MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and between

DQE FINANCIAL CORP.

and

BLUE WOLF ENERGY HOLDINGS LLC

relating to

MONTAUK ENERGY CAPITAL, LLC

Dated as of November 22, 2006

MEMBERSHIP INTEREST PURCHASE AGREEMENT

     THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”), dated as of November 22, 2006, is made by and between DQE FINANCIAL CORP., a Delaware corporation, with its principal offices located at 411 Seventh Avenue, Pittsburgh, PA 15219 (“ Seller ”), and BLUE WOLF ENERGY HOLDINGS LLC, a Delaware limited liability company, with its principal offices located at One Liberty Plaza, 23 ^rd Floor, New York NY 10006 (“ Purchaser ”). Seller and Purchaser are sometimes referred to individually as a “ Party ” and collectively as the “ Parties. ”

W I T N E S S E T H:

     WHEREAS, Seller owns 100% of the outstanding membership interests in Montauk Energy Capital, LLC, a Delaware limited liability company (“ Montauk ”); and

     WHEREAS, Montauk owns both directly and indirectly, and wholly and partially, equity interests in the Subsidiaries (as defined herein); and

     WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of the membership interests in Montauk, for the consideration and upon the terms and subject to the conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I
Definitions and Construction

     1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, the following words and phrases shall have the following meanings:

          “ Additional Employees ” has the meaning specified in Section 4.19(b) hereof.

          “ Affiliate ” means, with respect to any Person, any individual or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Person. As used in this definition, “control” means the direct or indirect ownership of 50% or more of the outstanding capital stock or other equity interests having ordinary voting power.

          “ Annual Incentive Plan ” means the annual incentive bonus plan sponsored by Seller for its eligible non-union employees.

          “ Applicable Law ” means any federal, state, local or international statute, law, ordinance, rule or regulation applicable to Seller, the Companies or the Business.

          “ Benefit Plans ” means, collectively, all “employee pension benefit plans” (as defined in Section 3(2) of ERISA), including multiemployer plans (as defined in Section 3(37) of ERISA and Section 4001(a)(3) of ERISA), all “employee welfare benefit plans” (as defined in Section 3(1) of ERISA) and all bonus, stock option, stock purchase, deferred compensation plans or arrangements and other employee fringe benefit plans, which in each case are or were sponsored, maintained or contributed to by DLH or any ERISA Affiliate for the benefit of the Company Employees.

          “ Bonds ” has the meaning specified in Section 8.15 hereof.

          “ Business ” means the Companies’ operations in the landfill gas-to-energy business (including electrical production, medium Btu processing, high Btu pipeline quality production and liquefied natural gas business), the development, operation and maintenance of landfill gas collection systems and gas purification facilities.

          “ Business Day ” means any day other than Saturday, Sunday and any day that in the Commonwealth of Pennsylvania or the State of
New York is a legal holiday or a day on which banking institutions are permitted to be closed.

          “ Capital Expenditures ” means amounts paid by Seller or its Affiliates (including the Companies) for those capital projects of the Companies identified on Schedule 1.1-A hereto.

          “ Capital Expenditures Target ” means $6,724,000 which is the aggregate of the targeted Capital Expenditures to be made between November 1, 2006 and December 31, 2006, as set forth on Schedule 1.1-A hereto.

          “ Cash Equivalents ” means the sum of the cash and cash equivalents of the Companies reflected as “cash” on the consolidated balance sheet of the Companies prepared in accordance with GAAP, applied on a basis consistent with the preparation of the Financial Statements, but excluding the Hedge Cash Proceeds.

          “ Closing ” means the closing of the sale and purchase of the Purchased Interests pursuant to this Agreement.

          “ Closing Capital Expenditures ” means the aggregate amount of Capital Expenditures made during the period commencing on November 1, 2006 and ending as of the close of business on the day immediately prior to the Closing Date.

          “ Closing Certificate ” has the meaning specified in Section 2.6(a) hereof.

          “ Closing Date ” means the date mutually selected by the Parties which is not later than five Business Days after the earliest date on which the conditions specified in Sections 7.1(b) and 7.2(b) hereof have been satisfied, or such other date as the Parties may mutually agree.

          “ Closing Indebtedness ” means the amount (supported by payoff letters, as appropriate) of Indebtedness, as of the close of business on the day immediately prior to the Closing.

          “ Closing Statement Review ” has the meaning specified in Section 2.7 hereof.

          “ Closing Working Capital ” means Working Capital as of the close of business on the day immediately prior to the Closing Date; provided, however, that Closing Working Capital shall not include Liabilities included in the computation of Closing Indebtedness.

          “ COBRA ” has the meaning specified in Section 4.15(g) hereof.

          “ Code ” means the Internal Revenue Code of 1986, as amended.

          “ Companies ” means, collectively, Montauk and the Subsidiaries.

          “ Company Assets ” means all assets owned or leased by the Companies and used in the Business.

          “ Company Employees ” has the meaning specified in Section 8.9(a) hereof.

          “ Confidentiality Agreement ” means that certain Non-Disclosure Agreement dated as of October 5, 2006 between Financial Advisor, on behalf of Seller, and Blue-Wolf Capital Management LLC.

          “ Contract ” means any contract, agreement, indenture, note, bond, loan, instrument, option, lease, conditional sales contract, sales and purchase order, mortgage, license, franchise, insurance policy, understanding, commitment or other arrangement or agreement, whether written or oral.

          “ DLH ” means Duquesne Light Holdings, Inc., which owns all of the issued and outstanding stock of Seller.

          “ DLH Guaranty ” means that certain Guaranty dated as of the Closing Date and executed by DLH in favor of the Purchaser Indemnified Parties, substantially in the form attached as Exhibit A hereto.

          “ DOJ ” has the meaning specified in Section 8.3(b) hereof.

          “ Environmental Laws ” has the meaning specified in the definition of Hazardous Materials.

          “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

          “ ERISA Affiliate ” means any other Person that, together with DLH, is required to be treated as a single employer under Section 414 of the Code or Section 4001(a)(14) of ERISA.

          “ Estimated Closing Capital Expenditures ” means the amount estimated by Seller to be the amount of Closing Capital Expenditures, as set forth on the Closing Certificate.

          “ Estimated Closing Indebtedness ” means the amount estimated by Seller to be the amount of Closing Indebtedness, as set forth on the Closing Certificate.

          “ Estimated Closing Working Capital ” means the amount estimated by Seller to be the amount of Closing Working Capital, as set forth on the Closing Certificate.

          “ Existing Litigation ” has the meaning specified in Section 9.1 (d) hereof.

          “ Federal Power Act ” means the Federal Power Act, as amended, and the rules and regulations promulgated thereunder.

          “ FERC ” means the U.S. Federal Energy Regulatory Commission, and any successor agency thereto.

          “ Final Order ” means action by the relevant Governmental Entity which has not been reversed, stayed, enjoined, set aside, annulled or suspended, with respect to which any waiting period prescribed by law before the transactions contemplated hereby may be consummated has expired, and as to which all conditions of such transactions prescribed by law, regulation or order have been satisfied.

          “ Final Purchase Price ” has the meaning specified in Section 2.8 hereof.

          “ Financial Advisor ” means Ewing Bemiss & Co.

          “ Financial Statements ” means, collectively, (i) the consolidated balance sheets of the Companies as of December 31, 2004 and 2005, and the related consolidated statements of income and cash flow for the years then ended and (ii) the consolidated balance sheet of the Companies as of October 31, 2006, and the related consolidated statements of income and cash flow for the ten-month period then ended (collectively, the “ Interim Statements ”).

          “ FTC ” has the meaning specified in Section 8.3 (b) hereof.

          “ GAAP ” means United States generally accepted accounting principles.

          “ Governmental Entity ” means any federal, state, local or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign.

          “ GSF Letter of Credit ” has the meaning specified in Section 8.12 hereof.

          “ GSF Payment Bond ” has the meaning specified in Section 8.12 hereof.

          “ Hazardous Materials ” means hazardous wastes, hazardous substances, hazardous constituents, toxic substances or related materials, whether solids, liquids or gases including but not limited to substances defined as “PCBs,” “hazardous wastes,” “hazardous substances,” “toxic substances,” “pollutants,” “contaminants,” “radioactive materials,” “petroleum,” or other similar designations in, or otherwise subject to regulation under, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (“ CERCLA ”), 42 U.S.C. § 9601 et seq. ; the Toxic Substance Control Act (“ TSCA ”), 15 U.S.C. § 2601 et seq. ; the Resource Conservation and Recovery Act (“ RCRA ”), 42 U.S.C. § 9601; the Clean Water Act (“ CWA ”), 33 U.S.C. § 1251 et seq .; the Safe Drinking Water Act, 42 U.S.C.§ 300f et seq. ; the Clean Air Act (“ CAA ”), 42 U.S.C. § 7401 et seq. ; or any similar state law; and in the plans, rules, regulations or ordinances adopted, or other criteria and guidelines promulgated pursuant to the preceding laws or other similar laws, regulations, rules or ordinances, in each case as in effect as of the date of this Agreement (collectively, the “ Environmental Laws ”); and any other substances, constituents or wastes subject to environmental regulations under any applicable federal, state or local law, regulation or ordinance in effect as of the date of this Agreement.

          “ Hedge Cash Proceeds ” has the meaning specified in Section 2.6(b)(v) hereof.

          “ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

          “ Indebtedness ” means, without duplication, the sum of (i) the principal amount of any indebtedness of the Companies (to the extent of Seller’s interest therein) for borrowed money outstanding immediately prior to the Closing, together with all prepayment premiums or penalties and other amounts becoming due as a result of the transactions contemplated by this Agreement, (ii) any unpaid interest owing on any such indebtedness of the Companies (to the extent of Seller’s interest therein), (iii) amounts owed as of the Closing with respect to any capital lease obligations of the Companies (to the extent of Seller’s interest therein), (iv) all liabilities of the Companies (to the extent of Seller’s interest therein) to pay for the deferred purchase or acquisition price of property, services or businesses which are accrued or required to be accrued under GAAP, other than trade accounts payables or expenses in the ordinary course of business consistent with past practice, (v) indebtedness of others guaranteed by the Companies (to the extent of Seller’s interest therein) or secured by a Lien on any of the Company Assets, or (vi) any receivables or payables owed by any of the Companies to Seller or any Affiliate of Seller (other than the Companies).

          “ Indemnified Party ” has the meaning specified in Section 9.4(a) hereof.

          “ Indemnifying Party ” has the meaning specified in Section 9.4(a) hereof.

          “ Independent Accountants ” has the meaning specified in Section 2.7 hereof.

          “ Intellectual Property Rights ” means all of the Companies’ patents, trademarks, trade secrets, service marks, trade names, copyrights, inventions, drawings, designs, customer lists, proprietary know-how or information or other rights with respect thereto used in the Business as currently conducted.

          “ Interim Working Capital ” means $2,415,076, the calculation of which is set forth on Schedule 1.1-B hereto.

          “ ISRA ” has the meaning specified in Section 8.3(c) hereof.

          “ JP Morgan Hedge ” has the meaning specified in Section 7.1(h) hereof.

          “ Leases ” has the meaning specified in Section 4.6(a) hereof.

          “ Liability ” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including, without limitation, any liability for Taxes.

          “ Liens ” means mortgages, liens, security interests, charges or encumbrances of any kind.

          “ Losses ” means, collectively, all losses, liabilities, claims, damages and expenses (including reasonable legal fees and expenses).

          “ Material Adverse Effect ” means (a) a result or consequence that would materially adversely affect the condition (financial or otherwise), results of operations or business of the Companies or the aggregate value of their assets, or could reasonably be expected to materially impair the ability of the Companies to own, hold, develop and operate their assets, in each case taken as a whole; or (b) a result or consequence that could reasonably be expected to materially impair Seller’s ability to perform its obligations hereunder or consummate the transactions contemplated hereby.

          “ Material Contract ” has the meaning specified in Section 4.8(a) hereof.

          “ Montauk ” has the meaning specified in the Recitals to this Agreement.

          “ Owned Real Property ” has the meaning specified in Section 4.6(b) hereof.

          “ Partially Owned Subsidiaries ” means, collectively, Apollo Energy III, LLC; Magellan-Montauk LFG, LLC; and, prior to the consummation of the Synfuels Divestiture, Montauk Synfuels, LLC.

          “ Party ” has the meaning specified in the Recitals to this Agreement.

          “ Permits ” means the certificates, licenses, permits, authorizations and approvals issued or granted to the Companies by Governmental Entities.

          “ Permitted Liens ” mean (i) mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s or other like liens arising in the ordinary course of business, (ii) liens arising under any original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (iii) liens for Taxes and other governmental obligations not yet due and payable or which hereafter may be paid without penalty and (iv) other imperfections of title, restrictions or encumbrances, if any, which do not materially impair the operation or continued use of the specific assets to which they relate.

          “ Person ” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization or any Governmental Entity.

          “ Post-Closing Tax Periods ” has the meaning specified in Section 8.1l(a) hereof.

          “ Pre-Closing Tax Periods ” has the meaning specified in Section 8.11 (a) hereof.

          “ Preliminary Purchase Price ” has the meaning specified in Section 2.6(b) hereof.

          “ Prorated Payment ” has the meaning specified in Section 8.9(k) hereof.

          “ Purchase Price ” has the meaning specified in Section 2.2 hereof.

          “ Purchased Interests ” means 100% of the membership interests in Montauk.

          “ Purchaser ” has the meaning specified in the Recitals to this Agreement.

          “ Purchaser Agreements ” has the meaning specified in Section 7.2(e) hereof.

          “ Purchaser Employee Plans ” has the meaning specified in Section 8.9(c) hereof.

          “ Purchaser Indemnified Parties ” has the meaning specified in Section 9.1 hereof.

          “ Purchaser Replaced Bonds ” has the meaning specified in Section 8.15 hereof.

          “ Representatives ” means, with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, legal counsel or other representative of that Person.

          “ Required Statutory Approvals ” has the meaning specified in Section 3.3 hereof.

          “ Securities Act ” means the Securities Act of 1933, as amended.

          “ Seller ” has the meaning specified in the Recitals to this Agreement.

          “ Seller Agreements ” has the meaning specified in Section 7.1 (e) hereof.

          “ Seller Employee Plans ” has the meaning specified in Section 8.9(c) hereof.

          “ Seller Indemnified Parties ” has the meaning specified in Section 9.2 hereof.

          “ Seller Retained Bonds ” has the meaning specified in Section 8.15 hereof.

          “ Seller Required Consents ” has the meaning specified in Section 3.3 hereof.

          “ Straddle Period ” means any taxable period beginning before and ending on or after the Closing Date.

          “ Subsidiaries ” has the meaning specified in Section 4.2 hereof.

          “ Synfuels Divestiture ” has the meaning specified in Section 8.14 hereof.

          “ Synfuels Entities ” means, collectively, Montauk Synfuels, LLC, Pace Carbon Synfuels, L.P. and Pace Carbon Fuels, L.L.C.

          “ Tax ” means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including any tax imposed under Subtitle A of the Code and any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding tax on amounts paid, payroll, employment, excise, severance, stamp, capital stock, occupation, property, environmental or windfall profit tax, premium, customs, duty or other tax), together with any interest, penalty, addition to tax or other additional amount, in each case imposed by any Governmental Entity, (ii) any liability for the payment of any amount of the type described in clause (i) above as a result of a Person being a member of an affiliated, consolidated or combined group with any other entity at any time on or prior to the date of this Agreement and (iii) any liability of any Person with respect to the payment of any amount of the type described in clause (i) or (ii) above as a result of any express or implied obligation of such Person to indemnify or reimburse any other Person.

          “ Tax Credits ” has the meaning specified in Section 4.13(1) hereof.

          “ Tax Return ” means all returns, declarations, reports, forms, estimates, information returns, statements or other documents (including any schedule, attachment and related supporting information) filed or required to be filed with or supplied to any Governmental Entity in connection with any Taxes, and including any amendments thereof.

          “ Third Party Claim ” has the meaning specified in Section 9.4(a) hereof.

          “ Unadjusted Purchase Price ” means $116,600,000.

          “ Warn Act ” has the meaning specified in Section 8.9(i) hereof.

          “ Working Capital ” means the excess as of the close of business on the day immediately prior to the Closing Date of (i) the Companies’ (to the extent of Seller’s interest therein) current assets (including any Cash Equivalents) over (ii) the Companies’ (to the extent of Seller’s interest therein) current liabilities (excluding any Indebtedness and any amounts owed to Seller or Affiliates of Seller (other than the Companies)), each as determined in accordance with GAAP; provided, however, that Working Capital shall not include (x) any Indebtedness or other liabilities satisfied as part of the Closing or (y) any receivables or payables which are eliminated pursuant to Section 8.8 hereof. For the elimination of doubt, obligations of the Companies immediately prior to the Closing Date related to employee bonuses, severance, vacation, obligations under any benefit/insurance plans and other similar items, including the items contemplated in Sections 8.9(e) and 8.9(k) hereof, shall be included as current liabilities in the calculation of Working Capital.

     1.2 Knowledge . Whenever any representation or warranty of Seller contained in this Agreement or in any schedule, exhibit or other document delivered in connection with this Agreement is qualified to the “knowledge” of Seller, such qualification means the actual knowledge, after due inquiry, of John R. Schmitt, Michael W. Rodgers, James A. Greenwell, G.R. O’Mahony, Daniel L. Bonk, Martin L. Ryan, Traci L. Spooner, Renee A. Voyt, Richard K. Wilcox, Joseph Sziveri and Gary L. Valdez. For purposes of this Section 1.2, “due inquiry” means the conduct of a reasonable investigation concerning the existence of certain facts or other matters, including, where appropriate, the making of a reasonably diligent inquiry of those employees of the Seller and/or the Companies with principal day-to-day operational responsibility with respect to such facts or matters.

     1.3 Limitations on Provisions relating to Partially Owned Subsidiaries . Notwithstanding anything to the contrary herein, (a) all representations and warranties of Seller contained in this Agreement or in any schedule, exhibit or other document delivered in connection with this Agreement which relate to the Partially Owned Subsidiaries (other than representations and warranties regarding Seller’s indirect ownership interest in the Partially Owned Subsidiaries) are deemed to be made to, and are qualified in their entirety by, the knowledge of Seller; (b) all covenants and agreements of Seller contained in this Agreement or in any schedule, exhibit or other document delivered in connection with this Agreement which relate to the Partially Owned Subsidiaries are made subject to the qualification that Seller indirectly owns only a 50% membership interest in each Partially Owned Subsidiary and, as a result, does not control the Partially Owned Subsidiaries; and (c) Seller does not make any representation, warranty or covenant regarding the entities which own the other 50% membership interest in each Partially Owned Subsidiary.

ARTICLE II
Sale and Purchase of Purchased Interests; Closing

     2.1 Sale and Purchase of the Purchased Interests . Subject to the terms and conditions of this Agreement, on the Closing Date, Seller will sell to Purchaser, and Purchaser will purchase from Seller, the Purchased Interests.

     2.2 Purchase Price . In consideration for the Purchased Interests and the fulfillment of the obligations set forth herein, Purchaser shall pay Seller the Unadjusted Purchase Price , subject to the adjustments required to be made pursuant to Sections 2.6 and 2.8 (the “ Purchase Price ”).

     2.3 Payment of Preliminary Purchase Price . The Preliminary Purchase Price, determined in accordance with Section 2.6 hereof, shall be payable by Purchaser to Seller at the Closing.

     2.4 Closing . The Closing shall be held at the offices of Seller located at 411 Seventh Avenue, Pittsburgh, Pennsylvania, or at such other location as the Parties mutually may agree, at 10:00 a.m. on the Closing Date. The Closing shall be effective as of 12:01 a.m. on the Closing Date.

     2.5 Deliveries at Closing . At the Closing, the following shall occur:

          (a) Seller shall deliver to Purchaser the following items:

          (i) an assignment of membership interest relating to the Purchased Interests;

          (ii) resignations of all managers, directors and officers, as applicable, of the Companies (or, in the case of the Partially Owned Subsidiaries, those managers designated or appointed by Montauk), in each case effective as of the Closing; and

          (iii) the Seller Agreements and all other items Seller is required to deliver pursuant to Section 7.1 hereof.

          (b) Purchaser shall deliver to Seller the following items:

          (i) the Preliminary Purchase Price, by wire transfer at the Closing to an account specified by Seller (which account shall be specified by Seller no later than two Business Days prior to the Closing Date); and

          (ii) the Purchaser Agreements and all other items Purchaser is required to deliver pursuant to Section 7.2 hereof.

     2.6 Purchase Price Adjustments .

          (a) Closing Certificate . At least two Business Days prior to the Closing, Seller shall deliver to Purchaser a certificate (the “ Closing Certificate ”), which certificate shall set forth Seller’s best estimate of the Estimated Closing Indebtedness, Estimated Closing Working Capital and Estimated Closing Capital Expenditures.

          (b) Closing Adjustments and Determination of Preliminary Purchase Price. The cash portion of the Purchase Price payable to Seller at the Closing pursuant to Section 2.3 hereof shall be determined as follows:

          (i) Funded Indebtedness . The portion of the Purchase Price payable at the Closing pursuant to Section 2.3 hereof will be reduced, on a dollar-for-dollar basis, by the amount of Estimated Closing Indebtedness assumed or paid by Purchaser, if any, in cash by wire transfer of funds to the accounts of the holders of Indebtedness listed on Schedule 2.6(b) hereto as necessary to fully satisfy the Companies’ Indebtedness with such holders.

          (ii) Working Capital . The portion of the Purchase Price payable at the Closing pursuant to Section 2.3 hereof will be adjusted, on a dollar-for-dollar basis, (A) downward by the amount, if any, by which the Estimated Closing Working Capital is less than the Interim Working Capital, or (B) upward by the amount, if any, by which the Estimated Closing Working Capital is more than the Interim Working Capital.

          (iii) Capital Expenditures . The portion of the Purchase Price payable at the Closing pursuant to Section 2.3 hereof will be adjusted, on a dollar-for-dollar basis, (A) downward by the amount, if any, by which the Estimated Closing Capital Expenditures is less than the Capital Expenditures Target, or (B) upward by the amount, if any, by which the Estimated Closing Capital Expenditures is more than the Capital Expenditures Target.

          (iv) Put Options . The portion of the Purchase Price payable at the Closing pursuant to Section 2.3 hereof will be reduced, on a dollar-for-dollar basis, by fifty percent (50%) of the aggregate purchase price as of the Closing Date of the put options described on, and determined in accordance with, Schedule 2.6(b)(iv) hereto.

          (v) Hedging Proceeds . The portion of the Purchase Price payable at the Closing pursuant to Section 2.3 hereof will be adjusted, on a dollar-for-dollar basis, (A) downward by the amount, if any, by which the net cash proceeds received by the Companies as a result of the unwinding and termination of the JP Morgan Hedge (the “ Hedge Cash Proceeds ”) are less than $4,000,000, or (B) upward by the amount, if any, by which the Hedge Cash Proceeds are more than $4,000,000.

The Purchase Price, as adjusted pursuant to the foregoing clauses (i) through (v) shall be referred to as the “ Preliminary Purchase Price .”

     2.7 Post-Closing Review and Final Adjustments to Purchase Price . Within 60 days following the Closing Date, there shall be delivered to Seller a computation schedule, together with supporting documentation therefor, of the actual (as opposed to estimated) Closing Indebtedness, Closing Working Capital and Closing Capital Expenditures (the “ Closing Statement Review ”). The Closing Statement Review shall be prepared by Purchaser, at Purchaser’s sole cost and expense, in accordance with GAAP and in accordance with the computations of the various estimates made by Seller at Closing pursuant to Section 2.6 hereof. In the event Seller disputes any item(s) on the Closing Statement Review within 15 days after Seller’s receipt thereof, and such dispute is not resolved within 15 days after Seller’s notification to Purchaser of the existence of the dispute, the Parties shall jointly retain Schneider Downs, an independent accounting firm (the “ Independent Accountants ”), to review the disputed item(s) on the Closing Statement Review. The final determination of such disputed item(s) by the Independent Accountants shall be binding on the parties. The cost of retaining the Independent Accountants shall be borne 50% by Purchaser and 50% by Seller.

     2.8 Payment of Final Adjusted Purchase Price . The amount paid to Seller at Closing as the Preliminary Purchase Price shall be adjusted following the Closing as a result of the Closing Statement Review process set forth in Section 2.7 hereof as follows:

     (i) downward by the amount, if any, by which the Estimated Closing Indebtedness is less than the Closing Indebtedness;

     (ii) upward by the amount, if any, by which the Estimated Closing Indebtedness is more than the Closing Indebtedness;

     (iii) upward by the amount, if any, by which the Estimated Closing Working Capital is less than the Closing Working Capital;

     (iv) downward by the amount, if any, by which the Estimated Closing Working Capital is more than the Closing Working Capital;

     (v) upward by the amount, if any, by which the Estimated Closing Capital Expenditures is less than the Closing Capital Expenditures; or

     (vi) downward by the amount, if any, by which the Estimated Closing Capital Expenditures is more than the Closing Capital Expenditures.

The Preliminary Purchase Price, as adjusted pursuant to the foregoing clauses (i) through (vi), shall be referred to as the “ Final Purchase Price .” If the Final Purchase Price is less than the Preliminary Purchase Price as a result of the aggregate amount of such adjustments, the differential shall be payable by Seller to Purchaser. If the Final Purchase Price is greater than the Preliminary Purchase Price as a result of such adjustments, the differential shall be payable by Purchaser to Seller. Such payments shall be made within five Business Days following the expiration of Seller’s 15-day period for delivering a notice of a dispute under Section 2.7 hereof if no such dispute was raised, or if such a notice of a dispute was delivered, then such payment shall be made within five Business Days following resolution of such dispute in accordance with

the terms of Section 2.7 hereof. Any payment made pursuant to this Section 2.8 shall be made by wire transfer of immediately available funds to an account designated by the receiving Party. The provisions of Sections 2.6, 2.7 and 2.8 hereof shall not be subject to, and Claims thereunder shall not be subject to (and shall not be included in the calculation of the aggregate amount of any Claims that are subject to), the limitations set forth in Article IX hereof.

ARTICLE III
Seller’s Representations and Warranties Regarding Seller

     Seller hereby makes the following representations and warranties regarding Seller to Purchaser, each of which is true and correct on the date hereof (except where specifically provided otherwise) and will be true and correct on the Closing Date, and each of which shall survive the Closing Date and the transactions contemplated hereby to the extent set forth in Section 11.3 hereof:

     3.1 Due Organization and Standing . Seller is a duly organized corporation, validly existing and in good standing under the laws of the State of Delaware.

     3.2 Authority; Execution and Delivery; Enforceability . Seller has full corporate power and authority to execute and deliver this Agreement and the Seller Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the Seller Agreements and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Seller. Seller has duly executed and delivered this Agreement and will duly execute and deliver each Seller Agreement. This Agreement constitutes, and each Seller Agreement, when duly executed and delivered by Seller, shall constitute, the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating to creditors’ rights and by general principles of equity.

     3.3 No Conflicts; Consents . The execution and delivery by Seller of this Agreement and the Seller Agreements, the consummation by Seller of the transactions contemplated hereby and thereby and compliance by Seller with the terms hereof and thereof do not and will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Seller under, any provision of (i) the organizational documents of Seller or the Companies, (ii) any contract, agreement or instrument to which Seller or any of the Companies is a party or by which any of their properties or assets is bound or (iii) any judgment, order or decree applicable to Seller or the Companies or any Applicable Law, other than, in the case of clauses (ii) and (iii) above, (x) any such items that, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect, (y) the Required Statutory Approvals and (z) the Seller Required Consents. Except as disclosed on Schedule 3.3-A hereto with respect to Governmental Entities (collectively, the “ Required Statutory Approvals ”) and on Schedule 3.3-B hereto with respect to any other Person

(collectively, the “ Seller Required Consents ”), no consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any other Person, respectively, is required to be obtained or made by or with respect to Seller or the Companies in connection with Seller’s execution and delivery of this Agreement or the Seller Agreements or the consummation by Seller of the transactions contemplated hereby and thereby, other than any such items which if not obtained or made, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect.

     3.4 Litigation . There is no action, suit or proceeding pending or, to Seller’s knowledge, threatened against Seller that questions the validity of this Agreement or any Seller Agreement or the right of Seller to enter into such agreements or consummate the transactions contemplated hereby or thereby.

ARTICLE IV
Seller’s Representations and Warranties Regarding the Companies

     Seller hereby makes the following representations and warranties regarding the Companies to Purchaser, each of which is true and correct on the date hereof (except where specifically provided otherwise) and will be true and correct on the Closing Date, and each of which shall survive the Closing Date and the transactions contemplated hereby to the extent set forth in Section 11.3 hereof:

     4.1 Due Organization, Standing and Power .

          (a) Montauk is a duly formed limited liability company, validly existing and in good standing under the laws of the State of Delaware. Montauk has full limited liability company power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its assets and to conduct the Business it presently conducts, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect. Montauk is duly qualified to do business as a foreign limited liability company in each jurisdiction where the character of the assets held by it or the nature of the Business conducted by it make such qualification necessary for it to conduct the Business as currently conducted by it, except where the failure to so qualify would not have a Material Adverse Effect. Seller has delivered or made available to Purchaser true, accurate and complete copies of Montauk’s certificate of formation, operating agreement, and minute books relating to meetings of the managers and member of Montauk, and membership interest transfer records, which books and records are complete and correct in all material respects.

          (b) Each of the Subsidiaries is duly formed or organized, validly existing and in good standing under the laws of the state set forth on Schedule 4.2 hereto. Each Subsidiary has full limited liability company or corporate, as applicable, power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its assets and to conduct the Business it presently conducts, other

than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect. Each Subsidiary is duly qualified to do business as a foreign limited liability company or corporation, as applicable, in each jurisdiction where the character of the assets held by it or the nature of the Business conducted by it make such qualification necessary for it to conduct the Business as currently conducted by it, except where the failure to so qualify would not have a Material Adverse Effect. Seller has delivered or made available to Purchaser true, accurate and complete copies of each Company’s organizational documents and minute books relating to meetings of the managers, directors and members, as applicable, of such Company, and membership interest or stock, as applicable, transfer records, which books and records are complete and correct in all material respects.

     4.2 Subsidiaries .

     (a) As of the date of this Agreement, except for (i) the entities listed on Schedule 4.2 hereto, which include the Partially Owned Subsidiaries (collectively, the “ Subsidiaries ”), and (ii) Montauk Synfuels, LLC’s ownership of a 8.325% limited partnership interest in Pace Carbon Synfuels Investors, L.P., the Companies do not own equity in or control, directly or indirectly, any other corporation, association, limited liability company, limited partnership or any other business entity, and do not participate in any partnership, joint venture or similar arrangement.

     (b) As of the Closing Date, except for the entities listed on Schedule 4.2 hereto (but not including Montauk Synfuels, LLC), the Companies do not own equity in or control, directly or indirectly, any other corporation, association, limited liability company, limited partnership or any other business entity, and do not participate in any partnership, joint venture or similar arrangement.

     4.3 Capitalization .

          (a) Seller owns 100% of the membership interests in Montauk. There are no outstanding rights, options, warrants, conversion rights or agreements for the purchase or acquisition of any membership interests or other securities of Montauk.

          (b) Schedule 4.2 hereto lists, with respect to each Subsidiary, (i) the type of entity, (ii) the state of organization or formation, (iii) the states where qualified to do business as a foreign entity, (iv) such Subsidiary’s issued and outstanding equity securities and the holders of such securities and (v) any outstanding rights, options, warrants, conversion rights or agreements for the purchase or acquisition of any equity interests or other securities of such Subsidiary.

     4.4 Financial Statements; Liabilities . The Financial Statements (including the notes thereto, if any), complete and correct copies of which are attached as Schedule 4.4 hereto, have been prepared from and in accordance with the books and records of the Companies and present fairly, in all material respects, the financial position and results of operations of the Companies as of the dates and for the periods indicated, in conformity with GAAP, consistently applied during such periods, except as otherwise stated in the Financial Statements or in the notes thereto, if any,

subject, in the case of the Interim Statements, to (a) normal and recurring year-end adjustments and (b) the lack of footnote disclosures. The Companies have no Liability (and, to the knowledge of Seller, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against the Companies giving rise to any Liability) except for (i) Liabilities set forth or reflected in the Financial Statements, (ii) Liabilities arising after the date of the most recent Interim Statement which have arisen in the ordinary course of business, (iii) contractual Liabilities arising in the ordinary course of business which are not required to be set forth or reflected in the Financial Statements, (iv) Liabilities otherwise disclosed in this Agreement and (v) other Liabilities which do not exceed $25,000 in the aggregate.

     4.5 Title to Assets . Each Company has good and valid title to all of its assets, in each case free and clear of all Liens, except (a) Permitted Liens and (b) the rights of lessors in and to leased assets.

     4.6 Real Property .

          (a) Other than the Companies’ interest in various sites pursuant to Material Contracts listed on Schedule 4.8 hereto, all real property leases to which any Company is a party are listed on Schedule 4.6(a) hereto (collectively, the “ Leases ”). Each Lease is valid, binding and in full force and effect and enforceable by such Company in accordance with its terms. All material obligations required to be performed by such Company to date under the Leases have been performed, and such Company is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. To the knowledge of Seller, no other party to any Lease is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. No Company has received written notice of the intention of any party to terminate any Lease. Complete and correct copies of all Leases, together with all modifications and amendments thereto, have been delivered or made available to Purchaser.

          (b) Except for the properties described on Schedule 4.6(b) hereto (collectively, the “ Owned Real Property ”), the Companies do not own real property. Waste Energy Technology, LLC has good and marketable title to the Owned Real Property, and owns the Owned Real Property free and clear of all Liens other than Permitted Liens. Seller has delivered or made available to Purchaser copies of the most recent title work, survey and deed, if any, in Seller’s possession relating to the Owned Real Property.

     4.7 Intellectual Property Rights .

          (a) The Companies own or possess adequate licenses or other rights to use their respective material Intellectual Property Rights. To the knowledge of Seller, the operation of the Business as now conducted does not and will not conflict with or infringe any proprietary rights owned or possessed by any third party.

          (b) There are no claims, disputes, actions, proceedings, suits or appeals pending against the Companies with respect to any Intellectual Property Rights (other than those,

if any, with respect to which service of process or similar notice has not yet been made on the Companies), and, to the knowledge of Seller, none has been threatened against the Companies. To the knowledge of Seller, there are no facts or alleged facts which reasonably would serve as a basis for any claim that any Company does not have the right to use any of its Intellectual Property Rights in the development, manufacture, use, sale or other disposition of any or all products or services presently being used, furnished or sold in the conduct of its respective Business.

          (c) To the knowledge of Seller, none of the Intellectual Property Rights has been infringed by third parties.

     4.8 Contracts .

          (a) Schedule 4.8 hereto sets forth a true and complete (except where such Contract is disclosed elsewhere on a Schedule to this Agreement) list of each of the following Contracts to which any Company is a party, or by which any Company or any of its assets is bound (collectively, the “ Material Contracts ”):

          (i) any Contract relating to landfill gas rights, landfill gas (or other energy) development and production, landfill gas (or other energy) sales, power purchase, and operations and maintenance;

          (ii) any Contract involving the expenditure by any Company of more than $100,000 in any instance (or any Contract involving aggregate expenditures by any Company of more than $250,000), including for the purchase of materials, goods, supplies, equipment, services or assets;

          (iii) any Contract with any supplier or vendor containing any provision permitting any party other than the Companies to renegotiate the price or other terms, or containing any pay-back or other similar provision, upon the occurrence of a failure by any Company to meet its obligations under the Contract when due or the occurrence of any other event;

          (iv) any outstanding guarantee, subordination agreement and indemnity agreement, whether or not entered into in the ordinary course, under which any Company is or may become liable for or obligated to discharge, or any asset of any Company is or may become subject to the satisfaction of, any indebtedness, obligations, performance or undertaking of other Persons involving the potential expenditure by any Company of more than $25,000 in any instance (or any such guarantee, subordination agreement or indemnity agreement involving the potential aggregate expenditure by any Company of more than $100,000);

          (v) any Contract relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset), including notes, indentures, mortgages, deeds of trust, loan or credit agreements, capital and equipment leases, letters of credit, pledge agreements, security agreements, factoring agreements or other Contracts for or relating to the incurrence of indebtedness;

          (vi) any Contract with respect to any hedging, swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions;

          (vii) any partnership, limited liability company, joint venture agreement, management Contract, or other Contract involving a sharing of profits or expenses by any Company;

          (viii) any Contract relating to a pending acquisition or disposition of any business (whether by merger, consolidation, reorganization, sale of stock, sale of assets or otherwise) or securities or other equity interests;

          (ix) any marketing, sales, franchise, distribution, commission, dealer, agency, representative, consulting or similar Contract which is exclusive or pursuant to which any Company is obligated to pay an amount in excess of $25,000 during any calendar year (or any such Contract providing for aggregate payments by any Company in excess of $100,000);

          (x) any Contract between any Company and Seller or an Affiliate of Seller (other than the Companies);

          (xi) any outstanding power-of-attorney empowering any Person not a current employee of any Company to act on behalf of any Company;

          (xii) any employee collective bargaining agreement with any labor union or employees covering former, current or future employees of any Company or work done, being done or to be done in the future by any Company;

          (xiii) any confidentiality agreement, non-competition, non-solicitation, no-hire, stand-still agreement or other Contract that restricts any Company from engaging in any line of business in any geographic area or competing with any Person;

          (xiv) any employment Contract;

          (xv) any Contract for the payment or receipt of license fees, commissions or royalties to or from any Person anticipated to be in excess of $25,000 individually or on an annual basis (or any such Contract providing for aggregate payments to or from any Person anticipated to be in excess of $100,000);

          (xvi) any Contract among members or stockholders or granting preemptive rights, a right of first refusal, registration rights or similar rights, or with respect to voting of securities of or equity interests in any Company;

          (xvii) any Contract with any Governmental Entity;

          (xviii) any Contract with respect to the discharge, storage or removal of Hazardous Materials;

          (xix) any other material Contract not made in the ordinary course of business; and

          (xx) any binding commitment or agreement to enter into any of the foregoing.

          (b) Except as disclosed on Schedule 4.8 hereto, (i) all of the Material Contracts are valid, binding and in full force and effect and are enforceable by the Company party thereto in accordance with their respective terms; (ii) each Company has performed all material obligations required to be performed by it to date under the Material Contracts to which it is a party, and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder; (iii) to the knowledge of Seller, no other party to any Material Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder; and (iv) no Company has received written notice of the intention of any party to terminate any Material Contract. Complete and correct copies of all Material Contracts, together with all modifications and amendments thereto, have been delivered or made available to Purchaser.

          (c) Schedule 3.3-B hereto sets forth each Material Contract with respect to which the consent of the other party or parties thereto is required by virtue of the execution and delivery of this Agreement to avoid the termination thereof, a breach, violation or default thereunder or any other change or modification to the terms thereof, other than any such consent which if not obtained, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

     4.9 Condition of Assets . Except as disclosed on Schedule 4.9 hereto, all Company Assets are in good operating condition and repair, reasonable wear and tear excepted, and subject to assets which are not utilized from time to time due to surplus, salvage or routine maintenance.

     4.10 Permits . Except as disclosed on Schedule 4.10 hereto, the Companies possess all material Permits that are necessary or desirable for the conduct of their Business. The Companies, as applicable, validly hold all such Permits and have complied in all material respects with all terms and conditions thereof. Except as disclosed on Schedule 4.10 hereto, no Company has received, subsequent to December 31, 2003, written notice of any proceedings relating to the revocation or modification of any such Permit. To the knowledge of Seller, none of the Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this Agreement or consummation of the transactions contemplated hereby.

     4.11 Insurance . An Affiliate of Seller and certain of the Companies maintain the insurance policies disclosed on Schedule 4.11 hereto for fire and casualty, liability, directors’ and officers’ liability and miscellaneous professional liability that provide coverage for the Companies with respect to their Business in such amounts, with such deductibles and against such risks and losses as are, in Seller’s judgment, reasonable for their Business. All such policies

are in full force and effect, all premiums due and payable thereon have been paid, and no written notice of cancellation or termination has been received with respect to any such policy that has not been replaced on substantially similar terms prior to the date of such cancellation. To the knowledge of Seller, the Business has been conducted in a manner so as to conform in all material respects to all applicable provisions of such insurance policies. At the Closing, coverage with respect to the Companies under the insurance policies maintained by Seller, the Companies or any of their Affiliates shall be terminated for periods after the Closing Date; provided, however that all insurance policies maintained by any Partially Owned Subsidiary shall not be terminated and shall remain in full force and effect after the Closing Date.

     4.12 Sufficiency of Assets . The Company Assets comprise all the assets employed by the Companies in connection with the Business. The Company Assets are sufficient for the conduct of the Business by the Companies immediately following the Closing in substantially the same manner as currently conducted.

     4.13 Taxes . Except as disclosed on Schedule 4.13 hereto:

          (a) The Companies, and any affiliated group, within the meaning of Section 1504 of the Code, of which any Company is or has been a member, have filed or caused to be filed in a timely manner (within any applicable extension periods), all Tax Returns. All Taxes shown to be due on such returns, reports and forms have been timely paid in full or will be timely paid in full by the due date thereof. No Liens for Taxes have been filed against the Company Assets.

          (b) For federal, state, local and foreign income Tax purposes: (i) all of the membership interests in Montauk are directly owned by Seller and Seller has, at all times during which Montauk has been a limited liability company, treated Montauk as a “disregarded entity” of Seller; (ii) Seller has, at all times during which each limited liability company Subsidiary has been a limited liability company, treated each limited liability company Subsidiary (the membership interests in which are directly or indirectly wholly owned by Montauk) as a “disregarded entity” of Seller; (iii) Seller has at all times treated the capital stock of each C corporation Subsidiary as directly owned by Seller; (iv) Seller has at all times treated its direct or indirect membership interests in each Partially Owned Subsidiary as directly owned by Seller; and (v) Seller has at all times treated each limited liability company Subsidiary (the membership interests in which are directly or indirectly wholly owned by a Partially Owned Subsidiary) as a “disregarded entity” of such Partially Owned Subsidiary.

          (c) Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

          (d) The Companies will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of accounting adopted prior to the Closing Date; (ii) any “closing agreement” as described in Section 7121 of the Code (or any corresponding similar provision of state, local or foreign income Tax law) executed prior to the Closing Date; (iii) any deferred intercompany gain or any excess loss account described under

Section 1502 of the Code and the regulations promulgated thereunder relating to a period prior to the Closing Date; (iv) any installment sale or open transaction disposition made prior to the Closing Date; or (v) any prepaid amount received prior to the Closing Date.

          (e) The Companies have not entered into any compensatory agreem