Exhibit 10.39

SECOND AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS SECOND AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT (this
“Amendment”) is made and entered into as of December 29, 2006, by and between
DQE FINANCIAL CORP., a Delaware corporation (“Seller”), and BLUE WOLF ENERGY
HOLDINGS LLC, a Delaware limited liability company (“Purchaser”).

RECITALS:

WHEREAS, Seller and Purchaser are parties to that certain Membership Interest
Purchase Agreement dated as of November 22, 2006 relating to Montauk Energy
Capital, LLC, as amended by First Amendment to Membership Interest Purchase
Agreement, dated December 29, 2006 (collectively, the “Purchase Agreement”);

WHEREAS, Seller and Purchaser acknowledge that as of the date hereof that only
$60,000,000 of the $101,837,726 of the Preliminary Purchase Price has been paid
by Purchaser to Seller, through no fault of either party, but due to the delay
in the wire transfer system;

WHEREAS, Purchaser has agreed to execute and deliver to Seller a demand secured
promissory note in the form of Exhibit “A” attached hereto and made a part
hereof (the “Purchaser Note”), to evidence Purchaser’s irrevocable and
unconditional obligation to pay to Seller $41,837,726 (the “Remaining Cash
Purchase Price Payable”), being the remaining portion of the Preliminary
Purchase Price due from Purchaser to Seller on the date hereof; and

WHEREAS, Purchaser has received the Remaining Cash Purchase Price Payable from
its lender in Citibank Account No. 376-43819-1-3-552 (the “BWEH Funding
Account”), and Purchaser has provided Citibank, N.A. with irrevocable
instructions to wire the Remaining Cash to Purchaser on January 2, 2007.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the Parties, intending to be legally bound hereby, agree as follows:

1. Defined Terms. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Purchase Agreement.

2. Waiver of Requirement to Pay Remaining Cash Purchase Price Payable on the
Closing Date. Notwithstanding anything in the Purchase Agreement to the
contrary, including, but not limited to Section 2.5(b)(i) of the Purchase
Agreement and subject to Purchaser’s execution and delivery of the Purchaser
Note to Seller on the date hereof, the Purchaser and Seller agree that all
conditions precedent to the effectiveness of purchase and sale of the Purchased
Interests as of December 29, 2006 have been satisfied upon execution and
delivery by Purchaser of the Purchaser Note and Purchaser and Seller hereby
waive any requirement for the Remaining Cash Purchase Price Payable to be paid
on the Closing Date (December 29, 2006).

3. Grant of Security Interest. In order to secure Purchaser’s obligation to pay
the Remaining Cash Purchase Price Payable as evidenced by the Purchaser Note,
Purchaser hereby grants to Seller a first and only lien and security interest in
the BWEH Funding Account.

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Purchaser further agrees and acknowledges that Purchaser has granted no other
lien on, or security interest in, the BWEH Funding Account, and that all assets
of Purchaser are free and clear of any liens, claims and encumbrances.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of
the date first above written.

 

DQE FINANCIAL CORP. By:  

/s/ John R. Schmitt

  John R. Schmitt, Vice President BLUE WOLF ENERGY HOLDINGS LLC By:  

 

  Josh Wolf-Powers, Manager

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IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of
the date first above written.

 

DQE FINANCIAL CORP. By:  

 

  John R. Schmitt, Vice President BLUE WOLF ENERGY HOLDINGS LLC By:  

/s/ Josh Wolf-Powers

  Josh Wolf-Powers, Manager

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EXHIBIT “A”

PURCHASER NOTE

(SEE ATTACHED NOTE)

 

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DEMAND NOTE

 

$41,837,726   

December 29, 2006

Pittsburgh, Pennsylvania

ON DEMAND, but no later than January 2, 2007, BLUE WOLF ENERGY HOLDINGS LLC, a
Delaware limited liability company (the “Payor”), promises to pay to the order
of DQE FINANCIAL CORP., a Delaware corporation (the “Payee”), at the Payee’s
Office, the principal sum of Forty-One Million Eight Hundred Thirty Seven
Thousand and Seven Hundred Twenty Six Dollars ($41,837,726), which sum
represents the balance of the Preliminary Purchase Price payable by the Payor to
Payee pursuant to that certain Membership Interest Purchase Agreement dated as
of November 22, 2006, as amended, by and between Payee and Payor relating to
Montauk Energy Capital, LLC (as amended, the “Purchase Agreement”). Interest
shall accrue on the unpaid principal amount of this Demand Note outstanding from
the date hereof until all amounts due hereunder are paid, at the rate of
2.675% per annum (0.007430555% per diem). All capitalized terms used herein
shall, unless otherwise defined herein, have the same meanings assigned to such
terms in the Purchase Agreement.

THE PAYEE ACKNOWLEDGES THAT THE OUTSTANDING PRINCIPAL BALANCE OF THIS DEMAND
NOTE AND ALL INTEREST AND OTHER CHARGES ACCRUED HEREON ARE PAYABLE ON DEMAND
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS DEMAND NOTE OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH.

The Payor does hereby grant a security interest in, and this Demand Note is
secured by all monies on deposit in Payor’s account at CitiBank, NA, Account
Number 376-438191-3-552 (the “Account”). Payor does hereby represent and warrant
that (i) the Payor has not granted, and shall not grant, a security interest in
the Account to any other party, (ii) there are no liens or encumbrances upon the
Account, (iii) no creditor has any claim to any monies contained in the Account,
and (iv) that the Payor has, and shall retain, monies in the Account in an
amount sufficient to satisfy Payior’s demand obligations under this Demand Note.
Payor further agrees to take such actions and enter into such documentation as
is necessary to provide Payee with a first priority, perfected security interest
in the Account if this Demand Note has not been paid in full by Payor on
January 2, 2007.

The following paragraph sets forth a warrant of authority for an attorney to
confess judgment against the Payor. In granting this warrant to confess
judgment, the Payor hereby knowingly, intentionally, voluntarily and, on the
advice of counsel, unconditionally waives any and all rights the Payor has or
may have to prior notice and an opportunity for hearing before a judgment can be
entered:

THE PAYOR UNCONDITIONALLY AND IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY
OR ANY PROTHONOTARY, CLERK OF COURT OR COURT OF RECORD, AS ATTORNEY FOR THE
PAYOR, TO APPEAR FOR THE PAYOR IN SUCH COURT AT ANY TIME AFTER THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT AND CONFESS JUDGMENT AGAINST
THE PAYOR IN FAVOR OF THE PAYEE, AND ITS SUCCESSORS AND ASSIGNS, FOR ALL OR ANY
PORTION OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS DEMAND NOTE, TOGETHER WITH
UNPAID INTEREST, COSTS OF SUIT AND ATTORNEYS’ FEES ADDED FOR COLLECTION IN AN
AMOUNT EQUAL TO TEN PERCENT (10.0%) OF SUCH SUM, OR AS OTHERWISE PERMITTED BY
LAW. THE PAYOR ALSO RELEASES ALL ERRORS, AND TO THE EXTENT PERMITTED BY LAW,
WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION
LAW OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. IF A COPY OF THIS DEMAND
NOTE, VERIFIED BY AFFIDAVIT

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OF THE PAYEE OR SOMEONE ON BEHALF OF THE PAYEE, SHALL HAVE BEEN FILED IN SUCH
ACTION, IT SHALL NOT BE NECESSARY TO FILE AN ORIGINAL OF THIS DEMAND NOTE AS A
WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT
AGAINST THE PAYOR SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE THEREOF OR BY
ANY IMPERFECT EXERCISE THEREOF AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO; THE AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS
OFTEN AS THE PAYEE SHALL DEEM NECESSARY OR DESIRABLE, FOR ALL OF WHICH THIS
DEMAND NOTE OR A VERIFIED COPY HEREOF SHALL BE A SUFFICIENT WARRANT.

The Payor hereby expressly waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Demand Note. In any action on this
Demand Note, the Payee or its assignee need not produce or file the original of
this Demand Note, but need only produce or file a photocopy of this Demand Note
certified by the Payee or such assignee to be a true and correct copy of this
Demand Note.

THE PAYOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS DEMAND NOTE, OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT NOW OR HEREAFTER EXECUTED OR DELIVERED
IN CONNECTION HEREWITH OR THEREWITH, OR (B) IN ANY WAY CONNECTED WITH RELATED OR
INCIDENTAL TO THE DEALINGS OF ANY OR ALL OF THE PARTIES TO THE PURCHASE
AGREEMENT, OR THEIR ASSIGNEES, WITH RESPECT TO THIS DEMAND NOTE, THE PURCHASE
AGREEMENT, ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT NOW OR HEREAFTER EXECUTED
OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND THE PAYOR HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY ANY COURT AT A TRIAL WITHOUT A JURY, AND THAT ANY HOLDER OF THIS
DEMAND NOTE MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PAYOR TO THE WAIVER OF ITS RIGHT
TO TRIAL BY JURY.

This Demand Note is intended as an instrument under seal and shall be governed
by, and construed and enforced in accordance with, the Laws of the Commonwealth
of Pennsylvania, excluding its rules relating to the conflict of laws.

All obligations of the Payor hereunder are absolute and unconditional, and shall
bind its successors and assigns.

[Next page is signature page]

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the Payor has
executed this Demand Note the day and year first above written.

 

BLUE WOLF ENERGY HOLDINGS LLC By:  

/s/ Josh Wolf-Powers

  Josh Wolf-Powers, Manager