BUSINESS DEVELOPMENT AGREEMENT

BUSINESS DEVELOPMENT AGREEMENT (this Agreement) is made as of the 23^rd day of October, 2006, (the Effective Date), between Cargill, Incorporated, a Delaware corporation, through its Emerging Business Accelerator business unit (Cargill), on the one hand, and Environmental Power Corporation, a Delaware corporation (EPC), and its wholly-owned subsidiary, Microgy Inc., a Colorado corporation (Microgy), on the other hand. EPC and Microgy are collectively referred to herein as the EPC Parties, and individually as an EPC Party. Cargill and the EPC Parties are collectively referred to herein as Parties, and individually as a Party. Capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to them in Article X.

WHEREAS, the EPC Parties are in the business of developing renewable energy projects and are the licensees of anaerobic digester technology (the Technology) which results in energy-production opportunities, emissions-reductions and the potential for issuance of Greenhouse Gas Reduction Certificates resulting from those emissions reductions; and

WHEREAS, Cargill and its Affiliates have contacts with a network of customers, farmers and strategic business partners (the Cargill Network) who might utilize the Technology or otherwise add value to such projects;

WHEREAS, the Parties desire to work jointly to identify potential customers, and develop and pursue business opportunities, for the EPC Parties and their Affiliates with members of the Cargill Network that will enable them to undertake anaerobic digester projects (each an AD Project); and

WHEREAS, the Parties now wish to enter into a definitive document in furtherance of that desire.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the Parties agree as follows:

Article I.

Business Development

Section 1.1. The territorial scope of the Parties activities pursuant to this Agreement is North America, subject to enlargement by mutual agreement.

Section 1.2. Cargill shall use its reasonable efforts to identify AD Projects for the EPC Parties within the Cargill Network (each, a Project Candidate). The EPC Parties and Cargill will work jointly to identify specific targeted markets for developing AD Projects within the Cargill Network in accordance with the process set forth in Schedule 1. Within those targeted markets Cargill will utilize the guidelines set forth in Schedule 2 (the Project Guidelines), in order to identify specific producers that are deemed appropriate candidates for further discussion (Project Candidates). The EPC Parties will make available their technical teams as reasonably necessary to facilitate the determination of Project Candidates. The parties acknowledge that the Project Guidelines are merely guidelines, and satisfaction of all the guidelines will not be a condition to the EPC Parties pursuing a possible AD Project.

Section 1.3. The EPC Parties shall consider each of the Project Candidates and, acting reasonably and at their sole cost and expense, shall select those candidates that they want Cargill to further pursue on their behalf. Cargill will then present to the identified Project Candidates the EPC Parties binding Option to implement an AD Project, the form of which is set forth in Schedule 3 (to be reasonably adapted as necessary to conform to specific environmental and physical variations presented by different Project Candidates). Cargill shall pursue negotiations with the Project Candidate with the goal of obtaining a completed and signed version of Schedule 3 as so presented, from the Project Candidate (a Project Commitment). At the request of any party, the EPC Parties will make available their staff to facilitate the negotiation and/or completion of a Project Commitment. Once the Project Candidate has signed the Project Commitment, Cargill shall present it to the EPC Parties for their review and consideration. The EPC Parties shall, keeping Cargill informed, proceed to negotiation of a mutually acceptable Lease and Project Agreement with the Project Candidate. Any such negotiations shall be concluded within 120 days of the designated effective date of the Project Commitment as signed by the Project Candidate or said Commitment shall be deemed to be of no further force and effect.

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