Document:

EQUITY INTEREST PURCHASE OPTION

 Exhibit 10.11 
 EQUITY INTEREST OPTION AGREEMENT 
 THIS AGREEMENT is made this 9th day of November, 2006, by and
between MICROGY, INC., a Colorado corporation whose mailing address is c/o Environmental Power Corporation, One Cate Street, 4th Floor, Portsmouth, New Hampshire 03801 (“Microgy”) and MICROGY HOLDINGS, LLC, a Delaware limited liability company (“Microgy Holdings”), on the one hand, and SOUTH-TEX MORROW, INC. (formerly known as
“SOUTH-TEX TREATERS, INC.”) a Texas corporation whose mailing address is P.O. Box 60480, Midland, Texas 79711 (“South-Tex”), on the other hand. 
 RECITALS: 
 A. MST GP, LLC, a Texas limited liability company, Microgy and South-Tex entered into an
Amended and Restated Limited Partnership Agreement dated October 13, 2005 (the “Limited Partnership Agreement”), creating MST PRODUCTION, LTD., a Texas limited partnership (“MST Production”). 
 B. South-Tex owns the following equity interests in the following entites: 
  

						
	 Name of Entity/
 Jurisdiction of Organization
	  	 Type of
 Interest
	  	Percentage of
All Interests	 
	 MST Production Ltd., a Texas limited partnership
	  	Limited partnership
interest	  	39.5	%*
	 MST GP, LLC, a Texas limited liability company
	  	Membership interest	  	50.0	%
	 MST Estates, LLC, a Texas limited liability company
	  	Membership interest	  	40.0	%

	*	All of the limited partnership interests in MST Production Ltd. held by South-Tex represent 39.5% of all partnership interests in MST Production Ltd. MST GP, LLC owns a 1% general
partnership interest in MST Production, Ltd., and South-Tex owns a 50% membership interest in MST GP, LLC, as noted above. 

 C. South-Tex has agreed to grant to Microgy Holdings an option to purchase, and to cause South-Tex to sell, the foregoing equity interests, under the terms, conditions and provisions set forth in this Agreement. 
 1. Certain Additional Defined Terms. The following terms used in this Agreement shall have the following meanings: 
 “Additional Gas Facilities” shall mean up to three (3) additional gas treatment facilities meeting the specifications set forth in the Additional
Gas Facilities PO. 
 “Additional Gas Facilities Agreement” shall mean an Equipment Purchase Agreement relating to the purchase by Microgy
or its assigns of the Additional Gas Facilities, substantially in the form attached to this Agreement as Exhibit A. 

 “Assignment and Assumption Agreement” shall mean the assignment and assumption agreement relating to the
assignment by South-Tex to Microgy Holdings or its assigns of the Equity Interests upon exercise of the Option, substantially in the form attached to this Agreement as Exhibit B. 
 “Equity Interests” shall mean the Limited Partnership Interests and the Membership Interests. 
 “Huckabay Gas Facility” shall mean the Gas Treatment Facility contemplated by the Limited Partnership Agreement. 
 “Huckabay Gas Facility Agreement” shall mean a Construction and Equipment Purchase Agreement relating to the purchase by MST Production of the Huckabay Gas Facility, substantially in the form attached to this Agreement as
Exhibit C. 
 “Limited Partnership Interests” shall mean the limited partnership interest in MST Production held by South-Tex.

 “Membership Interests” shall mean the membership interests in MST GP and MST Estates held by South-Tex.

 “MST Estates” means MST Estates, LLC, a Texas limited liability company of which South-Tex and Microgy are the sole members. 

“MST GP” means MST GP, LLC, a Texas limited liability company of which South-Tex and Microgy are the sole members. 
 “Option” shall have the meaning set forth in Section 2 of this Agreement. 
 “Organizational Documents” shall mean, with respect to any entity, its articles or certificate of organization or incorporation, its regulations, its limited partnership agreement, its limited
liability company or operating agreement, its bylaws, its indenture of trust or trust agreement or any other document relating to the organization and governance of such entity. 
 “Project Participation Agreement” shall mean a project participation agreement between South-Tex Treaters, LP and Microgy, substantially in the form attached to this Agreement as Exhibit D.

 All other capitalized terms used in this Agreement but not otherwise defined herein will have the respective meanings ascribed to them in
the Limited Partnership Agreement. 
 2. Purchase Option. South-Tex hereby grants to Microgy Holdings or its assigns the right and
option to purchase from South-Tex, for the consideration and on the terms set forth in this Agreement, all of the Equity Interests (the “Option”). The Option must be exercised, if at all, by delivering written notice to South-Tex on
or before November 10, 2006 (or such later date as the parties may mutually agree). Notwithstanding the foregoing, Microgy shall be required to exercise the Option, and shall be deemed to have exercised the Option without any further notice to
South-Tex hereunder, in the event that the closing of the tax-exempt bond offering referred to in that certain Preliminary Limited Offering Memorandum, dated September 27, 2006 (Microgy Holdings, LLC Project) occurs. 
  

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 3. Purchase Price. The purchase price for the Equity Interests upon exercise of the Option will be
the sum of Ten Dollars and No Cents ($10.00), which sum shall be paid in cash upon the closing of the sale of the Equity Interests to Microgy or its assigns (the “Closing”), and such Closing shall take place within five
(5) business days after the date of the written notice of exercise described in Section 2. 
 4. Closing. At the Closing,
the signatory parties will execute and deliver the following documents: 
 (a) the Assignment and Assumption Agreement; 
 (b) the Huckabay Gas Facility Agreement; 
 (c) the Additional Facilities Agreement; and 
 (d) the Project Participation Agreement. 
 5. Miscellaneous. 
 (a) This Agreement
shall be deemed to amend or supersede any prior agreements of the parties with respect to the subject matter hereof, including any such agreements set forth in the Limited Partnership Agreement or the other Organizational Documents of MST
Production, General Partner or Estates. Without limiting the foregoing, this Agreement shall supersede Section 11.9 of the Limited Partnership Agreement, provided, that, in the event that the Option is not exercised within the
time period described in Section 1, this Agreement shall be of no further force or effect and the provisions of Section 11.9 shall control. South-Tex, Microgy and Microgy Holdings each agree to enter into, or cause MST GP to enter into,
such further amendments to or consents under the Organizational Documents of MST Production, MST GP or MST Estates as are necessary to carry into effect the provisions of this Agreement or the purchase and sale of the Equity Interest pursuant to the
exercise of the Option. 
 (b) The obligations of the parties hereunder to consummate the purchase and sale of the Equity Interests shall be
subject to compliance with all applicable federal and state securities laws. 
 (c) This Agreement shall be governed by the laws of the State
of Texas. 
 (d) This Agreement may be executed in one or more counterparts and by facsimile signatures. 
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 IN WITNESS WHEREOF, the parties have executed this Equity Interest Option Agreement as of the date first
written above. 
  

			
	MICROGY, INC.
		
	By:	 	 /s/ John F. O’Neill

	Name:	 	John F. O’Neill
	Title:	 	Chief Financial Officer
	
	MICROGY HOLDINGS, LLC
		
	By:	 	 /s/ John F. O’Neill

	Name:	 	John F. O’Neill
	Title:	 	Vice President and Treasurer
	
	SOUTH-TEX MORROW, INC.
		
	By:	 	 /s/ David Morrow

	Name:	 	David Morrow
	Title:	 	

  

 4PROJECT PARTICIPATION AGREEMENT

 Exhibit 10.12 
 PROJECT PARTICIPATION AGREEMENT 
 This Project Participation Agreement (the
“Agreement”) is made effective as of the 9th day of November, 2006, between South-Tex Treaters, LP,
a Texas limited partnership with offices in Midland County, Texas (“South-Tex”), and Microgy, Inc., a Colorado corporation with an address c/o Environmental Power Corporation, One Cate Street, 4th Floor, Portsmouth, New Hampshire 03801 (“Microgy”). 
 RECITALS: 
 A. Microgy holds a technology license from Danish Biogas Technology, A.S., a company
organized under the laws of Denmark (“DBT”), to construct, use sell, operate and maintain a proprietary, Danish-engineered anaerobic digester system (the “Digester System”) using animal waste streams from dairy and
other livestock operations in the United States and other countries, and other organic substrates. 
 B. The Digester System produces
significant quantities of biogas (“Biogas”) from animal manure and other organic substrates. 
 C. South-Tex has developed
gas cleaning and compression technologies and systems (the “Gas Treating System”) that allow for the cleaning and compressing of the Biogas to acceptable pipeline quality (“Refined Gas”). 
 D. Microgy and South-Tex (the “Parties”) believe that the Digester System and the Gas Technologies, when employed together, are capable
of producing refined Biogas of sufficient quality and quantity as to be profitable for sale into the United States energy markets. 
 E. The
Parties desire to enter into a project participation agreement relating to the development of projects in the United States that incorporate the Digester System and the Gas Treating System in a manner that enables the production of Refined Gas (the
“Project” or “Projects”). 
 In consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, South-Tex and Microgy agree as follows: 
  

	1.	Project Participation. 

  

	 	1.1.	Option to Participate as Equity Holder. 

  

	 	(a)	Except as otherwise set forth in Section 1.2 of this Agreement, South-Tex shall have the option to participate as the holder of 40% of the voting equity interests in up to ten
(10) Projects (the “Equity Participation Option”). At such time as Microgy or any affiliate of Microgy enters into definitive agreements relating to the development and location of a Project, Microgy will, as promptly as
practicable thereafter, give South-Tex written notice of such proposed Project (the “Proposed Project Notice”). The Proposed Project Notice will set forth, in reasonable detail, 

 the location, size, projected output of Refined Gas and estimated permitting and construction timetable
for the proposed Project. South-Tex shall have thirty (30) days after receipt of the Proposed Project Notice within which to exercise the Equity Participation Option by delivering written notice of such exercise to Microgy. 
  

	 	(b)	In the event that South-Tex exercises the Equity Participation Option with respect to a given Project, Microgy shall, or shall cause the applicable entity which is intended to own
and operate the Project (each, a “Project Entity”) to, grant to South-Tex a 40% voting equity interest in the applicable Project Entity, in exchange for the performance by South-Tex of its obligations and responsibilities set forth
in Section 2 of this Agreement. 

  

	 	1.2.	Excluded Projects. Notwithstanding the foregoing, the Equity Participation Option shall not apply to: 

  

	 	(a)	the following four Projects: (i) Erath County, Texas, near Stephenville (known as the “Huckabay Ridge project”), (ii) Dublin, Texas (known as the “Rio Leche
project”), (iii) the two Projects being developed in Hereford, Texas (known as the “Mission project” and the “Cnossen project”, respectively); 

  

	 	(b)	any project not requiring the refinement of Biogas by the Gas Treating System; or 

  

	 	(c)	any Project intended to be financed through (i) the borrowing of funds originating from the issuance of any tax-exempt bonds, where the underwriter or purchasers of such bonds
have indicated that such Project or the applicable Project entity must be wholly owned by Microgy or an affiliate of Microgy, or (ii) any form of borrowing from any lender which will lend funds only on the condition that such Project or Project
entity is wholly owned by Microgy or an affiliate of Microgy. 

  

	2.	Project Obligations. Microgy and South-Tex shall have the following respective obligations with respect to each Project for which South-Tex has exercised its Equity
Participation Option in accordance with Section 1. 

  

	 	2.1.	Engineering. Microgy will provide all engineering necessary to construct the Digester System, and South-Tex will provide all necessary construction engineering for the Gas
Conditioning System, including all construction engineering to couple the Gas Conditioning System to the Digester. 

  

	 	2.2.	Construction. Microgy will be responsible for the construction of each Digester System and the permitting of each Project, and South-Tex will be responsible for the
construction of each Gas Conditioning System. The construction of each such system shall be for the account of the applicable Project Entity, and shall represent and satisfy the respective capital contributions of Microgy and South-Tex to such
Project Entity. The Gas Conditioning System shall be of such size, design, capacity and quality as is necessary and adequate to achieve the projected output of Refined Gas as set forth in the Proposed Project Notice. South-Tex shall not be required
to commence construction of 

  

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 the Gas Conditioning System for any Project until such time as it shall have received a written notice
from Microgy that Microgy and/or the Project Entity has obtained all necessary permits and financing, and is otherwise prepared to move forward with, the construction of the Digester System and that South-Tex should proceed with construction of the
Gas Conditioning System (the “Commencement Notice”). 
  

	 	2.3.	Operations and Maintenance. Microgy shall have all operating and maintenance duties for the Digester System in accordance with its license obligations to DBT. South-Tex shall
have all operating and maintenance responsibility for the Gas Conditioning System and all of the processing, handling, interconnecting and compliance monitoring duties necessary to transport the Refined Gas to the final purchaser.

  

	3.	Project Agreements. In the event that South-Tex exercises its Equity Participation Option with respect to a given Project, the provisions of this Section 3 shall also
apply. 

  

	 	3.1.	Project Organization and Ownership Agreements. 

  

	 	(a)	South-Tex and Microgy shall cooperate in negotiating mutually acceptable agreements and instruments relating to the organization and ownership of the Project developed
(“Project Agreements”). 

  

	 	(b)	It is the intention of the parties that the Parties shall divide control over as well as the distributable profits from the Projects on the basis of 60% for Microgy and 40% for
South-Tex. 

  

	 	3.2.	Other Agreements. Microgy, South-Tex and the Project Entity will enter into such additional agreements relating to such Project as are necessary to implement the provisions
of this Agreement, including: 

  

	 	(a)	One or more operation and maintenance agreements between Microgy, South-Tex and the Project Entity for the operation and maintenance of the Project; 

  

	 	(b)	Such other agreements as are necessary to document the relationships between the parties involved in each Project, consistent with the terms of this Agreement.

  

	 	3.3.	Publicity. Each of the Parties will include a reference to the other Party as a co-developer of such Project in any public announcement regarding the Project. Any such public
announcement regarding a Project shall be subject to the review and approval of the other Party, such review and approval not to be unreasonably withheld or delayed; provided that, Microgy may cause South-Tex to delay any public
announcement with respect to a Project to the extent required for Microgy’s compliance, or the compliance of Microgy’s parent, Environmental Power Corporation, with any obligations or requirements under federal or state securities laws,
rules or regulations or any stock exchange or stock market rule or policy. 

  

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	4.	Term and Termination. 

  

	 	4.1.	Term. This Agreement shall have an initial term of two (2) years from the date hereof, and shall automatically renew for successive one (1) year terms thereafter,
unless either party gives the other party at least six (6) months prior written notice of its intention not to renew this Agreement prior to the expiration of the initial term or any renewal thereof. 

  

	 	4.2.	Termination. Microgy shall have the right to terminate this Agreement as to any Project, and to terminate any related Project Agreements entered into pursuant hereto, at any
time prior to the delivery of the Commencement Notice, without liability to South-Tex, in the event that Microgy determines not to go forward with the completion of such Project. In the event that Microgy resumes development or construction of any
such Project at any time following such termination, this Agreement and any Project Agreements relating thereto shall be revived and reinstituted as to such Project. 

  

	5.	General. 

  

	 	5.1.	Intellectual Property Rights. All proprietary rights relating to the Digester System are and shall remain the exclusive property of Microgy and DBT. All proprietary rights
relating to the Gas Conditioning System are and shall remain the exclusive property of South-Tex. 

  

	 	5.2.	Governing Law. This Agreement shall be governed by the laws of the State of Texas, without regard to its conflict of laws provisions. 

  

	 	5.3.	Counterparts; Facsimile Signatures. This Agreement may be executed in one or more counterparts. This Agreement may be executed by facsimile signatures.

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 IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. 

 

			
	MICROGY, INC.
		
	By:	 	 /s/ John F. O’Neill

	Name:	 	John F. O’Neill
	Title:	 	Chief Financial Officer
	
	SOUTH-TEX TREATERS, INC.
		
	By:	 	 /s/ David Morrow

	Name:	 	David Morrow
	Title:	 	

  

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