communications between the Parties may be
      delivered pursuant to Section 10.2(a), above,; and if delivered by facsimile,
      such notices and communications shall be deemed given upon the sending party's
      receipt of telephonic confirmation from the receiving party of successful
      transmission, provided that the Day on which such facsimile is transmitted
      is a
      Business Day.  If the Day on which the facsimile is transmitted is not
      a Business Day or the facsimile is transmitted after 6:00 p.m. CPT on a Business
      Day, then such facsimile shall be deemed to have been delivered and received
      on
      the next following Business Day.  Further, all routine operational
      notices and communications between the Parties and notices during an emergency
      or other unforeseen event may be made in person or by telephone.

     

    (c)           Invoices
      and any communications or notices regarding billing or payments shall be sent
      to
      the following address:

    

    
      	
              Texoga:

            	
              Fulcrum:

            
	
              Texoga
                Technologies Inc.

            	Fulcrum
              Power Services L.P.
	
              9390
                Forest Lane

            	
              5120
                Woodway, Suite 10010

            
	
              Conroe,
                TX 77385

            	
              Houston,
                TX 77056

            
	 	 
	
              Attention:

            	Attention:
	
              Steve
                McGuire

            	
              Kathleen
                Schneider

            
	 	 
	
              Telephone:

            	Telephone:
	
              832-819-7079

            	713-297-4543

    

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    10.3           Entirety.  This
      Agreement contains the entire agreement between Texoga and Fulcrum with respect
      to the subject matter hereof and supersedes all prior negotiations,
      representations, contracts or agreements whether written or
      oral.  This Agreement may be modified, amended, altered or rescinded
      only by a writing expressly referring to this Agreement and signed by the
      Parties.  No delay, failure or waiver on the part of either Party in
      exercising any rights hereunder, and no partial or single exercise thereof,
      will
      constitute a waiver of such rights or of any other rights
      hereunder.

    

    10.4           Governing
      Law.  This Agreement shall be interpreted, construed and
      governed by the laws of the State of Texas, notwithstanding any conflict-of-laws
      principles that might require the application of the laws of another
      jurisdiction.

    

    10.5           Counterparts.  This
      Agreement may be executed in any number of counterparts with the same effect
      as
      if the Parties had signed the same document.  All counterparts shall
      be construed together and shall constitute one and the same
      agreement.

    

    10.6           Scope
      of Authority.  Nothing contained herein shall be deemed
      to create a relationship of employer-employee, association, partnership, or
      joint venture between the Parties.  Fulcrum shall not have authority,
      and shall not represent nor imply that it has authority, to bind Texoga in
      any
      manner whatsoever or to incur any liability or obligation on Texoga's behalf
      except as is provided pursuant to Section 3.2.

    

    10.7           Third
      Parties.  This Agreement is intended solely for the
      exclusive benefit of Fulcrum and Texoga.  Nothing in this Agreement
      shall be construed to create any duty, obligation, or liability to any third
      party.

    

    10.8           Confidentiality.  Texoga
      and Fulcrum shall treat as confidential  all information and data
      delivered to it by the Parties to this Agreement, whether delivered
      electronically, orally, or
      in
      tangible form, or that they learn as a result of the performance of this
      Agreement which (i) relate to the business affairs of the Parties and (ii)
      if
      delivered electronically or in tangible form, are expressly designated by label,
      stamp or other written communication as  confidential at the time of
      delivery (collectively, the "Confidential Information").  Whether or
      not otherwise identified in writing as confidential pursuant to (ii) above,
      all
      Texoga information and data regarding pricing, transaction terms, operations,
      and the Power Contracts shall be Confidential Information.  During the
      term of this Agreement and until two (2) years after the termination or
      expiration of this Agreement, each Party agrees not to disclose or permit the
      disclosure of any portion of the Confidential Information to any third party,
      other than as may be necessary or appropriate in furtherance of the purposes
      of
      this Agreement or in the conduct of the disclosing Party’s legitimate business
      affairs, provided, that either Texoga or Fulcrum may disclose any
      Confidential Information (a) that has become generally available to the public,
      (b)  that may be required or appropriate in any report, statement, or
      testimony submitted to any municipal, state, or Federal regulatory body having
      or claiming to have jurisdiction over the Party or the subject matter of this
      Agreement, (c) that may be required or appropriate in response to any summons
      or
      subpoena or in connection with any litigation, or (d) that may be required
      in
      order to comply with any law, order, regulation, or ruling applicable to either
      Party, provided, that the Party required to make such disclosure shall
      agree to take reasonable steps to protect the Confidential Information and
      shall
      disclose only that portion of the Confidential Information that it is required
      to disclose, and provided further, that the disclosing Party shall notify the
      other Party reasonably in advance of any disclosure, where possible, so as
      to
      allow the other Party to attempt to resist disclosure through the courts or
      other similar forum.    In addition to its confidentiality
      obligations described in this Section 10.8, Fulcrum shall abide by the
      confidentiality obligations set forth in Texoga's Power Contracts to the same
      extent as Texoga is obligated thereunder.

    

    10.9           Survival
      of Obligations.  The following Sections shall survive
      termination of this Agreement:  Section 3.3 (Record Keeping and
      Reports), Section 6.8 (Interest on Late Payments), Section 73. (Early
      Termination),  Section 8.2 (Fulcrum Indemnification Obligations), 8.3
      (Texoga Indemnification Obligations), Section 8.6 (No Consequential Damages),
      Section 9.4 (Rights upon Termination), Section 9.5 (Rights and Remedies in
      Law
      or Equity), Section 9.6 (Dispute Resolution), Section 10.4 (Governing Law),
      and
      Section 10.8 (Confidentiality).

    

    10.10                 Severability.
      If any provision of this Agreement is held to be illegal, invalid or
      unenforceable, such provision shall be fully severable; this Agreement shall
      be
      construed and enforced as if such illegal, invalid or unenforceable provision
      had never comprised a part of this Agreement; and the remaining provisions
      of
      this Agreement shall remain in full force and effect and shall not be affected
      by the illegal, invalid or unenforceable provision or by its severance from
      this
      Agreement.

    

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    10.11                      Force
      Majeure.  If any Party is rendered unable, wholly or in
      part, by force majeure to perform its obligations under this Agreement, other
      than the obligation to make payments then or subsequently due, it is mutually
      agreed that performance of the respective obligations of the Parties, so far
      as
      they are affected by such force majeure, shall be suspended without
      liability from the inception of any such inability until it is corrected, but
      for no longer period.  The term "force majeure" means an event that
      (a) was not within the control of the Party claiming its occurrence; and (b)
      could not have been prevented or avoided by such Party through the exercise
      of
      due diligence.  "Force majeure" includes, but is not limited to, (i)
      physical events such as acts of God, landslides, lightning, earthquakes, fires,
      storms, or storm warnings, such as hurricanes, which result in evacuation of
      the
      affected area, disruption of telecommunication services, floods, washouts,
      explosions, or breakage or accident to telecommunications equipment,
      transmission lines or power delivery equipment; and (ii) acts of others such
      as
      strikes, lockouts, or other industrial disturbances, riots, sabotage,
      insurrections or wars.  No Party shall be required to settle any labor
      disputes against its will.  A Party claiming the existence of an event
      of force majeure shall give the other Party oral notice, followed by written
      notice via facsimile, as soon as reasonable.  Any delay in furnishing
      such notice shall not delay the effective time of a suspension under this
      Section 10.11.

    

    10.12                      No
      Implied Warranties.  THE REPRESENTATIONS AND WARRANTIES
      OF TEXOGA AND FULCRUM ARE SET FORTH FULLY AND COMPLETELY IN THIS
      AGREEMENT.  THE PARTIES HEREBY EXPRESSLY DISCLAIM AND NEGATE ANY OTHER
      REPRESENTATION OR WARRANTY OF ANY KIND HEREUNDER, WHETHER EXPRESS, IMPLIED,
      STATUTORY, OR OTHER, WRITTEN OR ORAL, INCLUDING ANY REPRESENTATION OR WARRANTY
      WITH RESPECT TO CONFORMITY OR MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS
      FOR
      ANY PARTICULAR PURPOSE.

    

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

    IN
      WITNESS WHEREOF, and with the intent to be bound thereby, the Parties hereto
      have caused their duly authorized representatives to execute this Energy
      Management Agreement on their behalf effective as of the day and year first
      written above.

    

                Texoga Technologies,
      Inc.

                By: /s/
      STEVEN S.
      McGUIRE                                                                

                Name:  Steven
      S. McGuire

                Title:    President
      and CEO

    

    

                Fulcrum
      Power
      Services L.P., by its general partner Fulcrum Energy L.L.C.

    

                By:  /s/
      KIM
      CASEY                                                      

                Name: Kim
      Casey

                Title:   Authorized
      Representative

                Date:   1-12-07                                           

    

    
      
        
        

      

      
        -24-ex10-8.htm

    Exhibit
      10.8

    

    AGREEMENT
      FOR

    INTERCONNECTION
      AND PARALLEL OPERATION OF DISTRIBUTED GENERATION

    

    

    This
      Interconnection Agreement (“Agreement”) is made and entered into this 31st day of
      January  2007, by CenterPoint Energy Houston Electric, LLC,
      (“Company”), and Texoga Technologies Corporation (“Customer”),  a
      Texas Partnership, each hereinafter sometimes referred to individually as
“Party” or both referred to collectively as the “Parties”.  In
      consideration of the mutual covenants set forth herein, the Parties agree as
      follows:

    

    1. 
      Scope of Agreement -- This Agreement is applicable to
      conditions under which the Company and the Customer agree that one or more
      generating facility or facilities of ten MW or less to be interconnected at
      60
      kV or less (“Facility or Facilities”) may be interconnected to the Company’s
      utility system, as described in Exhibit A.

    

    2. 
      Establishment of Point(s) of Interconnection -- Company and
      Customer agree to interconnect their Facility or Facilities at the locations
      specified in this Agreement, in accordance with Public Utility Commission of
      Texas Substantive Rules § 25.211 relating to Interconnection of Distributed
      Generation and § 25.212 relating to Technical requirements for Interconnection
      and Parallel Operation of On-Site Distributed Generation, (16 Texas
      Administrative Code §25.211 and §25.212) (the “Rules”) or any successor rule
      addressing distributed generation and as described in the attached Exhibit
      A
      (the “Point(s) of Interconnection”).

    

    3. 
      Responsibilities of Company and Customer -- Each Party will, at
      its own cost and expense, operate, maintain, repair, and inspect, and shall
      be
      fully responsible for, Facility or Facilities which it now or hereafter may
      own
      unless otherwise specified on Exhibit A.  Customer shall conduct
      operations of its facility(s) in compliance with all aspects of the Rules,
      and
      Company shall conduct operations on its utility system in compliance with all
      aspects of the Rules, or as further described and mutually agreed to in the
      applicable Facility Schedule.   Maintenance
      of Facilities or interconnection facilities shall be performed in accordance
      with the applicable manufacturer’s recommended  maintenance schedule.
      The Parties agree to cause their Facilities or systems to be constructed in
      accordance with specifications equal to or greater than those provided by the
      National Electrical Safety Code, approved by the American National Standards
      Institute, in effect at the time of construction.

    

    Each
      Party covenants and agrees to design, install, maintain, and operate, or cause
      the design, installation, maintenance, and operation of, its distribution system
      and related Facilities and Units so as to reasonably minimize the likelihood
      of
      a disturbance, originating in the system of one Party, affecting or impairing
      the system of the other Party, or other systems with which a Party is
      interconnected

    

    Company
      will notify Customer if there is evidence that the Facility operation causes
      disruption or deterioration of service to other customers served from the same
      grid or if the Facility operation causes damage to Company’s
      system.

    

    Customer
      will notify Company of any emergency or hazardous condition or occurrence with
      the Customer’s Unit(s) which could affect safe operation of the
      system.

    

    4. 
      Limitation of Liability and Indemnification

    

    
      	
              a.

            	
              Notwithstanding
                any other provision in this Agreement, with respect to Company’s provision
                of electric service to Customer, Company’s liability to Customer shall be
                limited as set forth in Sheet E1 of Company’s PUC-approved tariffs and
                terms and conditions for electric service, which is incorporated
                herein by
                reference.

            

    

    

    
      	
              b.

            	
              Neither
                Company nor Customer shall be liable to the other for damages for
                any act
                that is beyond such party's control, including any event that is
                a result
                of an act of God, labor disturbance, act of the public enemy, war,
                insurrection, riot, fire, storm or flood, explosion, breakage or
                accident
                to machinery or equipment, a curtailment, order, or regulation or
                restriction imposed by governmental, military, or lawfully established
                civilian authorities, or by the making of necessary repairs upon
                the
                property or equipment of either party.

            

      	 	 

      	c. 	
              Notwithstanding
                Paragraph 4.b of this Agreement, Company shall assume all liability
                for
                and shall indemnify Customer for any claims, losses, costs, and expenses
                of any kind or character to the extent that they result from Company’s
                negligence in connection with the design, construction, or operation
                of
                its facilities as described on Exhibit A; provided, however, that
                Company
                shall have no obligation to indemnify Customer for claims brought
                by
                claimants who cannot recover directly from Company.  Such
                indemnity shall include, but is not limited to, financial responsibility
                for:  (a) Customer’s monetary losses; (b) reasonable costs and
                expenses of defending an action or claim made by a third person;
                (c)
                damages related to the death or injury of a third person; (d) damages
                to
                the property of Customer; (e) damages to the property of a third
                person;
                (f) damages for the disruption of the business of a third
                person.  In no event shall Company be liable for consequential,
                special, incidental or punitive damages, including, without limitation,
                loss of profits, loss of revenue, or loss of production.  The
                Company does not assume liability for any costs for damages arising
                from
                the disruption of the business of the Customer or for the Customer’s costs
                and expenses of prosecuting or defending an action or claim against
                the
                Company.  This paragraph does not create a liability on the part
                of the Company to the Customer or a third person, but requires
                indemnification where such liability exists.  The limitations of
                liability provided in this paragraph do not apply in cases of gross
                negligence or intentional
                wrongdoing.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              d.

            	
              Notwithstanding
                Paragraph 4.b of this Agreement, Customer shall assume all liability
                for
                and shall indemnify Company for any claims, losses, costs, and expenses
                of
                any kind or character to the extent that they result from Customer’s
                negligence in connection with the design, construction or operation
                of its
                facilities as described on Exhibit A; provided, however, that Customer
                shall have no obligation to indemnify Company for claims brought
                by
                claimants who cannot recover directly from Customer.  Such
                indemnity shall include, but is not limited to, financial responsibility
                for:  (a) Company’s monetary losses; (b) reasonable costs and
                expenses of defending an action or claim made by a third person;
                (c)
                damages related to the death or injury of a third person; (d) damages
                to
                the property of Company; (e) damages to the property of a third person;
                (f) damages for the disruption of the business of a third
                person.  In no event shall Customer be liable for consequential,
                special, incidental or punitive damages, including, without limitation,
                loss of profits, loss of revenue, or loss of production.  The
                Customer does not assume liability for any costs for damages arising
                from
                the disruption of the business of the Company or for the Company’s costs
                and expenses of prosecuting or defending an action or claim against
                the
                Customer. This paragraph does not create a liability on the part
                of the
                Customer to the Company or a third person, but requires indemnification
                where such liability exists.  The limitations of liability
                provided in this paragraph do not apply in cases of gross negligence
                or
                intentional wrongdoing.

            

    

    

    
      	
              e.

            	
              Company
                and Customer shall each be responsible for the safe installation,
                maintenance, repair and condition of their respective lines and
                appurtenances on their respective sides of the point of
                delivery.  The Company does not assume any duty of inspecting
                the Customer’s lines, wires, switches, or other equipment and will not be
                responsible therefore.  Customer assumes all responsibility for
                the electric service supplied hereunder and the facilities used in
                connection therewith at or beyond the point of delivery, the point
                of
                delivery being the point where the electric energy first leaves the
                wire
                or facilities provided and owned by Company and enters the wire or
                facilities provided by Customer.

            

    

    

    
      	
              f.

            	
              For
                the mutual protection of the Customer and the Company, only with
                Company
                prior authorization are the connections between the Company’s service
                wires and the Customer’s service entrance conductors to be
                energized.

            	 

    

    

    5. 
      Right of Access, Equipment Installation, Removal& Inspection– Upon
      reasonable notice, the Company may send a qualified person to the premises
      of
      the Customer at or immediately before the time the Facility first produces
      energy to inspect the interconnection, and observe the Facility’s commissioning
      (including any testing), startup, and operation for a period of up to no more
      than three days after initial startup of the unit.

    

    Following
      the initial inspection process described above, at reasonable hours, and upon
      reasonable notice, or at any time without notice in the event of an emergency
      or
      hazardous condition, Company shall have access to Customer’s premises
      for any reasonable purpose in connection with the performance of the obligations
      imposed on it by this Agreement or if necessary to meet its legal obligation
      to
      provide service to its customers.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6. 
      Disconnection of Unit – Customer retains the option to
      disconnect from Company’s utility system.  Customer will notify the
      Company of its intent to disconnect by giving the Company at least
      thirty  days’ prior written notice. Such disconnection shall not be a
      termination of the agreement unless Customer exercises rights under Section
      7.

    

    Customer
      shall disconnect Facility from Company’s system upon the effective date of any
      termination under Section 7.

    

    Subject
      to Commission Rule, for routine maintenance and repairs on Company’s utility
      system, Company shall provide Customer with seven business days’ notice of
      service interruption

    

    Company
      shall have the right to suspend service in cases where continuance of service
      to
      Customer will endanger persons or property.  During the forced outage
      of the Company’s utility system serving Customer, Company shall have the right
      to suspend service to effect immediate repairs on Company’s utility system, but
      the Company shall use its best efforts to provide the Customer with reasonable
      prior notice.

    

    7. 
      EffectiveTerm and Termination Rights-- This Agreement becomes effective
      when executed by both parties and shall continue in effect until
      terminated.  The agreement may be terminated for the following
      reasons:  (a) Customer may terminate this Agreement at any time, by
      giving the Company sixty days’ written notice; (b) Company may terminate upon
      failure by the Customer to generate energy from the Facility in parallel with
      the Company’s system within twelve months after completion of the
      interconnection; (c) either party may terminate by giving the other party at
      least sixty days’ prior written notice that the other Party is in default of any
      of the material terms and conditions of the Agreement, so long as the notice
      specifies the basis for termination and there is reasonable opportunity to
      cure
      the default; or (d) Company may terminate by giving Customer at least sixty
      days
      notice in the event that there is a material change in an applicable rule or
      statute.

    

    8. 
      Governing Law and Regulatory Authority -- This Agreement was
      executed in the State of Texas and must in all respects be governed by,
      interpreted, construed, and enforced in accordance with the laws
      thereof.  This Agreement is subject to, and the parties’ obligations
      hereunder include, operating in full compliance with all valid, applicable
      federal, state, and local laws or ordinances, and all applicable rules,
      regulations, orders of, and tariffs approved by, duly constituted regulatory
      authorities having jurisdiction.

    

    9. 
      Amendment --This Agreement may be amended only upon mutual
      agreement of the Parties, which amendment will not be effective until reduced
      to
      writing and executed by the Parties.

    

    10.  Entirety
      of Agreement and Prior Agreements Superseded -- This Agreement,
      including all attached Exhibits and Facility Schedules, which are expressly
      made
      a part hereof for all purposes, constitutes the entire agreement and
      understanding between the Parties with regard to the interconnection of the
      facilities of the Parties at the Points of Interconnection expressly provided
      for in this Agreement.  The Parties are not bound by or liable for any
      statement, representation, promise, inducement, understanding, or undertaking
      of
      any kind or nature (whether written or oral) with regard to the subject matter
      hereof not set forth or provided for herein.  It is expressly
      acknowledged that the Parties may have other agreements covering other services
      not expressly provided for herein, which agreements are unaffected by this
      Agreement.

    

    11. 
      Notices -- Notices given under this Agreement are deemed to
      have been duly delivered if hand delivered or sent by United States certified
      mail, return receipt requested, postage prepaid, to:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
               

            	
              (a)

            	
              If
                to Company:  CenterPoint
                Energy

            

    

    PO
      Box
      1700

    Houston,
      TX 77251-1700

    Attention:  Richard
      K. Murphy

    Manager
      Electric Distribution Engineering

    

    

    (b)               If
      to Customer:  Texoga Technologies Corporation

    10003
      Woodloch Forest Drive, Suite 900

    The
      Woodlands, TX  77380

    Attention:
      Steve S. McGuire 

    Title:
      CEO

    

    

    The
      above-listed names, titles, and addresses of either Party may be changed by
      written notification to the other, notwithstanding Section 10.

    

    12. 
      Invoicing and Payment -- Invoicing and payment terms for
      services associated with this agreement shall be consistent with applicable
      Substantive Rules of the PUCT.

    

    13. 
      No Third-Party Beneficiaries -- This Agreement is not intended
      to and does not create rights, remedies, or benefits of any character whatsoever
      in favor of any persons, corporations, associations, or entities other than
      the
      Parties, and the obligations herein assumed are solely for the use and benefit
      of the Parties, their successors in interest and, where permitted, their
      assigns.

    

    14. 
      No Waiver -- The failure of a Party to this Agreement to
      insist, on any occasion, upon strict performance of any provision of this
      Agreement will not be considered to waive the obligations, rights, or duties
      imposed upon the Parties.

    

    15. 
      Headings -- The descriptive headings of the various articles
      and sections of this Agreement have been inserted for convenience of reference
      only and are to be afforded no significance in the interpretation or
      construction of this Agreement.

    

    16. 
      Multiple Counterparts -- This Agreement may be executed in two
      or more counterparts, each of which is deemed an original but all constitute
      one
      and the same instrument.

    

    IN
      WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their
      respective duly authorized representatives.

    

    

    
      	
              CenterPoint
                Energy

            	
              Texoga
                Technologies Corporation

            
	 	 
	
              BY:
                /s/ RICHARD K. MURPHY

            	
              BY:
                /s/ STEVEN S. McGUIRE

            
	
              Richard
                K. Murphy

            	
              Steven
                S. McGuire

            

    

    

    
      	
              TITLE:
                Manager, Electric Distribution Engineering

            	
              TITLE:
                CEO                    
                

            
	 	 
	
              DATE
                January 31, 2007

            	
              DATE:
                January 1, 2007

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    LIST
      OF FACILITY SCHEDULES AND
      POINTS OF INTERCONNECTION

    

    

    
      	
              Facility
                Schedule No.

            	
              Name
                of Point of Interconnection

            
	 	 
	
                 001

            	
              Texoga
                Technologies Corporation

            

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FACILITY
      SCHEDULE NO.   001

    

    

    [The
      following information is to be specified for each Point of Interconnection,
      if
      applicable.]

    

    1.      Name:   Texoga
      Technologies Corporation

    

    2.      Facility  location:   Physical
      Address: 321 Alana Lane, Oak Ridge North, TX  77386

                    Service
      Address:  321 Alana Lane, Oak Ridge North,
      TX  77386

    

    3.      Delivery
      voltage:   12.47 KV

    

    

    4.      Metering
      (voltage, location, losses adjustment due to metering location, and
      other):

    12.47
      KV, at point of
      interconnection

    

    

    
      	
              5.

            	
              Normal
                Operation of Interconnection:    IMPORT &
                EXPORT CAPABLE

            

    

    

    6.      One
      line diagram attached (check one): ___X___ Yes /_______
      No

    

    

    
      	
              7.

            	
              Facilities
                to be furnished by Company:   SERVED DIRECTLY FROM
                12.47 KV OVERHEAD DISTRIBUTION CIRCUIT.   PROTECTIVE
                RELAYING TRANSFER TRIP TRANSMITTER LOCATED AT RAYFORD SUBSTATION,
                AT
                CUSTOMER EXPENSE. NECESSARY MODIFICATIONS TO COMPANY FACILITIES TO
                ACCOMMODATE SINGLE CIRCUIT SERVICE AND ALLOW IMPORT / EXPORT METERING
                CAPABILITY, AT CUSTOMER EXPENSE.

            

    

    

    
      	
              8.

            	
              Facilities
                to be furnished by Customer: PROTECTIVE RELAYING EQUIPMENT, INCLUDING
                TRANSFER TRIP RECEIVER, TO PROVIDE PROTECTIVE, DISCONNECTING AND
                SYNCHRONIZATION FUNCTIONS AS PER PUCT RULES 25.211 AND 25.212. CUSTOMER
                TO
                PROVIDE COMMUNICATION CIRCUITS FOR SCADA AND TRANSFER
                TRIP.

            

    

    

    
      	
              9.

            	
              Cost
                Responsibility: CUSTOMER EXPENSE FOR ALL INTERCONNECTION
                MODIFICATIONS.

            

    

    

    
      	
              10.

            	
              Control
                area interchange point (check one): ______ Yes /____X___
                No

            

    

    

    

    11.   Supplemental
      terms and conditions attached (check one): __X____ Yes / _____
      No

    

    

    
      	
                       CENTERPOINT
                ENERGY

            	
              Texoga
                Technologies Corporation

            

    

    

    
      	
              BY:/s/
                RICHARD K. MURPHY

            	
              BY:
                /s/ STEVEN S. McGUIRE

            
	
                  RICHARD
                KEN MURPHY

            	
              Steven
                S. McGuire

            
	 	 
	
              TITLE:
                Manager, Electric Distribution Engineering

            	
              TITLE:
                CEO

            
	 	 
	
              DATE
                January 31, 2007

            	
              DATE:January
                1, 2007

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SUPPLEMENTAL
      TERMS AND CONDITIONS

    (FACILITY
      SCHEDULE NO. 001 - ARTICLE 11)

    

    Customer
      understands that the presence of generation at this site will cause line voltage
      levels on the circuit to vary as the amount of generation
      varies.  Sudden changes in generation, such as a complete shutdown,
      could affect the quality of service to other customers on the
      circuit.  Therefore, Customer agrees to operate the generators in a
      controlled manner such that it does not cause sudden changes in line voltage
      levels noticeable to other customers on the circuit.

    

    Customer
      understands that the circuit voltage will be changed from 12.47 Kv to 34.5
      Kv in
      the future.  The conversion will take place when sufficient new loads
      are added such that it is not practical to continue serving the area with the
      12.47 Kv circuit.  Customer will replace the 12.47 Kv equipment at
      Texoga Biofuels to 34.5 Kv rated equipment at that time.

    

    When
      the
      Texoga Biofuels DG intertie breaker trips, Customer must determine the
      cause.  If the trip was initiated by the transfer trip relay and the
      distribution voltage and frequency have returned to normal, the utility will
      make reasonable effort to expedite allowing Customer to synchronously reclose
      the intertie breaker.  For all other causes, Customer shall repair or
      remove the cause before reclosing the intertie breaker.

    

    
      	
              Texoga
                Technologies Corporation  (Steven McGuire
                mobile)

            	
              281-465-0427

            
	
              CenterPoint
                Energy contacts:  System Dispatcher

            	
              281-894-0491

            
	
              Distribution
                Control Dispatcher

            	
              207-945-5850

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TEXOGA
      TECHNOLOGIES DG ONE LINE DIAGRAM

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