Document:

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                                                                   EXHIBIT 10.07

Confidential treatment has been requested for portions of this exhibit.  The
copy filed herewith omits the information subject to the confidentiality
request.  Omissions are designated as *****.  A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.

                         DANISH BIOGAS TECHNOLOGY, A.S.
                         TECHNOLOGY LICENSING AGREEMENT
                      TO MICROGY COGENERATION SYSTEMS, INC.

THIS AGREEMENT entered into this 12th day of May, 2000 by and among Microgy
Cogeneration Systems, Inc. ("Microgy"), a Colorado, USA corporation with its
offices at 1767A Denver West Blvd., Suite 15 , Golden, Colorado 80401, Danish
Biogas Technology, A.S., a Danish entity ("DBT"), with offices at
Udviklingsparken Aarhus, Sonderhoj 46, DK-8260 Viby J., Denmark..

WITNESSETH:

WHEREAS, Microgy has developed intellectual property, proprietary formulas,
processes, devices and other trade secrets to commercially exploit its
proprietary micro-cogeneration system which uses its exclusive bladeless
micro-turbine and generator technology (the "Microgy Turbine"), or its
conventional prime mover and generation technology, which may incorporate, at it
option, its proprietary advanced waste heat ammonia absorption process
("WHAARP") technology or other proprietary and conventional technologies that do
not include any of DBT's technologies as defined below, as appropriate to
produce and sell electricity and process cooling or heating (the "Microgy
System"); and

WHEREAS, The Microgy System is capable of producing electricity, cooling and
heating by burning methane gas or bio-gas generated from waste streams and other
sources; and

WHEREAS, DBT owns and has developed intellectual property, proprietary formulas,
processes, devices and other trade secrets to construct and operate a bio-gas
fueled electrical co-generation system (the "DBT System") consisting of its
proprietary anaerobic digester, which combines organic bio-mass wastes such as
animal manure and other high strength liquid or semi-solid organic waste streams
with other substrate such as fats, oils and grease to produce bio-gas gas (the
"DBT AD Unit"), and its proprietary cogeneration technology and integrated
process control system which uses commercially available reciprocating gas
engines modified by DBT to burn bio-gas or dual bio-gas and diesel fuel for the
generation of electricity and heat (the "DBT CHP System"); and

WHEREAS, Microgy desires to acquire a perpetual and exclusive license to
construct, own, operate and otherwise commercially exploit the DBT System and,
separately as a stand alone unit, the DBT AD Unit in the Unites States of
America and its possessions and territories, Canada and Mexico (the "Licensed
Territory"), and to acquire a perpetual and non-exclusive license to construct,
own, operate and otherwise commercially exploit the DBT System and/or the DBT AD
Unit in countries outside of the Licensed Territory, excluding Denmark and all
of the European countries; and

WHEREAS, DBT desires to grant Microgy a perpetual and exclusive license to
construct, own, operate and otherwise commercially exploit the DBT System and,
separately as a stand alone unit, the DBT AD Unit in the Licensed Territory, and
to grant to Microgy a perpetual and non-exclusive license to construct, own,
operate and otherwise commercially exploit the DBT System and/or the DBT AD Unit
in countries outside of the Licensed Territory, excluding Denmark and all of the
European countries; and

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WHEREAS, DBT desires to hold an equity position in each Microgy System project
deploying the DBT System or the DBT AD Unit developed and owned by Microgy or
its affiliates or sub-licensees in the Licensed Territory and to hold an
advisory board seat or equivalent position in any Microgy affiliate or other
related entity appropriately sub-licensed to deploy the DBT System or the DBT AD
Unit; and

WHEREAS, DBT desires to retain the exclusive right, for compensation, to manage
and supervise the bio-gas digester functions of each of the DBT Systems or DBT
AD Units installed by Microgy in the Licensed Territory;

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

1.    GRANT OF DBT SYSTEM PERPETUAL EXCLUSIVE LICENSE. DBT hereby grants to
      Microgy a perpetual and exclusive license to assemble, manufacture,
      purchase, install, own, lease, sell, use, deploy, manage, operate, service
      or otherwise commercially exploit in the Licensed Territory the DBT System
      consisting of the integrated DBT AD Unit and the DBT CHP System and all
      future upgrades, improvements and enhancements to the DBT System, the DBT
      AD Unit and the DBT CHP System, as an integrated bio-gas fueled electric
      co-generation system.

2.    GRANT OF DBT AD UNIT PERPETUAL EXCLUSIVE LICENSE. DBT hereby grants to
      Microgy a perpetual and exclusive license to assemble, manufacture,
      purchase, install, own, lease, sell, use, deploy, manage, operate, service
      or otherwise commercially exploit in the Licensed Territory the DBT AD
      Unit as a stand alone unit separate from the DBT System and without any
      requirement to use the DBT CHP System, and all future upgrades,
      improvements and enhancements to the DBT AD Unit when used with the
      Microgy System in all Microgy projects and developments in the Licensed
      Territory.

3.    GRANT OF PERPETUAL NON-EXCLUSIVE LICENSE. DBT hereby grants to Microgy a
      perpetual and non-exclusive license to assemble, manufacture, purchase,
      install, own, lease, sell, use, deploy, manage, operate, service or
      otherwise commercially exploit the DBT System or the DBT AD Unit as a
      stand alone unit separate from the DBT System without any requirement to
      use the DBT CHP System, and all future upgrades, improvements and
      enhancements to the DBT System or the DBT AD Unit when used with the
      Microgy System in all Microgy projects and developments in all countries
      outside of the Licensed Territory, excluding Denmark and all of the
      European countries. Microgy shall have the right to convert this perpetual
      and non-exclusive license into a perpetual exclusive license consistent
      with the license terms set forth in Sections 1 and 2 above, in any country
      outside of the Licensed Territory upon written approval by DBT.

4.    DUTY TO ENGINEER, DESIGN AND CONSTRUCT. Microgy shall have the duty and
      supervisory responsibility to construct and install each DBT System and
      DBT AD Unit in all projects in the Licensed Territory. DBT shall have the
      duty to (a) engineer, design and assist and advise Microgy on the
      construction and installation of each DBT System or DBT AD Unit employed
      by Microgy hereunder; (b) provide engineering and construction drawings,
      specifications for components, construction quality standards, performance
      standards, operations and maintenance requirements; and (c) provide
      consulting advice to Microgy to monitor, track and troubleshoot the DBT
      System, the DBT AD Unit or the DBT CHP System after deployment by Microgy
      or any of its affiliates. Microgy will provide to DBT on a project by
      project basis basic

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      *****Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

      site and project specific information from which DBT will be compensated
      for its engineering work and production of construction drawings on a per
      project basis at a flat rate of ***** US per project.

5.    DBT OBLIGATION TO SUPPLY MATERIAL AND EQUIPMENT. DBT will supply at
      reasonable cost to Microgy all of the components necessary to construct
      the DBT CHP System, the DBT System and the DBT AD Unit in the Licensed
      Territory. DBT will also supply critical components of the DBT System or
      DBT AD Unit gas storage system, including, but not limited to, the
      rubberized gas storage bag and process controls at reasonable cost to
      Microgy. DBT understands that very low cost of components and very short
      shipping and delivery times are critical to the success of Microgy
      projects. DBT will make all reasonable good faith efforts to keep
      component costs to Microgy low and shipping and delivery times as short as
      possible. DBT will use United States based construction site labor and
      suppliers of basic raw materials such as steel, pumps, piping, wiring
      materials and other commodity components readily available in the United
      States whenever possible to keep total project costs low.

6.    COOPERATION ON THE DEVELOPMENT OF NUTRIENT MANAGEMENT SYSTEMS. Microgy and
      DBT agree to cooperate on the development of DBT's experimental manure
      processing technology ("DBT Manure Technology") which utilizes a manure
      evaporator and condenser using waste heat from the Microgy System. If DBT
      makes the DBT Manure System commercially available to any customer, the
      DBT Manure Technology will be considered and enhancement to the DBT System
      or the DBT AD Unit as defined under Section 9 of this Agreement. DBT
      hereby grants Microgy the perpetual and exclusive license to own, use,
      deploy or otherwise commercially exploit the DBT Manure Technology when
      used with the DBT System or the DBT AD Unit in the Licensed Territory and
      a perpetual, non-exclusive license to own, use, deploy or otherwise
      commercially exploit the DBT Manure Technology in all Microgy projects
      incorporating the DBT System or the DBT AD Unit outside of the Licensed
      Territory.

7.    DBT EQUITY POSITION IN CERTAIN PROJECTS DEVELOPED. DBT will be granted an
      equity ownership position of five percent (5%) in any legal entity that
      owns each project developed by Microgy using the DBT System or DBT AD Unit
      wherein Microgy retains an equity position or any position convertable
      into equity. It is understood that one entity may develop more than one
      project and multiple entities may develop one or more projects employing
      the DBT System or DBT AD Unit. A prinipal of DBT will be entitled to an
      advisory board seat on each project entity employing the DBT System or DBT
      AD Unit.

8.    SUBCONTRACTING. Microgy may subcontract with a third party or parties for
      the assembly, installation, operation, supervision and maintenance of the
      DBT System or DBT AD Unit; provided, however, that such subcontracting
      shall not relieve DBT or Microgy from any of the provisions contained in
      this agreement. DBT shall provide engineering design and performance
      specifications to guide the preparation of construction documents to
      install the DBT System or DBT AD Unit. Said subcontractors shall be
      subject to the provisions provided for in Section 18 herein to maintain
      confidentiality of the DBT System or DBT AD Unit intellectual property and
      trade secrets.

9.    TECHNOLOGICAL ADVANCEMENTS. Any improvements, modifications or other
      changes or enhancements to the DBT System, the DBT AD Unit or the DBT CHP
      System or any integral hardware components of the DBT System, the DBT AD
      Unit or the DBT CHP System made by

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*****Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

      DBT or Microgy shall be the sole and exclusive property of DBT. Any such
      improvements, modifications or other changes or enhancements to the DBT
      System, the DBT AD Unit or the DBT CHP System any integral hardware
      components developed by either party shall be licensed to Microgy under
      the same terms and conditions as set forth in this agreement on an
      exclusive basis for use in the Licensed Territory and on a non-exclusive
      basis in all projects developed by Microgy outside of the Licensed
      Territory that incorporate the DBT System, the DBT AD Unit or the DBT CHP
      System.

10.   INTELLECTUAL PROPERTY PROTECTION. DBT and Microgy will file all necessary
      patents and process patents to protect the integrated Microgy System and
      DBT System or DBT AD Unit from competitive exploitation, shall be equal
      owners in said patents and shall share all costs of obtaining and
      maintaining said patents. DBT will make all reasonable efforts to maintain
      all existing patents or other intellectual property rights on the DBT
      System or DBT AD Unit and secure additional patents or other means of
      protecting trade secrets as necessary to protect the integrity of the
      integrated DBT System or DBT AD Unit and Microgy System.

11.   SUB-LICENSING OF THE DBT SYSTEM. Microgy may sub-license the DBT System or
      DBT AD Unit or any portion of the use, operation, management or
      maintenance of the DBT System or DBT AD Unit to any affiliated entity
      wherein Microgy has an equity interest with notice to DBT. Microgy may
      only sub-license the DBT System or DBT AD Unit to a non-affiliate with the
      express written permission of DBT. Further, Microgy will not permit
      sub-licensees to make, assign or grant other sub-licenses of the DBT
      System or DBT AD Unit.

12.   LICENSING FEE. Microgy will pay to DBT a licensing fee (the "Licensing
      Fee") for each installed and operating DBT System or DBT AD Unit deployed
      by Microgy. The Licensing Fee shall be calculated as follows:

      (a)   During the first 12 months of this agreement, Microgy shall pay to
            DBT an amount equal to ***** percent (*****%) the total cost of each
            individual project completed by Microgy or any of its affiliates or
            sub-licensees.

      (b)   After the first 12 months of this agreement, Microgy shall pay to
            DBT an amount equal to ***** percent (*****%) of the total cost of
            the next six (6) projects completed by Microgy or any of its
            affiliates or sub-licensees in any calendar year; and an amount
            equal to ***** percent (*****%) of the total cost of any additional
            projects in excess of six (6) projects completed in that calendar
            year.

      (c)   The total cost shall be defined as the cost of material, equipment
            and direct labor, engineering design, construction management and
            other expenses including project management and commissioning to
            complete each individual project, less any amount paid to DBT or any
            of its affiliates for engineering, design or consulting services
            charged to the project, as evidenced by written invoices; not
            including Microgy's profit, taxes, bonding, and finance costs, if
            any.

      (d)   If new anaerobic digester technology appears in the market at any
            time after five (5) years of the date of this Agreement which
            produces one hundred percent (100%) of the methane gas produced by
            the DBT AD Unit for the same amount of raw materials or by any other
            process, the License Fee shall be renegotiated by the parties
            hereto.

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*****Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

13.   MANAGEMENT CONSULTING CONTRACT TO DBT. DBT will advise Microgy on the
      management of the bio-gas digester functions of all DBT System or DBT AD
      Units per separate agreement with the owner of the project. DBT will be
      compensated for its consulting services at a rate of ***** Dollars U.S.
      ($*****) per month for each project developed by microgy or any of its
      affiliates which uses the DBT System or DBT AD Unit (the "Management
      Fee"). Said fee shall commence upon commercial operation of the project
      and shall be adjusted annually according to the inflation rate published
      by the U.S Consumer Price Index. DBT agrees to promptly report to Microgy
      all operating data necessary for the safe and efficient operation of the
      DBT System, the DBT AD Unit or the Microgy System. Microgy will have
      overall managerial authority over each project it develops using the DBT
      System or the DBT AD Unit.

14.   PAYMENT TERMS. Partial proportional payment to DBT of the Licensing Fee
      shall be made by Microgy within ten (10) business days after Microgy
      receives progress payments and the final payment shall be paid upon
      completion of each project developed. Payment to DBT of the Management Fee
      will be paid monthly. All fees payable hereunder shall be paid in US funds
      to the depository account specified by DBT.

15.   COOPERATION BETWEEN THE PARTIES. DBT and Microgy will cooperate in the
      marketing, construction, implementation, operation, maintenance, upgrading
      and improvement of all DBT System, DBT AD Units and the Microgy System
      developed by Microgy in the Licensed Territory. The parties agree to
      communicate monthly in writing and orally as the need may arise to clarify
      all issues relating to implementation of the DBT System or DBT AD Unit.

16.   NON-COMPETE AND NON-CIRCUMVENTION. Microgy shall not purchase, use,
      develop or otherwise participate in the development of any anaerobic
      digester technology that competes with the DBT System or DBT AD Unit
      during the term of this Agreement. Microgy shall not develop any anaerobic
      digester technology that competes with DBT after termination of this
      Agreement. For each breach of this non-compete provision, Microgy will pay
      an agreed penalty of U.S. $100,000 for any one breach hereof. Microgy
      reserves the right to contract with other parties to use competing
      anaerobic digester technology in the Microgy System upon termination of
      this Agreement. DBT agrees during the term of this Agreement not to
      compete, circumvent or otherwise develop or attempt to develop any
      anaerobic digester based electrical generation or cogeneration projects or
      developments, whether using its system or any other system with any party
      or parties other than Microgy or its affiliates in the Licensed Territory.

17.   TERM OF AGREEMENT AND TERMINATION. The term of this Agreement shall be
      perpetual, continuing unless terminated as set forth below.

      (a)   Either party may terminate this Agreement following a material
            breach by the other party of any of the provisions of this Agreement
            which remains uncured for a period of thirty (30) days after written
            notice thereof to the breaching party. Any party hereto may seek
            arbitration as to whether any alleged breach is material as to this
            Agreement. Any arbitration action commenced by any party hereto
            shall act to stay termination of this Agreement, pending the outcome
            of the arbitration proceeding as provided for in Section 24 herein.

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      (b)   Either party may terminate this agreement immediately upon
            delivering written notice to the other party upon or after the
            filing by the other party of a petition in bankruptcy or insolvency,
            or an adjudication that the other party is bankrupt or insolvent, or
            the filing of a petition or answer seeking reorganization,
            readjustment or rearrangement of its business under any law or
            government relating to bankruptcy or insolvency, or the appointment
            of a receiver for all or substantially all of the property of such
            other party, or the making of any assignment or attempted assignment
            for the benefit of creditors.

      (c)   The licensing rights granted to Microgy pursuant to this Agreement
            shall include the right to continue to use the DBT System or DBT AD
            Unit purchased or placed into service prior to the termination of
            this Agreement, This provision shall survive the termination of this
            Agreement.

18.   SUPPORT AND TECHNICAL TRAINING. DBT shall provide all necessary technical,
      sales and support services during construction of each project at no
      charge to Microgy over the life of this agreement. Such services shall
      include, but are not limited to on-going technical, operational and
      maintenance support. Technical training shall include product operations
      training, product performance information, installation instructions,
      emergency response and any other material and necessary training as
      requested by Microgy. Sales and marketing training shall include operating
      characteristics, system advantages and uses, installation data and
      performance and savings measures. DBT shall provide post-development
      technical support and maintenance information to Microgy by e-mail,
      telephone or fax, without charge. Should Microgy request technical support
      from DBT at a project location, it will make the request to DBT in writing
      and all reasonable travel and living costs and any other reasonable
      expenses incurred by DBT shall be paid by Microgy.

19.   CONFIDENTIALITY. Both the Microgy System and the DBT System or DBT AD Unit
      are comprised of substantial proprietary technology which is based upon
      trade secrets and other confidential information. As such, the parties
      will exercise reasonable care in disclosing only so much information about
      each system to their partners, professional agents, sub-contractors,
      sub-licensees and other necessary personnel so as to be able to develop
      the projects contemplated hereunder. The parties acknowledge that a
      willful violation of this section will cause irreparable harm to the other
      party and that money damages alone would be insufficient to compensate the
      injured party for such harm. Accordingly, the injured party shall be
      entitled to temporary and permanent injunctive relief, including temporary
      restraining orders, preliminary and permanent injunctions and orders of
      specific performance to enforce the obligations under this section without
      the necessity of proving actual damages or of posting bond. This provision
      shall not, however, diminish the injured party's right to reclaim and
      recover damages for such willful breach.

20.   GENERAL AND PRODUCT LIABILITY INSURANCE. Microgy shall maintain general
      and product liability insurance covering the design, manufacture,
      operation, maintenance and safety of the DBT System or DBT AD Unit and the
      Microgy System for all developed projects in the Licensed Territory
      incorporating all or any component of the DBT System or DBT AD Unit. and
      shall name DBT as an additional insured. Microgy shall secure an
      endorsement upon the policy giving DBT thirty (30) days prior written
      notice of the effective date of any material alteration or cancellation of
      such policy or policies. Microgy agrees to deliver to DBT upon request
      from time to time a certificate of insurance evidencing said insurance.

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21.   REPRESENTATIONS AND WARRANTIES. The parties hereto represent and warrant
      as follows:

      (a)   DBT hereby represents and warrants to Microgy that (i) DBT has full
            legal title to the DBT System, the DBT CHP System and DBT AD Unit
            and the right to enter into this Agreement and to grant Microgy the
            rights granted herein, (ii) that the manufacture, use and
            distribution of the DBT System, the DBT CHP Unit and DBT AD Unit, as
            contemplated under this Agreement, will not infringe on the
            intellectual property rights or other rights of any third party,
            (iii) that DBT is the owner of the patents and/or patent
            applications, described in Exhibit A attached to this Agreement ,
            (iv) that DBT will promptly pay all maintenance fees associated with
            any issued patent for the DBT System, the DBT CHP System and the DBT
            AD Unit, and (v) that DBT shall produce and convey the DBT System,
            the DBT CHP System or DBT AD Unit to Microgy in a prompt manner in
            accordance with Microgy's delivery requirements, and the DBT System,
            the DBT CHP System or DBT AD Unit shall be of good and merchantable
            quality and workmanship and shall comply with the specifications
            agreed upon by the parties. DBT shall update Exhibit A when
            additional patents issue, or when there is any other material change
            in the information listed therein.

      (b)   Microgy hereby represents and warrants that it has obtained, or will
            obtain, the rights to all technologies incorporated into the Microgy
            System and shall apply jointly with DBT for process patents
            concerning the use of the DBT System, the DBT CHP System or DBT AD
            Unit with the Microgy System within three hundred and sixty (360)
            days from the execution date of this Agreement. All patents
            incorporating the DBT System, the DBT CHP System or the DBT AD Unit
            shall be owned equally by DBT and Microgy. Further, Microgy shall
            demonstrate that (i) the manufacture, use and distribution of the
            Microgy System, as contemplated under this Agreement, will not
            infringe on the intellectual property rights or other rights of any
            third party, (ii) that Microgy is the owner of the patents and/or
            patent applications described in Exhibit B attached to this
            Agreement, and (iii) that Microgy will promptly pay all maintenance
            fees associated with any issued patent for the Microgy System.
            Microgy shall update Exhibit B when additional patents issue, or
            when there is any other material change in the information listed
            therein.

22.   INFRINGEMENT. If any action or proceeding brought against either party to
      this agreement (the "Defending Party") is based on a claim of infringement
      of a proprietary right or interest arising out of the Defending Party's
      use of its technology (the "Technology"), and if the Defending Party
      promptly notifies the other party to this agreement (the "Other Party") in
      writing of any such action or proceeding, the Defending Party shall, at
      its own expense, do the following to assure the Other Party of its
      continued use of the Technology: (1) defend such action or proceeding and
      pay all damages, costs, losses, claims, awards, settlements, attorney's
      fees and expenses, or any of them, arising out of such action or
      proceeding, (2) procure for the Other Party the right to continue to use
      the Technology or replace or modify it, with another comparable system
      which has the Other Party's approval, such that the infringement is
      removed, (3) if in any such action or proceeding a temporary restraining
      order or preliminary injunction be granted, the Defending Party shall, by
      giving satisfactory bond or otherwise, secure the suspension of such
      restraining order or preliminary injunction. Both the Defending Party and
      the Other Party shall cooperate reasonably with each other in any defense
      of the actions and proceedings referred to in this section. Costs
      associated with such cooperation shall be borne by the Defending Party.
      The Defending Party shall

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      give the Other Party prompt written notice of any potential infringement
      problems of which it becomes aware, including third party infringement
      upon the intellectual rights of the Defending Party related to the
      Technology. The Defending Party agrees to aggressively defend, at its sole
      cost and expense, any known threat of infringement upon the Technology
      and, if in the opinion of a independent third party arbitrator, if the
      Defending Party does not aggressively preserve the rights to the
      Technology by pursuing potential infringing entities, the Other Party may
      terminate this Agreement pursuant to Section 17 herein. Any delays caused
      by infringement actions for which the Defending Party is responsible shall
      not be considered to be delays caused by uncontrollable forces. If the
      Defending Party is unable to secure the continued use by the Other Party
      of the Technology, the Other Party may terminate this agreement and all
      rights granted to the Other Party under the terms of this Agreement shall
      remain vested in the Other Party for the actual life of all projects it
      developed using the Technology. To further protect the Other Party's
      interest in manufacturing, use, sales, marketing, distribution and
      servicing of the technology, the Defending Party shall provide copies of
      all existing and proposed licensing arrangements for other applications of
      the Technology to the Other Party on a timely basis. Additionally, the
      Defending Party agrees to notify the Other Party of the existence or
      subsequent granting of any other licenses it may have or acquire.

23.   INDEMNITY. Both parties shall indemnify and hold harmless each other, its
      shareholders, directors, officers, employees and agents, from and against
      any liabilities, losses, costs, damages and expenses (including reasonable
      attorneys' fees) arising out of or related to (i) any defect in the DBT
      System, the DBT CHP System or DBT AD Unit and the Microgy System, (ii) any
      breach of the representations, warranties and covenants made by the
      parties; and (iii) any losses, damages, injuries, or death to persons, or
      damage to property resulting from the negligence, in whole or in part, by
      the parties or any of its employees, agents, representatives, or
      subcontractors. Amounts due to the parties by way of indemnification may
      be offset against amounts due from either party.

24.   ASSIGNMENT. Except as otherwise provided in Section 11 herein concerning
      the permissible sub-licensing of the DBT System or the DBT AD Unit by
      Microgy, this Agreement may not be assigned by either party in any manner,
      whether voluntary or involuntary, without the written consent of the other
      party (other than to a subsidiary or other affiliate, the majority of
      which is owned by the respective party).

25.   DISPUTE RESOLUTION. Any controversy or dispute arising out of or in
      connection with this Agreement, its interpretation, performance or
      termination, which the parties are unable to resolve within a reasonable
      time after written notice by one party to the other of the existence of
      such controversy or dispute, may be submitted to arbitration by either
      party and if so submitted by either party, shall be finally settled by
      arbitration conducted in accordance with the rules of conciliation and
      arbitration of the International Chamber of Commerce in effect on the date
      hereof. Any such arbitration shall take place in the City of Aarhus,
      Denmark. Such arbitration shall be conducted in the English language and
      the arbitrator shall apply the laws of the Country of Denmark. The
      institution of any arbitration proceedings hereunder shall not relieve any
      party of its obligation to perform hereunder during the continuance of
      such arbitration proceeding. The decision of the arbitrator shall be
      binding and conclusive upon the parties, their successors and assigns and
      they shall comply with such decision in good faith.

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26.   DEFAULT, NOTICE OF DEFAULT AND RIGHT TO CURE. In the event of default by
      any party to any provision in this agreement, the effected party or
      parties shall notify the defaulting party in writing with a clear
      description of the nature of the default within 30 days of the date of the
      default. The defaulting party shall have thirty (30) days from receipt of
      the default notice to cure the default. If the parties cannot agree to a
      cure for the default or otherwise disagree as to the nature of the cure,
      the dispute shall be handled in accordance with the dispute resolution
      provisions of section 24 herein.

27.   EXCLUSIVE AGENT. Microgy shall be DBT's exclusive agent in the Licensed
      Territory during the term of this Agreement.

28.   ENTIRE AGREEMENT. This Agreement succeeds and replaces the agreement
      between the parties dated November 17, 1999 and represents the entire
      agreement between the parties with respect to the subject matter hereof,
      and no modification hereof shall be effective unless contained in writing
      executed by both parties.

29.   WAIVER OF BREACH. Waiver by either party of a breach any provisions hereof
      shall not be construed as a waiver of any subsequent breach thereof or of
      any other provision.

30.   SEVERABILITY. Should any part, term, or provision of this Agreement be
      held to be illegal or in conflict with the laws of the United States,
      Colorado, Denmark or other court of competent jurisdiction, the validity
      of the remaining portions or provisions shall not be affected thereby.

31.   NOTICE. Any notice required herein shall be sent by personal delivery,
      certified mail or by a recognized overnight courier service to the party
      entitled to receipt thereof at the address provided in the preamble to
      this Agreement.

32.   EXECUTION BY FAX. This Agreement may be executed by Microgy and/or DBT by
      facsimile signature, which facsimile signatures shall be deemed to be
      original signatures, and shall have the same force and effect as original
      signatures.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

Microgy Cogeneration Systems, Inc.        Danish Biogas Technology, A.S.
(MICROGY)                                 (DBT)

By:_____________________________          By:_______________________________
      Benjamin J. Brant                         Dr. George Aboagye Mathiesen
      President                                 President

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                                    EXHIBIT A

             DBT PATENTS, PATENT APPLICATIONS OR PATENT DISCLOSURES

In the event DBT files patent applications, this Exhibit A shall be completed in
accordance with the provisions contained in Section 20 herein.

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                                    EXHIBIT B

          MICROGY'S PATENTS, PATENT APPLICATIONS OR PATENT DISCLOSURES

This Exhibit B shall be completed in accordance with the provisions contained in
Section 20 herein.

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                                                                   EXHIBIT 10.08

                                 PROMISSORY NOTE
                   NOTICE: CONTAINS A WAIVER OF TRIAL BY JURY

$750,000.00                                             Date: September 14, 2001

1. Principal. FOR VALUE RECEIVED, the undersigned, ENVIRONMENTAL POWER
CORPORATION, a Delaware ("Maker") promises to pay to ALCO FINANCIAL SERVICES,
LLC ("Payee"), or order, at its office at 900 Larkspur Landing Circle, Suite
230, Larkspur, CA 94939, the principal amount set forth above on September 13,
2002, plus interest payable as set forth below. Capitalized terms not defined
herein have the meanings ascribed to them in the security agreement of even date
herewith made by Maker in favor of Payee (the "Security Agreement").

2. Interest. Interest hereunder shall be due and payable monthly, payable with
each installment of principal due hereunder, and continuing on the first day of
each month thereafter until the entire principal sum hereof and all interest
accrued hereunder are paid in full. Interest hereunder shall be computed (on the
basis of a 360-day year and actual days elapsed) on the outstanding principal
balance owing hereunder at the prime rate as reported in the Wall Street Journal
(Western Addition) (the "Prime Rate") plus three and one-half percent (3.5%)
(the "Interest Rate"). If the Prime Rate is reported as a range, the highest
reported rate shall be used in determining the Interest Rate.

3. Application of Payments. Each payment received hereunder shall, at the
Payee's option, be applied first to interest and all sums due hereunder other
than principal, with the remainder, if any, to principal.

4. Event of Default. Each of the following events or conditions shall constitute
an "Event of Default":

      4.1. Borrower fails to make any payment hereunder when due, whether at
maturity, upon acceleration, or otherwise, which default is not cured within
five (5) business days;

      4.2. Borrower is in default with respect to the Security Agreement, which
default is not cured within five (5) business days;

      4.3. An order for relief is entered against Maker by any United States
Bankruptcy Court; or Maker does not generally pay its debts as they become due
(within the meaning of 11 U.S.C. 303(h) as at any time amended, or any successor
statute thereto); or Maker makes an assignment for the benefit of creditors; or
Maker applies for or consents to the appointment of a custodian, receiver,
trustee, or similar officer for it or for all or any substantial part of its
assets, or such custodian, receiver, trustee, or similar officer is appointed
without the application or consent of Maker; or Maker institutes (by petition,
application, answer, consent, or otherwise) any bankruptcy, insolvency,
reorganization, moratorium, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition,
application, or otherwise) against Maker; or any judgment, writ, warrant of
attachment, execution, or similar process shall be issued or levied

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against a substantial portion of the property of Maker;

      4.4. An adverse change occurs with respect to the financial condition or
operations of Maker which results in a material impairment of the prospect of
repayment of this Note;

      4.5. A sale, hypothecation or other disposition by the Maker is made of
twenty (20%) percent or more of the beneficial interest in any class of voting
stock of Maker;

      4.6. Any material provision of this Note or the Security Agreement ceases,
for any reason, to be valid and binding on Maker.

5. Remedies.

      5.1. Upon the occurrence of any Event of Default at Payee's option:

      5.2. Payee may declare this Note terminated;

      5.3. Lender may declare all principal and interest due hereunder to be
immediately due and payable, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived by Maker.

      5.4. all amounts due shall accrue interest at the Interest Rate plus ten
percent (10%); and

      5.5. Lender may, immediately and without expiration of any period of
grace, enforce payment of all Obligations and exercise any and all other
remedies granted to it under the Security Agreement, at law, in equity, or
otherwise.

6. Security Interest. The obligations evidenced hereby are secured by all
personal property collateral now or hereafter granted by Maker to Payee,
including but not limited to collateral described in the Security Agreement.

7. Prepayment Penalty. With each prepayment of any portion of this Note, whether
in whole or in part, Maker shall pay Payee a prepayment penalty of $7,500.00.

8. Attorneys Fees. Maker agrees to reimburse Payee on demand for:

      8.1. the actual amount of all costs and expenses, including reasonable
attorneys' fees, which Payee has incurred or may incur in:

            8.1.1. negotiating, preparing, or administering this Note and any
documents prepared in connection herewith, all of which shall be paid out of the
principal advanced with the execution hereof;

            8.1.2. any way arising out of this Note; and

            8.1.3. protecting, preserving or enforcing any lien, security
interest, or other right granted by Maker to Payee or arising under applicable
law, whether or not suit is brought, including but not limited to the defense of
any claim that any payment received by Maker from or for the

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<PAGE>

account of an Account Debtor is avoidable under the Bankruptcy Code or any other
debtor relief statute.

      8.2. the actual costs, including photocopying (which, if performed by
Payee's employees, shall be at the rate of $.10/page), travel, and reasonable
attorneys' fees and expenses incurred in complying with any subpoena or other
legal process attendant to any litigation in which Maker is a party.

9. Choice of Law. This Note and all transactions contemplated hereunder and/or
evidenced hereby shall be governed by, construed under, and enforced in
accordance with the internal laws of the State of California.

10. Jury Trial Waiver. IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY
RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (a) ARISING HEREUNDER, OR (b) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE
OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

11. Venue; Jurisdiction. The parties agree that any suit, action or proceeding
arising out of the subject matter hereof, or the interpretation, performance or
breach of this Agreement, shall, if Payee so elects, be instituted in any court
sitting in San Francisco, California (the "Acceptable Forums"). Maker agrees
that the Acceptable Forums are convenient to it, and irrevocably submits to the
jurisdiction of the Acceptable Forums, irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement, and waives any and
all objections to jurisdiction or venue that it may have under the laws of the
State of California or otherwise in those courts in any such suit, action or
proceeding. Should such proceeding be initiated in any

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other forum, Maker waives any right to oppose any motion or application made by
Payee as a consequence of such proceeding having been commenced in a forum other
than an Acceptable Forum.

                                        ENVIRONMENTAL POWER CORPORATION

                                        By: /s/ Joseph E. Cresci
                                            ------------------------------------

                                        Name: Joseph E. Cresci
                                              ----------------------------------
                                        Title: CEO
                                               ---------------------------------

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