Document:

Execution
Version

      

      ASSET
PURCHASE AGREEMENT

       

      by and
among

       

      U.S.
ENERGY BIOGAS CORP.,

       

      the
subsidiaries of U.S. ENERGY BIOGAS CORP.

       

      set forth
on the signature pages hereto

       

      and

       

      SILVER
POINT FINANCE, LLC

       

      January
23, 2009

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Table of
Contents

      
         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                	
                                                                                                                        ARTICLE I PURCHASE AND SALE OF ASSETS

                                                                                                                      	
                                                                                                                        1

                                                                                                                      
	 
      	
                                                                                                                        1.1

                                                                                                                      	
                                                                                                                        Acquired Assets

                                                                                                                      	
                                                                                                                        1

                                                                                                                      
	 
      	
                                                                                                                        1.2

                                                                                                                      	
                                                                                                                        Assigned Contracts

                                                                                                                      	
                                                                                                                        4

                                                                                                                      
	 
      	
                                                                                                                        1.3

                                                                                                                      	
                                                                                                                        Excluded Assets

                                                                                                                      	
                                                                                                                        5

                                                                                                                      
	 
      	
                                                                                                                        1.4

                                                                                                                      	
                                                                                                                        Assumed Liabilities

                                                                                                                      	
                                                                                                                        6

                                                                                                                      
	 
      	
                                                                                                                        1.5

                                                                                                                      	
                                                                                                                        Excluded Liabilities

                                                                                                                      	
                                                                                                                        7

                                                                                                                      
	 
      	
                                                                                                                        1.6

                                                                                                                      	
                                                                                                                        Cure Costs; Verification of Costs and
      Expenses

                                                                                                                      	
                                                                                                                        8

                                                                                                                      
	 
      	
                                                                                                                        1.7

                                                                                                                      	
                                                                                                                        Release Consideration

                                                                                                                      	
                                                                                                                        9

                                                                                                                      
	ARTICLE II
      CLOSING	
                                                                                                                        9

                                                                                                                      
	 
      	
                                                                                                                        2.1

                                                                                                                      	
                                                                                                                        Closing

                                                                                                                      	
                                                                                                                        9

                                                                                                                      
	 
      	
                                                                                                                        2.2

                                                                                                                      	
                                                                                                                        Deliveries at the Closing.

                                                                                                                      	
                                                                                                                        9

                                                                                                                      
	
                                                                                                                        ARTICLE III REPRESENTATIONS AND WARRANTIES OF
      SELLERS

                                                                                                                      	
                                                                                                                        11

                                                                                                                      
	 
      	
                                                                                                                        3.1

                                                                                                                      	
                                                                                                                        Corporate Status

                                                                                                                      	
                                                                                                                        11

                                                                                                                      
	 
      	
                                                                                                                        3.2

                                                                                                                      	
                                                                                                                        Power and Authority

                                                                                                                      	
                                                                                                                        12

                                                                                                                      
	 
      	
                                                                                                                        3.3

                                                                                                                      	
                                                                                                                        Enforceability

                                                                                                                      	
                                                                                                                        12

                                                                                                                      
	 
      	
                                                                                                                        3.4

                                                                                                                      	
                                                                                                                        Capitalization and
    Subsidiaries

                                                                                                                      	
                                                                                                                        12

                                                                                                                      
	 
      	
                                                                                                                        3.5

                                                                                                                      	
                                                                                                                        Good Title
      Conveyed; Sufficiency of Assets

                                                                                                                      	
                                                                                                                        13

                                                                                                                      
	 
      	
                                                                                                                        3.6

                                                                                                                      	
                                                                                                                        Records

                                                                                                                      	
                                                                                                                        13

                                                                                                                      
	 
      	
                                                                                                                        3.7

                                                                                                                      	
                                                                                                                        No Violation

                                                                                                                      	
                                                                                                                        13

                                                                                                                      
	 
      	
                                                                                                                        3.8

                                                                                                                      	
                                                                                                                        Government Regulation

                                                                                                                      	
                                                                                                                        14

                                                                                                                      
	 
      	
                                                                                                                        3.9

                                                                                                                      	
                                                                                                                        Governmental Consents

                                                                                                                      	
                                                                                                                        14

                                                                                                                      
	 
      	
                                                                                                                        3.10

                                                                                                                      	
                                                                                                                        Changes Since May 31, 2007

                                                                                                                      	
                                                                                                                        14

                                                                                                                      
	 
      	
                                                                                                                        3.11

                                                                                                                      	
                                                                                                                        Financial Statements

                                                                                                                      	
                                                                                                                        16

                                                                                                                      
	 
      	
                                                                                                                        3.12

                                                                                                                      	
                                                                                                                        Projections

                                                                                                                      	
                                                                                                                        16

                                                                                                                      
	 
      	
                                                                                                                        3.13

                                                                                                                      	
                                                                                                                        Liabilities.

                                                                                                                      	
                                                                                                                        17

                                                                                                                      
	 
      	
                                                                                                                        3.14

                                                                                                                      	
                                                                                                                        Projects

                                                                                                                      	
                                                                                                                        17

                                                                                                                      
	 
      	
                                                                                                                        3.15

                                                                                                                      	
                                                                                                                        Project Documents

                                                                                                                      	
                                                                                                                        18

                                                                                                                      
	 
      	
                                                                                                                        3.16

                                                                                                                      	
                                                                                                                        Adverse Proceedings

                                                                                                                      	
                                                                                                                        19

                                                                                                                      
	 
      	
                                                                                                                        3.17

                                                                                                                      	
                                                                                                                        Affiliate Transactions

                                                                                                                      	
                                                                                                                        19

                                                                                                                      
	 
      	
                                                                                                                        3.18

                                                                                                                      	
                                                                                                                        Environmental Matters

                                                                                                                      	
                                                                                                                        19

                                                                                                                      
	 
      	
                                                                                                                        3.19

                                                                                                                      	
                                                                                                                        Real Estate

                                                                                                                      	
                                                                                                                        21

                                                                                                                      
	 
      	
                                                                                                                        3.20

                                                                                                                      	
                                                                                                                        Compliance with Laws

                                                                                                                      	
                                                                                                                        23

                                                                                                                      
	 
      	
                                                                                                                        3.21

                                                                                                                      	
                                                                                                                        Credit Support Obligations

                                                                                                                      	
                                                                                                                        24

                                                                                                                      
	 
      	
                                                                                                                        3.22

                                                                                                                      	
                                                                                                                        Labor and Employment Matters

                                                                                                                      	
                                                                                                                        24

                                                                                                                      
	 
      	
                                                                                                                        3.23

                                                                                                                      	
                                                                                                                        Employee Benefit Plans

                                                                                                                      	
                                                                                                                        26

                                                                                                                      
	 
      	
                                                                                                                        3.24

                                                                                                                      	
                                                                                                                        Taxes

                                                                                                                      	
                                                                                                                        28

                                                                                                                      
	 
      	
                                                                                                                        3.25

                                                                                                                      	
                                                                                                                        Insurance

                                                                                                                      	
                                                                                                                        30

                                                                                                                      
	 
      	
                                                                                                                        3.26

                                                                                                                      	
                                                                                                                        Permits

                                                                                                                      	
                                                                                                                        30

                                                                                                                      
	 
      	
                                                                                                                        3.27

                                                                                                                      	
                                                                                                                        Utility Service Available

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        3.28

                                                                                                                      	
                                                                                                                        Lines of Business

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        3.29

                                                                                                                      	
                                                                                                                        Marketing of Production

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        3.30

                                                                                                                      	
                                                                                                                        Intellectual Property

                                                                                                                      	
                                                                                                                        31

                                                                                                                      
	 
      	
                                                                                                                        3.31

                                                                                                                      	
                                                                                                                        Contracts

                                                                                                                      	
                                                                                                                        32

                                                                                                                      
	 
      	
                                                                                                                        3.32

                                                                                                                      	
                                                                                                                        Gasco Acquisitions

                                                                                                                      	
                                                                                                                        33

                                                                                                                      
	 
      	
                                                                                                                        3.33

                                                                                                                      	
                                                                                                                        Accuracy of Information
      Furnished

                                                                                                                      	
                                                                                                                        34

                                                                                                                      

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

        

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  	 
      	
                                                                                                                          3.34

                                                                                                                        	
                                                                                                                          No Commissions

                                                                                                                        	
                                                                                                                          34

                                                                                                                        
	 
      	
                                                                                                                          3.35

                                                                                                                        	
                                                                                                                          Assets

                                                                                                                        	
                                                                                                                          34

                                                                                                                        
	 
      	
                                                                                                                          3.36

                                                                                                                        	
                                                                                                                          Inventory

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	 
      	
                                                                                                                          3.37

                                                                                                                        	
                                                                                                                          Accounts Receivable

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	 
      	
                                                                                                                          3.38

                                                                                                                        	
                                                                                                                          Propriety of Past Payments

                                                                                                                        	
                                                                                                                          35

                                                                                                                        
	 
      	
                                                                                                                          3.39

                                                                                                                        	
                                                                                                                          Equipment Held by Other
    Persons

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	
                                                                                                                          ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
      PURCHASER

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	 
      	
                                                                                                                          4.1

                                                                                                                        	
                                                                                                                          Corporate Status

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	 
      	
                                                                                                                          4.2

                                                                                                                        	
                                                                                                                          Corporate Power and
    Authority

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	 
      	
                                                                                                                          4.3

                                                                                                                        	
                                                                                                                          Enforceability

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	 
      	
                                                                                                                          4.4

                                                                                                                        	
                                                                                                                          No Violation

                                                                                                                        	
                                                                                                                          36

                                                                                                                        
	 
      	
                                                                                                                          4.5

                                                                                                                        	
                                                                                                                          No Commissions

                                                                                                                        	
                                                                                                                          37

                                                                                                                        
	 
      	
                                                                                                                          4.6

                                                                                                                        	
                                                                                                                          Financial Resources

                                                                                                                        	
                                                                                                                          37

                                                                                                                        
	ARTICLE V CONDUCT OF BUSINESS PENDING THE
      CLOSING	
                                                                                                                          37

                                                                                                                        
	 
      	
                                                                                                                          5.1

                                                                                                                        	
                                                                                                                          Conduct of Business by the Company Pending the
      Closing

                                                                                                                        	
                                                                                                                          37

                                                                                                                        
	ARTICLE VI ADDITIONAL AGREEMENTS	
                                                                                                                          39

                                                                                                                        
	 
      	
                                                                                                                          6.1

                                                                                                                        	
                                                                                                                          Compliance with Covenants

                                                                                                                        	
                                                                                                                          39

                                                                                                                        
	 
      	
                                                                                                                          6.2

                                                                                                                        	
                                                                                                                          Efforts and Actions to Cause Closing to
      Occur

                                                                                                                        	
                                                                                                                          39

                                                                                                                        
	 
      	
                                                                                                                          6.3

                                                                                                                        	
                                                                                                                          Access to Information

                                                                                                                        	
                                                                                                                          41

                                                                                                                        
	 
      	
                                                                                                                          6.4

                                                                                                                        	
                                                                                                                          Bankruptcy Court Approval.

                                                                                                                        	
                                                                                                                          41

                                                                                                                        
	 
      	
                                                                                                                          6.5

                                                                                                                        	
                                                                                                                          Bankruptcy Filings

                                                                                                                        	
                                                                                                                          42

                                                                                                                        
	 
      	
                                                                                                                          6.6

                                                                                                                        	
                                                                                                                          Break-Up Fee

                                                                                                                        	
                                                                                                                          42

                                                                                                                        
	 
      	
                                                                                                                          6.7

                                                                                                                        	
                                                                                                                          Notification of Certain
    Matters

                                                                                                                        	
                                                                                                                          42

                                                                                                                        
	 
      	
                                                                                                                          6.8

                                                                                                                        	
                                                                                                                          Supplemental Disclosure

                                                                                                                        	
                                                                                                                          43

                                                                                                                        
	 
      	
                                                                                                                          6.9

                                                                                                                        	
                                                                                                                          Tax Matters

                                                                                                                        	
                                                                                                                          43

                                                                                                                        
	 
      	
                                                                                                                          6.10

                                                                                                                        	
                                                                                                                          [Reserved]

                                                                                                                        	
                                                                                                                          45

                                                                                                                        
	 
      	
                                                                                                                          6.11

                                                                                                                        	
                                                                                                                          Change of Control and Prepayment
      Obligations

                                                                                                                        	
                                                                                                                          45

                                                                                                                        
	 
      	
                                                                                                                          6.12

                                                                                                                        	
                                                                                                                          Publicity

                                                                                                                        	
                                                                                                                          46

                                                                                                                        
	 
      	
                                                                                                                          6.13

                                                                                                                        	
                                                                                                                          Employee Matters

                                                                                                                        	
                                                                                                                          46

                                                                                                                        
	 
      	
                                                                                                                          6.14

                                                                                                                        	
                                                                                                                          Further Assurances

                                                                                                                        	
                                                                                                                          46

                                                                                                                        
	 
      	
                                                                                                                          6.15

                                                                                                                        	
                                                                                                                          Environmental Matters

                                                                                                                        	
                                                                                                                          47

                                                                                                                        
	 
      	
                                                                                                                          6.16

                                                                                                                        	
                                                                                                                          Termination of Intercompany
      Agreements

                                                                                                                        	
                                                                                                                          47

                                                                                                                        
	
                                                                                                                          ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF
      PURCHASER

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.1

                                                                                                                        	
                                                                                                                          Accuracy of Representations and Warranties;
      Compliance with
      Obligations

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.2

                                                                                                                        	
                                                                                                                          No Order or Injunction

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.3

                                                                                                                        	
                                                                                                                          Government Authorizations

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.4

                                                                                                                        	
                                                                                                                          Final Order

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.5

                                                                                                                        	
                                                                                                                          No Material Adverse Change

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.6

                                                                                                                        	
                                                                                                                          Corporate Certificate

                                                                                                                        	
                                                                                                                          48

                                                                                                                        
	 
      	
                                                                                                                          7.7

                                                                                                                        	
                                                                                                                          Consents Obtained

                                                                                                                        	
                                                                                                                          49

                                                                                                                        
	 
      	
                                                                                                                          7.8

                                                                                                                        	
                                                                                                                          No Adverse Litigation

                                                                                                                        	
                                                                                                                          49

                                                                                                                        
	 
      	
                                                                                                                          7.9

                                                                                                                        	
                                                                                                                          Sale Order

                                                                                                                        	
                                                                                                                          49

                                                                                                                        
	 
      	
                                                                                                                          7.10

                                                                                                                        	
                                                                                                                          [Reserved]

                                                                                                                        	
                                                                                                                          49

                                                                                                                        
	 
      	
                                                                                                                          7.11

                                                                                                                        	
                                                                                                                          Employment Agreements

                                                                                                                        	
                                                                                                                          49

                                                                                                                        
	 
      	
                                                                                                                          7.12

                                                                                                                        	
                                                                                                                          Permits

                                                                                                                        	
                                                                                                                          49

                                                                                                                        

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

        

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          	 
      	
                                                                                  7.13

                                                                                	
                                                                                  ISRA

                                                                                	
                                                                                  49

                                                                                
	 
      	
                                                                                  7.14

                                                                                	
                                                                                  Release and Conveyance

                                                                                	
                                                                                  49

                                                                                
	 
      	
                                                                                  7.15

                                                                                	
                                                                                  2007 Financial Statements

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  7.16

                                                                                	
                                                                                  Termination of Intercompany
      Agreements

                                                                                	
                                                                                  50

                                                                                
	
                                                                                  ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF
      SELLERS

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  8.1

                                                                                	
                                                                                  Accuracy of Representations and Warranties;
      Compliance with Obligations

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  8.2

                                                                                	
                                                                                  Government Authorizations

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  8.3

                                                                                	
                                                                                  Final Order

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  8.4

                                                                                	
                                                                                  No Order or Injunction

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  8.5

                                                                                	
                                                                                  Release

                                                                                	
                                                                                  50

                                                                                
	
                                                                                  ARTICLE IX DEFINITIONS

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  9.1

                                                                                	
                                                                                  Defined Terms

                                                                                	
                                                                                  50

                                                                                
	 
      	
                                                                                  9.2

                                                                                	
                                                                                  Other Definitional Provisions.

                                                                                	
                                                                                  61

                                                                                
	
                                                                                  ARTICLE X TERMINATION, AMENDMENT AND
      WAIVER

                                                                                	
                                                                                  61

                                                                                
	 
      	
                                                                                  10.1

                                                                                	
                                                                                  Termination Events

                                                                                	
                                                                                  61

                                                                                
	 
      	
                                                                                  10.2

                                                                                	
                                                                                  Effect of Termination

                                                                                	
                                                                                  63

                                                                                
	
                                                                                  ARTICLE XI GENERAL
    PROVISIONS

                                                                                	
                                                                                  63

                                                                                
	 
      	
                                                                                  11.1

                                                                                	
                                                                                  Notices

                                                                                	
                                                                                  63

                                                                                
	 
      	
                                                                                  11.2

                                                                                	
                                                                                  Entire Agreement

                                                                                	
                                                                                  64

                                                                                
	 
      	
                                                                                  11.3

                                                                                	
                                                                                  Expenses

                                                                                	
                                                                                  64

                                                                                
	 
      	
                                                                                  11.4

                                                                                	
                                                                                  Amendment; Waiver

                                                                                	
                                                                                  64

                                                                                
	 
      	
                                                                                  11.5

                                                                                	
                                                                                  Binding Effect; Assignment

                                                                                	
                                                                                  64

                                                                                
	 
      	
                                                                                  11.6

                                                                                	
                                                                                  Counterparts

                                                                                	
                                                                                  65

                                                                                
	 
      	
                                                                                  11.7

                                                                                	
                                                                                  Interpretation

                                                                                	
                                                                                  65

                                                                                
	 
      	
                                                                                  11.8

                                                                                	
                                                                                  Governing Law;
    Interpretation

                                                                                	
                                                                                  65

                                                                                
	 
      	
                                                                                  11.9

                                                                                	
                                                                                  Severability

                                                                                	
                                                                                  65

                                                                                
	 
      	
                                                                                  11.10

                                                                                	
                                                                                  Jurisdiction.

                                                                                	
                                                                                  65

                                                                                
	 
      	
                                                                                  11.11

                                                                                	
                                                                                  Arm’s-Length
      Negotiations

                                                                                	
                                                                                  66

                                                                                
	 
      	
                                                                                  11.12

                                                                                	
                                                                                  Survival of Obligations

                                                                                	
                                                                                  66

                                                                                

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          iii

          
            

          

        

        
           

        

      

      

      
        
          
            	
                    Exhibits:
      

                  	 
      
	
                    Exhibit
      A

                  	
                    Allocation
      of Consideration

                  
	
                    Exhibit
      B-1

                  	
                    Seller
      Release

                  
	
                    Exhibit
      B-2

                  	
                    Purchaser
      Release

                  
	
                    Exhibit
      C

                  	
                    Sale
      Order

                  
	
                    Exhibit
      D

                  	
                    [Reserved]

                  
	
                    Exhibit
      E

                  	
                    Form
      of Assignment of Leases

                  
	
                    Exhibit
      F

                  	
                    [Reserved]

                  
	
                    Exhibit
      G

                  	
                    [Reserved]

                  
	
                    Exhibit
      H

                  	
                    Form
      of Assumption Agreement

                  
	
                    Exhibit
      I

                  	
                    Bidding
      Procedures

                  
	
                    Exhibit
      J

                  	
                    Bidding
      Procedures Order

                  
	
                    Exhibit
      K

                  	
                    Form
      of Bill of Sale and Assignment
Agreement

                  

          

        

      

      

      
        
          
            	
                    Schedules:

                  	 
      
	
                    Schedule
      A

                  	
                    Transferred
      Subs

                  
	
                    Schedule
      1.1(b)(ii)

                  	
                    Accounts
      Receivable

                  
	
                    Schedule
      1.1(b)(iii)

                  	
                    Inventory

                  
	
                    Schedule
      1.1(b)(iv)

                  	
                    Tangible
      Personal Property

                  
	
                    Schedule
      1.1(b)(v)

                  	
                    Intellectual
      Property

                  
	
                    Schedule
      1.1(b)(vi)

                  	
                    Computer
      Software and IT Systems

                  
	
                    Schedule
      1.1(b)(ix)(1)

                  	
                    Project
      Documents

                  
	
                    Schedule
      1.1(i)(ix)(2)

                  	
                    Customer
      Contracts

                  
	
                    Schedule
      1.1(i)(ix)(3)

                  	
                    Supplier
      Contracts

                  
	
                    Schedule
      1.1(i)(ix)(4)

                  	
                    Leases

                  
	
                    Schedule
      1.1(ix)(5)

                  	
                    Tangible
      Personal Property Leases

                  
	
                    Schedule
      1.1(b)(x)

                  	
                    Permits

                  
	
                    Schedule
      1.1(b)(xiii)

                  	
                    Bank
      Accounts and Lockbox Arrangements

                  
	
                    Schedule
      1.1(b)(xv)

                  	
                    Employee
      Benefit Plans

                  
	
                    Schedule
      1.1(b)(xvii)

                  	
                    Other
      Acquired Assets

                  
	
                    Schedule
      1.3(a)

                  	
                    Excluded
      Contracts

                  
	
                    Schedule
      1.3(i)

                  	
                    Other
      Excluded Assets

                  
	
                    Schedule
      1.5

                  	
                    Other
      Excluded Liabilities

                  
	
                    Schedule
      3.1

                  	
                    Corporate
      Status

                  
	
                    Schedule
      3.4

                  	
                    Capitalization

                  
	
                    Schedule
      3.7

                  	
                    No
      Violation

                  
	
                    Schedule
      3.8(a)

                  	
                    Small
      Power Production Facilities

                  
	
                    Schedule
      3.10

                  	
                    Changes

                  
	
                    Schedule
      3.13(b)

                  	
                    Liabilities
      - Indebtedness

                  
	
                    Schedule
      3.13(c)

                  	
                    Liabilities
      - Depositories

                  
	
                    Schedule
      3.14(a)

                  	
                    Projects
      – Project Owners

                  
	
                    Schedule
      3.14(b)

                  	
                    Projects
      – Exceptions

                  

          

        

      

      
        
           

        

        
          iv

          
            

          

        

        
           

        

      

      

      
        
          	
                  Schedule
      3.15

                	
                  Project
      Documents

                
	
                  Schedule
      3.17

                	
                  Affiliate
      Transactions

                
	
                  Schedule
      3.18

                	
                  Environmental
      Matters

                
	
                  Schedule
      3.19

                	
                  Real
      Estate

                
	
                  Schedule
      3.21

                	
                  Credit
      Support Obligations

                
	
                  Schedule
      3.22

                	
                  Labor
      and Employment

                
	
                  Schedule
      3.23

                	
                  Employee
      Benefit Plans

                
	
                  Schedule
      3.24

                	
                  Taxes

                
	
                  Schedule
      3.25

                	
                  Insurance

                
	
                  Schedule
      3.29

                	
                  Marketing
      of Production

                
	
                  Schedule
      3.30

                	
                  Intellectual
      Property

                
	
                  Schedule
      3.31

                	
                  Contracts

                
	
                  Schedule
      3.32

                	
                  Gasco
      Acquisitions

                
	
                  Schedule
      3.39

                	
                  Equipment
      Held by Other Persons

                
	
                  Schedule
      4.4

                	
                  No
      Violation

                
	
                  Schedule
      6.5(a)

                	
                  Bankruptcy
      Filings

                
	
                  Schedule
      6.13

                	
                  Employee
      Matters

                
	
                  Schedule
      7.15

                	
                  2007
      Financial Statements

                

        

      

      
        
           

        

        
          v

          
            

          

        

        
           

        

      

       

      ASSET
PURCHASE AGREEMENT

       

      This
ASSET PURCHASE AGREEMENT (this “Agreement”) is
entered into as of January 23, 2009, by and among U.S. Energy Biogas Corp., a
Delaware corporation (the “Company”), the other
undersigned subsidiaries of the Company (each a “Selling Sub” and,
collectively, the “Selling Subs” and,
together with the Company, the “Sellers”) and Silver
Point Finance, LLC, a Delaware limited liability company (“Purchaser”).  Certain
capitalized terms used in this Agreement have the meanings assigned to them in
Section
9.1.

       

      RECITALS

       

      WHEREAS,
on January 9, 2008 (the “Petition Date”), U.S.
Energy Systems, Inc., a Delaware corporation (“USEY”), and its
subsidiaries GBGH, LLC and U.S. Energy Overseas Investments, LLC each filed a
voluntary petition for relief commencing cases (the “Bankruptcy Cases”)
under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § § 101-1330 (the “Bankruptcy Code”) in
the United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy
Court”);

       

      WHEREAS,
the Company, along with the Selling Subs, intends to file voluntary petitions
(the “Petitions”) for
relief commencing cases (the “New Bankruptcy
Cases”) under the Bankruptcy Code in the Bankruptcy Court, which such New
Bankruptcy Cases shall be jointly administered with the Bankruptcy
Cases;

       

      WHEREAS,
Purchaser or one or more of its permitted designees desires to purchase and
acquire, and the Sellers desire to sell, convey, assign and transfer, or cause
to be sold, conveyed, assigned and transferred, to the Purchaser or its
permitted designees, the Acquired Assets, free and clear of any and all Liens of
whatsoever kind and nature (except Permitted Liens), and the Purchaser or one or
more of its permitted designees is willing to assume and the Sellers desire to
assign and delegate to the Purchaser or its permitted designees the Assumed
Liabilities, solely as provided herein, and subject to the terms and conditions
set forth herein, and in accordance with an Order of the Bankruptcy Court
pursuant to Sections 105, 363 and 365 of the Bankruptcy Code;

       

      WHEREAS,
Purchaser or one or more of its permitted designees desires to purchase and
acquire, and the respective Sellers desire to sell, convey, assign and transfer,
or cause to be sold, conveyed, assigned and transferred, to the Purchaser or one
or more of its permitted designees, all of the equity interests owned by Sellers
(the “Interests”) in the
subsidiaries of the Company set forth on Schedule A (each a “Transferred Sub” and
collectively, the “Transferred Subs”),
free and clear of any and all Liens of whatsoever kind and nature, in the manner
and subject to the terms and conditions set forth herein and in accordance with
Sections 105, 363 and 365 of the Bankruptcy Code;

       

      WHEREAS,
the Sellers are engaged in the business of developing and operating, and owning
subsidiaries that develop and operate, landfill gas-to-energy projects in the
United States (the “Business”);
and

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      WHEREAS,
Purchaser, as administrative agent, collateral agent, syndication agent, lead
arranger and lender under the Credit and Guaranty Agreement, dated as of August
7, 2006 (as amended, the “USEO Credit
Agreement”), by and among U.S. Energy Overseas Investments LLC, USEY and
Purchaser, will assume the Indebtedness under the USEO Credit Agreement at
Closing, which such Indebtedness is guaranteed by the Company.

       

      NOW,
THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and undertakings contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:

       

      ARTICLE
I

       

      PURCHASE
AND SALE OF ASSETS

       

      1.1         Acquired
Assets. On
the terms and subject to the conditions set forth in this Agreement and pursuant
to Sections 105, 363 and 365 of the Bankruptcy Code, at the Closing, each of the
Sellers hereby agrees, to sell, assign, transfer, convey, and deliver, or cause
to be sold, assigned, transferred, conveyed and delivered to the Purchaser (or
one or more of its permitted designees), free and clear of all Liens except
Permitted Liens, and the Purchaser (or one or more of its permitted designees)
shall purchase and accept from each of the Sellers:

       

      (a)         all
right, title and interest of the Sellers in and to the Interests.
Notwithstanding anything contained in this Agreement to the contrary, equity
interests in the Excluded Subs shall not be included in the
Interests;

       

      (b)         all
respective rights, title and interests of each of the Sellers in and to all
rights, properties and assets of the Sellers other than the Excluded Assets,
including without limitation, those assets that are listed or described below,
whether tangible or intangible, as the same shall exist on the Closing Date,
free and clear of all Liens except Permitted Liens (collectively, the “Acquired
Assets”).  Without limiting the foregoing, the Acquired Assets
shall include all of Sellers’ right, title and interest in and to the
following:

       

      (i)          all
cash, certificates of deposit, bank deposits, negotiable instruments, marketable
securities and other cash equivalents, together with all accrued but unpaid
interest thereon;

       

      (ii)         all
accounts receivable, whether reflected in the balance sheet or otherwise,
including, without limitation, those accounts receivable identified on Schedule
1.1(b)(ii);

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (iii)        all
of the inventories, whether reflected in the balance sheet or otherwise,
including, without limitation, those inventories identified on Schedule
1.1(b)(iii);

      (iv)        all
equipment, machinery, computers, furniture, furnishings, fixtures, tools, office
supplies and all other tangible personal property owned by the Sellers,
including, without limitation, those items identified on Schedule
1.1(b)(iv);

       

      (v)         all
Intellectual Property, whether registered or unregistered, and the applications
and registrations therefore, all goodwill associated therewith, and all rights
to pursue past, present and future enforcement or infringement thereof,
including, without limitation, the Intellectual Property identified on Schedule
1.1(b)(v);

       

      (vi)        all
rights in computer software programs and information technology systems,
including, without limitation, those identified on Schedule
1.1(b)(vi);

       

      (vii)       [Reserved]

       

      (viii)      [Reserved]

       

      (ix)         the
Assigned Contracts and all rights and incidents of interest to the Assigned
Contracts pursuant to Section 1.2 hereof,
which may include:

       

      (1)          all
Project Documents and other agreements, contracts or arrangements associated
with the Projects to which any Seller is a party that are Assigned Contracts and
listed or described on Schedule
1.1(b)(ix)(1), including, without limitation:

       

      (A)         all
landfill gas rights agreements;

       

      (B)         all
site lease agreements;

       

      (C)         all
gas purchase agreements;

       

      (D)         all
power purchase agreements;

       

      (E)         all
operation and maintenance agreements; and

       

      (F)         all
agreements relating to the purchase and sale of renewable energy
credits;

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (2)          all
other agreements, contracts or arrangements between any Seller and a customer
(the “Customer
Contracts”) that are Assigned Contracts and listed or described on Schedule
1.1(b)(ix)(2);

       

      (3)          all
other agreements, contracts or arrangements between any Seller and a vendor or
other third party providing goods or services (the “Supplier Contracts”)
that are Assigned Contracts and listed or described on Schedule
1.1(b)(ix)(3);

       

      (4)          all
Leases with respect to the Leased Real Property that are Assigned Contracts and
listed or described on Schedule
1.1(b)(ix)(4);

       

      (5)          all
leases related to tangible personal property, including, without limitation,
equipment leases, including, without limitation, those that are Assigned
Contracts and listed or described on Schedule
1.1(b)(ix)(5); and

       

      (6)          all
other Contracts of the Sellers;

       

      (x)         all
permits, including, without limitation, the permits listed or described on Schedule
1.1(b)(x);

       

      (xi)        all
books and records that are used or have arisen from the Sellers’ conduct of the
Business, including, without limitation, the Project Documents that are books
and records;

       

      (xii)       all
payments, credits, claims for refunds, prepaid rent, deposits (including
security deposits and utility deposits), advances, deferred charges and other
prepaid expenses;

       

      (xiii)      all
bank accounts and lockbox arrangements, including, without limitation, those
items listed or described on Schedule
1.1(b)(xiii);

       

      (xiv)      all
avoidance actions and similar rights and causes of action, including causes of
action under Sections 544 through 553 of the Bankruptcy Code against the
Purchaser or any of its Affiliates, directors, officers, representatives,
employees or agents;

       

      (xv)       all
Employee Benefit Plans of the Company listed or described on Schedule
1.1(b)(xv);

       

      (xvi)      any
intercompany payables, liabilities and obligations (of any nature or kind, and
whether based in common law or statute or arising under written contract or
otherwise, known or unknown, fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, real or potential) to any Seller, as to which any
Acquired Company is an obligor or is otherwise responsible or liable;
and

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (xvii)     all
other rights, properties or assets of the Sellers, including, without
limitation, those that are listed or described on Schedule
1.1(b)(xvii).

       

      1.2         Assigned
Contracts

       

      (a)         Designated
Contracts.  Twenty (20) days prior to the Sale Hearing,
Purchaser shall use reasonable efforts to deliver to the Company a preliminary
list, prepared in good faith, identifying from among the contracts and
arrangements identified or described in Section 1.1: (i) the
executory contracts and unexpired leases it wishes the Sellers to assume and
assign to the Purchaser (or its permitted designees) at Closing, if any, and
(ii) the contracts or leases entered into subsequent to the commencement of the
New Bankruptcy Cases it wishes to have the Sellers assign to the Purchaser (or
its permitted designees) at Closing, if any.  Notwithstanding the
foregoing, Purchaser shall have until five (5) Business Days prior to the Sale
Hearing to designate, from among the contracts and arrangements identified or
described in Section
1.1, and upon any such designation, Sellers shall provide all relevant
non-debtor parties with immediate and appropriate written notice of (i) the
executory contracts and unexpired leases it wishes the Sellers to assume and
assign to the Purchaser (or its permitted designees) at Closing, if any, and
(ii) the contracts or leases entered into subsequent to the commencement of the
New Bankruptcy Cases it wishes to have the Sellers assign to the Purchaser (or
its permitted designees) at Closing, if any (the final such date being referred
to as the “Contract
Designation Date”).  In all cases, appropriate additions and
deletions to or from the applicable Schedules shall be made immediately to
reflect such elections by the Purchaser as and when made.

       

      (b)         Undisclosed
Contracts.  If prior to or following the Closing, any party
hereto becomes aware of any executory contract or unexpired lease related to the
Acquired Assets  that has not been disclosed in writing or that was
not made available, in each case, to the Purchaser prior to the date hereof
(each, an “Undisclosed
Contract”), the discovering party shall reasonably promptly notify the
other party in writing of such Undisclosed Contract, and the Purchaser may
elect, no later than the later of (i) ten (10) Business Days after such notice
and (ii) the Contract Designation Date, to receive (for itself or for one of its
permitted designees) an assignment of the applicable Sellers’ rights in such
Undisclosed Contract; provided that the Bankruptcy Court authorizes the
assumption by the Sellers (for contracts entered prior to the commencement of
the New Bankruptcy Cases, whether or not amended after the commencement of the
New Bankruptcy Cases) and/or the assignment to the Purchaser or its permitted
designee of such Undisclosed Contract.  If any Undisclosed Contract is
entered into after the entry of the Sale Order, the Sellers shall promptly
notify the Purchaser thereof; provided, however, that nothing
herein shall permit a Seller to enter into an contract or lease in violation of
Section
5.1.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (c)         Certain
Consents.  In the case of Assigned Contracts (i) that cannot be
transferred or assigned effectively without the consent of third parties, which
consent has not been obtained prior to the Closing (after giving effect to the
Sale Order and the Bankruptcy Code), Sellers shall, subject to any approval of
the Bankruptcy Court that may be required, reasonably cooperate with the
Purchaser, at the sole cost and expense of the Purchaser, in endeavoring to
obtain such consent and, if any such consent is not obtained, Sellers shall,
during the thirty (30) day period following Closing, and subject to any approval
of the Bankruptcy Court that may be required, cooperate with the Purchaser in
all reasonable respects and at the Purchaser’s sole cost and expense, to provide
to the Purchaser or its permitted designee the benefits thereof in some other
manner, or (ii) that are otherwise not transferable or assignable (after giving
effect to the Sale Order and the Bankruptcy Code), Sellers shall, during the
thirty (30) day period following Closing, and subject to any approval of the
Bankruptcy Court that may be required, reasonably cooperate with the Purchaser,
at the sole cost and expense of the Purchaser, to provide to the Purchaser or
its permitted designee the benefits thereof in some other manner (including the
exercise of the rights of Sellers thereunder); provided, however, that nothing
in this Section
1.2(c) shall require the Purchaser to reimburse Sellers for any
attorneys’ fees and expenses incurred by Sellers in complying with their
obligations under this Section
1.2(c).

       

      (d)         Excluded
Contracts.  Purchaser acknowledges and agrees that if it elects
to exclude any Contracts from being assigned pursuant to this Section 1.2,
Purchaser shall be responsible for any Contract rejection damage claim under
Section 502 of the Bankruptcy Code (“Rejection
Costs”).

       

      1.3         Excluded
Assets.  Notwithstanding
anything contained in this Agreement to the contrary, the following rights,
properties and assets (collectively, the “Excluded Assets”) of
the Sellers will not be included in the Acquired Assets:

       

      (a)         any
Contract to which any of the Sellers is a party that is not an Assigned
Contract, including, without limitation, any Contract listed or described on
Schedule 1.3(a)
(the “Excluded
Contracts”);

       

      (b)         all
avoidance actions and similar rights and causes of action, including causes of
action under Sections 544 through 553 inclusive, of the Bankruptcy Code, except
as provided by Section
1.1(b)(xiv);

       

      (c)         any
inventory transferred or used in the ordinary course of business prior to the
Closing;

       

      (d)         any
accounts receivable that have been satisfied or discharged prior to the
Closing;

       

      (e)         any
arrangements or agreements between the Company or any of its Subsidiaries, on
the one hand, and USEY or any of its Affiliates (other than the Company and its
Subsidiaries) or any of their respective officers, members, managers, directors,
stockholders, parents, other interest holders or employees, on the other
hand;

       

      (f)         all
intercompany payables, liabilities and obligations (of any nature or kind, and
whether based in common law or statute or arising under written contract or
otherwise, known or unknown, fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, real or potential) owed to any Seller, as to which
any Seller or an Affiliate thereof (other than an Acquired Company) is an
obligor or is otherwise responsible or liable;

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (g)         [Reserved]

       

      (h)         [Reserved];
and

       

      (i)         the
rights, properties and assets identified on Schedule
1.3(i).

       

      1.4         Assumed
Liabilities.  On
the terms and subject to the conditions set forth in this Agreement, at the
Closing the Purchaser or its permitted designee shall assume from the Sellers
and thereafter pay, perform or otherwise discharge in accordance with their
respective terms and subject to the respective conditions thereof, only the
following liabilities (collectively, the “Assumed Liabilities”)
and no others:

       

      (a)         all
liabilities of the Sellers as reflected on the face of, or reserved against in,
the most recent balance sheet included in the Financial Statements, and all
trade payables and other operating liabilities incurred by the Sellers in the
ordinary course of the Business consistent with past practice since the date of
the most recent balance sheet included in the Financial Statements and existing
as of the Closing;

       

      (b)         all
liabilities of Sellers arising and attributable to the period from and after the
Closing Date with respect to the Acquired Assets, including, without limitation,
the Assigned Contracts, following the Closing;

       

      (c)         the
Cure Costs and the Rejection Costs;

       

      (d)         the
outstanding USEB Indebtedness, which amount currently is $83,800,000, but is
subject to adjustment prior to Closing in accordance with the terms of the USEB
Indebtedness;

       

      (e)         the
NPI Indebtedness, but solely to the extent of an amount fixed at $5,800,000 (it
being acknowledged and agreed that the fixing of the amount of the NPI
Indebtedness at such amount is solely for purposes of calculating such Assumed
Liability and shall not constitute any admission or otherwise bind or prejudice
Purchaser with respect to the calculation of the amount of the NPI Indebtedness
for any other purpose, including without limitation for the purpose of
determining the distribution of or Purchaser’s entitlement to the purchase price
paid for the Business by a Qualified Bidder other than the Purchaser in
accordance with the Bidding Procedures);

       

      (f)         all
or a portion of the outstanding USEO Indebtedness as Purchaser may designate to
Seller at or prior to Closing in an amount not less than $500,000;

       

      (g)         all
liabilities related to the Employee Benefit Plans of the Company listed or
described on Schedule
1.1(b)(xv);

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (h)         reasonable,
documented administrative expenses of the Sellers under Section 503(b)(1) of the
Bankruptcy Code in the New Bankruptcy Cases, regardless of whether incurred
prior to or after the consummation of the transactions contemplated by this
Agreements (collectively, the "USEB Administrative
Expenses"); and reasonable, documented administrative expenses of USEY
and Sellers under Section 503(b)(1) of the Bankruptcy Code in the USEY
Bankruptcy Case (collectively, the "USEY Administrative
Expenses"; together with the Sellers' administrative expenses, the "Administrative
Expenses"), provided that in no event shall the Administrative Expenses
assumed and payable by Purchaser hereunder exceed $4.3 million in the aggregate;
and

       

      (i)         [Reserved]

       

      (j)         all
liabilities related to the employment or termination of employment of any
Transferred Employee arising after the Closing Date.

       

      1.5         Excluded
Liabilities.  The
Purchaser shall not assume or agree to pay, satisfy, perform or otherwise
discharge any claims, liabilities, indebtedness, obligations or expenses other
than the Assumed Liabilities (the “Excluded
Liabilities”).  Without limiting the generality of the
foregoing, the Purchaser does not assume or agree to pay, satisfy, perform or
otherwise discharge any of the following claims, liabilities, indebtedness,
obligations or expenses and the Purchaser shall have no liability for or
obligation in respect of:

       

      (a)         the
Sellers’ professional fees and expenses for its advisers, including without
limitation, advisers retained pursuant to an order of the Bankruptcy Court
except to the extent otherwise provided for in this Agreement;

       

      (b)         obligations,
liabilities or amounts payable to any security holder of any
Seller;

       

      (c)         general
unsecured claims or any other liability not expressly assumed under this
Agreement;

       

      (d)         all
liabilities of the Sellers for Taxes relating or attributable to taxable periods
ending on or before the Closing Date (“Pre-Closing Periods”)
and, with respect to any period that begins on or before and that ends after the
Closing Date (a “Straddle Period”),
the portion of such Straddle Period deemed to end on and include the Closing
Date;

       

      (e)         any
environmental liabilities of Sellers, including without limitation, any
liabilities involving:

       

      (i)          any
violation of or alleged violation, or non-compliance with, Environmental Laws or
permits, licenses or authorizations issued pursuant to applicable Environmental
Laws prior to the Closing Date, with respect to the ownership, lease,
maintenance, construction, modification or operation of the Acquired Assets,
except where, as a result of the transfer of a permit to Purchaser, Purchaser is
obligated to assume such liabilities as a condition of said transfer as a matter
of applicable Environmental Law;

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (ii)          loss
of life, injury to persons or property, natural resource damages, or
investigation or remediation obligations, arising from the discharge or release
of Hazardous Substances prior to the Closing Date, at or migrating or emitted or
discharged from the Acquired Assets or from the properties at which the Acquired
Assets are located; provided, that this exclusion shall not apply to any
investigation or remediation that may be required after the Closing Date in
connection with the sale of the assets owned by Lafayette Energy Partners, L.P.
if the current transaction triggers an obligation to comply with
ISRA;

       

      (iii)          loss
of life, injury to persons or property, natural resource damages, or
investigation or remediation obligations, arising from the storage,
transportation, treatment, disposal, discharge recycling or release, at any
off-site location, or arising from the arrangement for such activities, prior to
the Closing Date, of Hazardous Substances generated in connection with the
ownership or operation of the Acquired Assets;

       

      (iv)          without
limiting the foregoing, any liabilities arising from the allegation by the State
of Illinois asserting that Upper Rock Energy Partners LLC violated applicable
Environmental Law by installing a generating unit at the Upper Rock County
Landfill without a permit; and

       

      (v)          without
limiting the foregoing, any fines, penalties or other costs that may be imposed
due to any failure (whether by Sellers or predecessor owners or operators) to
comply with ISRA with respect to prior transactions involving the assets
currently owned by Lafayette Energy Partners, L.P.;

       

      (f)         any
liability relating to any Section 29 tax credit indemnification
obligations;

       

      (g)         any
liability relating to any Excluded Asset; and

       

      (h)         any
liability listed or described on Schedule
1.5.

       

      1.6         Cure Costs; Verification of
Costs and Expenses.  Sellers
shall assume and assign all Assigned Contracts to the Purchaser or its permitted
designees as of the Closing Date pursuant to Section 365 of the Bankruptcy Code
and the Sale Order.  In connection with such assignment and
assumption, Purchaser shall cure all monetary defaults under such Assigned
Contracts to the extent required by Section 365(b) of the Bankruptcy Code (such
amounts, the “Cure
Costs”).  Sellers shall be responsible for the verification of
all Cure Costs including all administrative responsibilities associated
therewith, and shall use their reasonable efforts to establish the proper cure
amount, if any, for each Assigned Contract, including taking all reasonable
actions with respect to the filing and prosecution of any pleadings and
proceedings in the Bankruptcy Court and the service and delivery of any related
notices or pleadings.  Sellers shall be responsible for the
verification of all Rejection Costs, if any, including all administrative
responsibilities associated therewith, and shall use their reasonable efforts to
establish the proper amount of any Rejection Costs for each Contract excluded
pursuant to Section
1.2(d), including taking all reasonable actions with respect to the
filing and prosecution of any pleadings and proceedings in the Bankruptcy Court
and the service and delivery of any related notices or
pleadings.  Sellers shall be responsible for the verification of all
Administrative Expenses, including all administrative responsibilities
associated therewith, and shall provide reasonable documentation of all
Administrative Expenses at Purchaser’s request.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      1.7         Release
Consideration.  At
the Closing and subject to the terms and conditions set forth in this Agreement,
in consideration of (i) the release provided by USEY and other consideration
provided by USEY under this Agreement, (ii) the sale, transfer and conveyance of
USEY’s interest in ZFC Royalty Partners and (iii) the assignment of all right,
title and interest of USEY in its Pollution Legal Liability Policy, effective as
of March 1, 2005, by and between USEY and AIG Environmental (and any predecessor
policy relating thereto), the Purchaser shall, in addition to the assumption of
the Assumed Liabilities, pay directly to USEY $100,000 (the “Release
Consideration”).  The Release Consideration shall be payable at
the Closing by wire transfer of immediately available funds made to the account
of USEY designated in writing by USEY to Purchaser at least two Business Days
prior to the Closing Date.

       

      ARTICLE
II

       

      CLOSING

       

      2.1         Closing.  Subject
to the terms and conditions of this Agreement, the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take
place at the offices of Hunton & Williams LLP, 200 Park Avenue, New York,
New York, at 10 a.m. local time on the second (2nd)
Business Day after the satisfaction or waiver of the conditions set forth in
Articles VII and VIII hereof or such other place and time as the parties may
otherwise agree, and the date of the Closing is referred to herein as the “Closing
Date”).

       

      2.2         Deliveries at the
Closing.

       

      (a)         Deliveries by
Sellers.  At or prior to the Closing, the Sellers shall deliver
or cause to be delivered to Purchaser the following:

       

      (i)          the
documents required to be delivered by the Sellers pursuant to Articles VI and
VII;

       

      (ii)         a
release by USEY and the Sellers in substantially the form attached hereto as
Exhibit B-1,
releasing all claims of any nature against Purchaser and any of its Subsidiaries
and Affiliates for acts, omissions or occurrences which have occurred, existed
or arisen at or before the Closing (the “Seller
Release”);

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (iii)        a
certified copy of the Sale Order in substantially the form attached hereto as
Exhibit
C;

       

      (iv)       copies
of all of the books and records relating to the Sellers;

       

      (v)        affidavits
from each Seller, signed under penalties of perjury, in form and substance as
required under Treasury Regulations Section 1.1445-2(b), that such Seller is not
a foreign person;

       

      (vi)       the
Bill of Sale and Assignment Agreements duly executed by the Sellers transferring
the Acquired Assets to the Purchaser or its designees;

       

      (vii)      the
Assumption Agreements duly executed by the Sellers and the Purchaser or its
designees evidencing the assignment and assumption by the Purchaser or its
designees of the Assumed Liabilities;

       

      (viii)      duly
executed assignments or instruments with respect to any Intellectual Property
included in the Acquired Assets for which an assignment or instrument is
required to assign, transfer and convey such assets to, or perfect title to such
assets in, Purchaser;

       

      (ix)        duly
executed assignments of the Leases included in the Acquired Assets,
substantially in the form of Exhibit E hereto (the
“Lease
Assignments”);

       

      (x)          [Reserved];

       

      (xi)         [Reserved];

       

      (xii)        duly
executed documents of transfer and conveyance, in form reasonably satisfactory
to Purchaser, as Purchaser may reasonably request in order for Purchaser or its
designees to assume the USEB Indebtedness, the USEO Indebtedness and the NPI
Indebtedness, each as contemplated hereunder;

       

      (xiii)      duly
executed instruments or other evidence sufficient to transfer to the Purchaser
the unencumbered legal and beneficial ownership of the Interests and all books
and records of the Acquired Companies (including minute books);

       

      (xiv)      resignations
from each director of each Acquired Company (except as to such directors as to
which Purchaser notifies Sellers that no such resignation is required);
and

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (xv)       such
other bills of sale, deeds, endorsements, assignments, Transfer Tax returns and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Purchaser, as Purchaser may reasonably request to
vest in Purchaser or its permitted designees all the right, title and interest
of Sellers in, to or under any or all of the Acquired Assets.

       

      (b)         Deliveries by Purchaser to
Seller.  At or prior to the Closing, Purchaser shall deliver or
cause to be delivered to Sellers the following:

       

      (i)          payment
of the Release Consideration;

       

      (ii)         the
documents required to be delivered by Purchaser pursuant to Articles VI and
VIII;

       

      (iii)        the
Assumption Agreements, duly executed by Purchaser or its designees;

       

      (iv)        duly
executed documents of transfer and conveyance, in form reasonably satisfactory
to Purchaser, as Purchaser may reasonably request in order for Purchaser or its
designees to assume the USEB Indebtedness, the USEO Indebtedness and the NPI
Indebtedness, each as contemplated hereunder; and

       

      (v)         a
release by Purchaser and its Subsidiaries in substantially the form attached
hereto as Exhibit
B-2 (the “Purchaser
Release”);

       

      (vi)         the
Lease Assignments, duly executed by Purchaser;

       

      (vii)       such
other assignments and other good and sufficient instruments of assumption and
transfer, in form reasonably satisfactory to Sellers, as Sellers may reasonably
request to transfer and assign the Assumed Liabilities to Purchaser or its
permitted designees.

       

      ARTICLE
III

       

      REPRESENTATIONS
AND WARRANTIES OF SELLERS

       

      As a
material inducement to Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, each of the Sellers jointly and severally
makes the following representations and warranties to Purchaser as of the date
of this Agreement (or if made as of a specific date, as of such date) and as of
the Closing Date.

       

      
        
          
          

        

        
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      3.1         Corporate
Status.  Each
of the Company, the Sellers and the Acquired Companies (a) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization as identified in Schedule 3.1(a), (b)
has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, and (c)
is qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except where the failure to be so qualified would not be reasonably
likely to result in a Material Adverse Effect.  Except as identified
on Schedule
3.1(b) there is no pending or, to any Sellers’ Knowledge, threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of any
Seller or any Acquired Company.

       

      3.2         Power and
Authority.  Each
Seller has the corporate power and authority to enter into this Agreement, to
perform its respective obligations hereunder and to consummate the transactions
contemplated hereby.  Each Seller has taken all requisite corporate
action necessary to authorize the execution and delivery of this Agreement, the
performance of its respective obligations hereunder, and the consummation of the
transactions contemplated hereby.

      3.3         Enforceability.  This
Agreement has been duly executed and delivered by each Seller and, upon entry of
the Sale Order (assuming due and valid authorization, execution and delivery by
Purchaser), constitutes the legal, valid and binding obligation of each such
Seller, enforceable against each such Seller in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in
equity.

       

      3.4         Capitalization and
Subsidiaries.  Schedule 3.4 sets
forth a true, complete and correct list as of the Closing Date, both before and
after giving effect to the transactions contemplated hereby, of the name of the
Company and each of its Subsidiaries and indicates (i) the ownership of such
entity (by each holder and type and percentage of interest), (ii) the type of
entity of each of them, and (iii) the number and class of authorized and issued
capital stock or other ownership interest of such Subsidiary.  Except
as set forth on Schedule 3.4, as of
the Closing Date, neither the Company nor any of its Subsidiaries has any equity
investments in any other corporation or entity.  All of the issued and
outstanding shares of capital stock or other ownership interests of each
Acquired Company: (i) have been duly authorized and validly issued and are fully
paid and nonassessable, (ii) were issued in compliance with all applicable state
and United States federal securities laws and (iii) were not issued in violation
of any preemptive rights or rights of first refusal or similar
rights.  Except as set forth on Schedule 3.4, no
preemptive rights or rights of first refusal or similar rights exist with
respect to any shares of capital stock or other ownership interest of any
Acquired Company and no such rights arise by virtue of or in connection with the
transactions contemplated hereby; there are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind that
could require any Acquired Company to issue or sell any shares of its capital
stock or other ownership interest (or securities convertible into or
exchangeable for shares of its capital stock or other ownership interest); there
are no outstanding stock appreciation, phantom stock, profit participation or
other similar rights with respect to any Acquired Company; there are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock or other ownership interest of any Acquired
Company; and no Acquired Company is obligated to redeem or otherwise acquire any
of its outstanding shares of capital stock or other ownership
interest.

       

      
        
          
          

        

        
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      3.5         Good Title Conveyed;
Sufficiency of Assets.  Immediately
prior to Closing, Sellers
will have, and, upon delivery to Purchaser on the Closing Date of the
instruments of transfer contemplated by Section 2.2(a), and subject to the terms
of the Sale Order, Sellers will thereby transfer to Purchaser or its permitted
designees good title to, or, in the case of property leased or licensed by
Sellers, a valid leasehold interest in, all of the Acquired Assets, free and
clear of all Liens.  The Acquired Assets and Interests are sufficient
to permit the Purchaser or its permitted designees to operate the Business from
and after the Closing Date in substantially the same manner as the Business is
currently being operated by Sellers.  The stock powers, endorsements,
assignments and other instruments to be executed and delivered by Sellers to
Purchaser at the Closing will be valid and binding obligations of Sellers,
enforceable in accordance with their respective terms, and will effectively vest
in Purchaser good, valid and marketable title to the Interests pursuant to and
as contemplated by this Agreement free and clear of all Liens derived through
Sellers.

       

      3.6         Records.  The
copies of the certificate or articles of incorporation, bylaws or other
organizational or governing documents and other documents and agreements of
Sellers and the Acquired Companies that were provided to Purchaser are true,
accurate, and complete and reflect all amendments made through the date of this
Agreement.  To Sellers’ Knowledge, all accounts, books, ledgers and
official and other records of the Sellers and the Acquired Companies are
accurate and complete, and there are no material inaccuracies or discrepancies
contained therein.

       

      3.7         No
Violation.  Upon
entry of the Sale Order, the execution, delivery and performance by Sellers and
the consummation of the transactions contemplated by this Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to any Seller or any Acquired Company, any of the
organizational documents of any Seller or any Acquired Company, or any order,
judgment or decree of any Governmental Authority binding on any Seller or any
Acquired Company, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any Material Contract of
any Seller or any Acquired Company or give rise to any right of termination,
cancellation, modification, amendment, suspension, revocation or acceleration of
remedies or rights pursuant to any Material Contract of any Seller or any
Acquired Company, (iii) result in or require the creation or imposition of any
Lien upon any of the Interests, the Acquired Assets or the Business, (iv) result
in any default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the
Business, the Acquired Assets or any Acquired Company or (v) require any
approval of stockholders, members or partners of any Seller or any Acquired
Company or any approval or consent of, or notice to, any Person under any
Material Contract of any Seller or any Acquired Company.

      
        
           

        

        
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    3.8    
Government
Regulation.

     

    (a)         The
Company is a “holding company” as defined under the Public Utility Holding
Company Act of 2005 solely by reason of owning indirect interests in “qualifying
small power production facilities” as defined in the Public Utility Regulatory
Policies Act of 1978.  All facilities purporting to be qualifying
small power production facilities in which the Company owns an indirect interest
are listed in Schedule
3.8(a) and are in material compliance with the regulations of the Federal
Energy Regulatory Commission relevant to maintaining status as a qualifying
small power production facility; provided, however, that any non-compliance that
may threaten qualifying facility status would be material.

     

    (b)         None
of the Company, any of its Subsidiaries or any entity in which the Company owns
or controls any voting securities is:  (i) a “public utility” as
defined in the Federal Power Act, except to the extent that such public utility
is the owner of a “qualifying small power production facility” as defined in the
Public Utility Regulatory Policies Act of 1978 having a power production
capacity of 20MW or less and is entitled to the exemptions provided in 18 C.F.R.
§§ 292.601(c) and 292.602(b) and (c), or (ii) regulated as a “public utility”,
“electric utility”, “gas utility” or similar designation under the laws of any
state.

     

    (c)         Neither
the Company nor any of its Subsidiaries is a “registered investment company” or
a company “controlled” by a “registered investment company” or a “principal
underwriter” of a “registered investment company” as such terms are defined in
the Investment Company Act of 1940.

     

    3.9    
Governmental
Consents.  Upon
entry of the Sale Order and subject to any necessary approvals required under
the HSR Act or other applicable Competition Law, the execution, delivery and
performance by Sellers of this Agreement and the consummation of the
transactions contemplated hereby do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
Governmental Authority.

     

    3.10    
Changes Since May 31,
2007.  Since
May 31, 2007, except as expressly contemplated by the terms of this Agreement or
as set forth on Schedule 3.10,
neither the Sellers nor any Acquired Company has:

     

    (a)    
suffered any change, event, occurrence, development or circumstance which
individually or in the aggregate, has had, or could reasonably be expected to
have, a Material Adverse Effect;

     

    (b)    
issued, sold, pledged, disposed of, encumbered, or authorized the issuance,
sale, pledge, disposition, grant or encumbrance of, any shares of its capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock or any other
ownership interest;

     

    (c)    
declared, set aside, made, or paid any dividend or other distribution payable in
cash, stock, property or otherwise, on or with respect to its capital stock or
other securities or reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock or other securities;

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (d)    
sold, leased, licensed or transferred any of its properties or assets other than
in the ordinary course of business consistent with past practice;

     

    (e)    
granted, acquired, disposed of, abandoned or failed to maintain any rights in
Intellectual Property owned by or licensed to it other than in the ordinary
course of business consistent with past practices;

     

    (f)    
(i)  acquired (including, without limitation, for cash or shares of
capital stock, by merger, consolidation or acquisition of stock or assets) any
interest in any corporation, partnership or other business organization or
division thereof or any assets, or made any investment either by purchase of
stock or securities, contributions of capital or property transfer or, except in
the ordinary course of business consistent with past practice, purchased any
property or assets of any other Person, (ii) made or obligated itself to make
capital expenditures out of the ordinary course of business consistent with past
practice, (iii) other than in the ordinary course of business consistent with
past practice, incurred any obligations or liabilities including, without
limitation, Indebtedness, (iv) issued any debt securities or assumed, guaranteed
or endorsed or otherwise as an accommodation become responsible for, the
obligations of any Person, or made any loans or advances, (v) modified,
terminated or entered into any Contract other than in the ordinary course of
business consistent with past practice, or (vi) imposed any security interest or
other Lien on any of its assets other than in the ordinary course of business
consistent with past practice;

     

    (g)    
suffered any theft, damage, destruction or casualty loss, whether or not covered
by insurance, in excess of $50,000 in the aggregate;

     

    (h)    
waived, canceled, compromised or released any rights other than in the ordinary
course of business consistent with past practice;

     

    (i)    
except for annual salary increases and annual performance based cash bonus plans
adopted in the ordinary course of business consistent with past practice,
increased the compensation payable or to become payable to its employees,
officers or directors or granted any bonus, severance or termination pay to, or
entered into any bonus, employment, change of control or severance agreement
with, any of its managers, officers, directors or employees, or established,
adopted, entered into or amended or taken any action to create or accelerate any
rights or benefits with respect to any collective bargaining, bonus, profit
sharing trust, compensation, stock option, restricted stock pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any managers,
officers, directors or employees;

     

    (j)         made
any loans to any of its officers, directors, employees, Affiliates, agents or
consultants or made any change in its existing borrowing or lending arrangements
for or on behalf of any of such persons, whether pursuant to an employee benefit
plan or otherwise;

    
      
         

      

      
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    (k)    
conducted any operations or adopt any policies other than in the ordinary course
of business consistent with past practice;

     

    (l)    
entered into, or amended in any material respect the terms of, any collective
bargaining agreement or other labor-related agreement or
arrangement;

     

    (m)    
unless required by law, made or changed any election in respect of Taxes except
in the ordinary course of business consistent with past practice, amended any
Tax Return previously filed, adopted or changed any accounting method in respect
of Taxes, entered into any closing agreement, settled or compromised any claim
or assessment in respect of Taxes, or consented to any extension or waiver of
the limitation period applicable to any claim or assessment in respect of
Taxes;

     

    (n)    
taken any action with respect to accounting policies or procedures or made any
adjustment to its books and records other than in the ordinary course of
business and in a manner consistent with past practices;

     

    (o)    
paid, discharged or satisfied any existing claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of due
and payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date thereof in
the ordinary course of business and consistent with past practice;

     

    (p)    
delayed paying any account payable beyond the date on which nonpayment would
interfere with project operations except to the extent being contested in good
faith;

     

    (q)    
entered into any transaction with USEY or any Affiliates;

     

    (r)    
made or pledged any charitable contributions in excess of $5,000;
or

     

    (s)    
agreed, in writing or otherwise, to do or authorized any of the
foregoing.

     

    3.11    
Financial
Statements.  The
Company has delivered to Purchaser a true and complete copy of the Financial
Statements.  The Financial Statements have been prepared in accordance
with GAAP, consistently applied (except as disclosed in the footnotes thereto),
and fairly present, in all material respects, the financial position of the
Company and its Subsidiaries as of the dates thereof and their results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal year-end audit adjustments and the absence of
notes thereto.

     

    3.12    
Projections.  The
Projections of the Company and its Subsidiaries for the period of Fiscal Year
2008 through and including Fiscal Year 2028, including monthly projections for
each month during the Fiscal Year in which the Closing Date takes place, (the
“Projections”)
are based on good faith estimates and assumptions made by the management of the
Company believed to be reasonable and attainable.

    
      
         

      

      
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    3.13    
Liabilities.

     

    (a)    
To Sellers’ Knowledge, neither the Company nor any of its Subsidiaries has any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except:

     

    (i)    
to the extent reflected on its Financial Statements and not heretofore paid or
discharged;

     

    (ii)    
liabilities incurred in the ordinary course of business consistent with past
practice since the date of its Financial Statements which, individually and in
the aggregate, are of the same character and nature as the obligations, duties
and liabilities set forth on its Financial Statements; and

     

    (iii)    
liabilities incurred in the ordinary course of business prior to December 31,
2007 which, in accordance with GAAP consistently applied, were not required to
be recorded thereon and which, in the aggregate, are not material.

     

    (b)    
Except as described therein, Part A of Schedule 3.13(b) sets
forth a complete and correct list of all existing Indebtedness of the Company
and its Subsidiaries as of the date hereof and as of the Closing Date, to the
extent material, there has been no change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness of such
Persons.  Except as described in Part B of such Schedule, neither the
Company nor any of its Subsidiaries is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any
Indebtedness of the Company or its Subsidiaries and no event or condition exists
with respect to any Indebtedness of the Company or any of its Subsidiaries that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of
payment.

     

    (c)    
Schedule
3.13(c) lists the account numbers and names of each bank, broker or other
depository institution at which the Company and any of its Subsidiaries
maintains a depository account, and the names of all persons authorized to
withdraw funds from each such account.

     

    (d)    
Neither Sellers nor any Acquired Company is a party to any sale and leaseback
transaction.

    
      
         

      

      
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    3.14    
Projects.

     

    (a)    
Schedule
3.14(a) is a true and complete list of all of the Company’s Projects and
their respective Project Owners.  To Sellers’ Knowledge, the
descriptions of the Projects set forth in Schedule 3.14(a) and
all information regarding the Project furnished to the Purchaser by or on behalf
of the Sellers are true and accurate in all material respects, contain no
materially misleading information and do not omit any information the omission
of which would be materially misleading; provided this representation excludes
any projections, forward-looking statements or predictions of future
events.

     

    (b)    
To Sellers’ Knowledge, except as set forth on Schedule 3.14(b),
each of the Projects has received all inspections and certifications currently
required by any Governmental Authority and to the extent material, there are no
physical defects or performance deficiencies in the Projects, other than
ordinary wear and tear consistent with similar assets of a similar
age.

     

    3.15    
Project
Documents.

     

    (a)    
Each Project Document to which the Company or a Subsidiary is a party (together
with the other Project Documents for the applicable Project) is set forth on
Schedule 3.15
and constitutes the entire agreement of the respective parties thereto with
respect to the subject matter thereof and no respective party thereto shall be
bound except in accordance therewith.

     

    (b)    
Each Project Document to which the Company or a Subsidiary is a party is in full
force and effect and constitutes the valid contract of the parties thereto,
enforceable against the parties thereto in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or by equitable principles
relating to or limiting creditors’ rights generally, and, as applicable, the
Company and each of its Subsidiaries and, to the Sellers’ Knowledge, each of the
other parties thereto has executed such Project Document with full power,
authority and capacity to contract.  Neither the Company nor a
Subsidiary has assigned any of its right, title or interest in or under such
Project Document except in accordance with the USEB Credit
Documents.

     

    (c)    
The rights of the Company or a Subsidiary that is party to each Project
Document, as stated therein, are effective and are not, nor, to Sellers’
Knowledge, are they claimed to be, subject to any claims or any defenses,
counterclaims or setoffs against the Company or an applicable Subsidiary, to the
extent material.  To Sellers’ Knowledge, the obligations of each
party, other than the Company or its Subsidiaries, party to each Project
Document, as stated therein, are effective and are not subject to any claims or
any defenses, counterclaims or setoffs against such Person.  No event
or force majeure under such Project Document has occurred and is continuing that
could reasonably be expected to result in the termination of such Project
Document or to cause a Material Adverse Effect.

     

    (d)    
The copies of the Project Documents furnished to Purchaser by the Sellers are
true, complete and correct.  None of the Project Documents have been
modified or amended since their delivery to the Purchaser or made the subject of
waiver or consent by the Company or a Subsidiary, except by a written
instrument, a copy of which has been furnished to the
Purchaser.

    
      
         

      

      
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    (e)    
To Sellers’ Knowledge, the Company and each of its Subsidiaries have rights
sufficient to safely own, use, maintain and operate the applicable Project in
accordance with Prudent Engineering and Operating Practices for the remaining
useful life of such Project or the expiration of the Project
Documents.

     

    3.16    
Adverse
Proceedings.  There
are no Adverse Proceedings that relate to the transactions contemplated
hereby.  Except for Adverse Proceedings that are immaterial,
individually or in the aggregate, to the Company and its Subsidiaries, there are
no Adverse Proceedings.  Neither the Company nor any of its
Subsidiaries (a) is in violation of any applicable laws (including Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, or (b) is subject to or in default with respect
to any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     

    3.17    
Affiliate
Transactions.  Except
as set forth on Schedule 3.17 and
pursuant to other agreements and arrangements provided for or required
hereunder, (i) there are no existing or proposed agreements, arrangements,
understandings, or transactions (other than reasonable and customary fees paid
to directors and compensation arrangements for officers and other employees
entered into in the ordinary course of business) between the Company or any of
its Subsidiaries, on the one hand, and USEY or any of its Affiliates (other than
the Company and its Subsidiaries) or any of their respective officers, members,
managers, directors, stockholders, parents, other interest holders or employees,
on the other hand, (ii) none of the foregoing Persons have any direct or
indirect ownership, partnership, or voting interest in the Company or any of its
Subsidiaries, and (iii) neither the Company nor any of its Subsidiaries has any
liability or obligation, whether accrued, absolute, contingent or otherwise, for
any of the foregoing Persons.

     

    3.18    
Environmental
Matters.  Except
as set forth on Schedule
3.18:

     

    (a)    
The Company and its Subsidiaries have been and are in material compliance with
all applicable Environmental Laws;

     

    (b)    
Each of the Company and its Subsidiaries has obtained all permits, licenses and
other authorizations which are required under the Environmental Laws for the
operation of their respective businesses and the ownership, use and operation of
each location owned, operated or leased by the Company and its
Subsidiaries.  All such permits, licenses and authorizations are in
effect, no appeal or any other action is pending to revoke any such permit,
license or authorization, and each of the Company and its Subsidiaries are in
full compliance with all terms and conditions of all such permits, licenses and
authorizations.  To the extent required by applicable Environmental
Laws, each of the Company and its Subsidiaries has filed all applications
necessary to renew or obtain any necessary permits, licenses, or authorizations
in a timely fashion so as to allow the Company and its Subsidiaries to continue
to operate their businesses in compliance with applicable Environmental Laws and
Sellers do not expect such new or renewed licenses, permits or other
authorizations to include any terms or conditions that will have a material
impact on the Company or its Subsidiaries.  Without limiting the
foregoing, all permits, licenses and authorizations issued to the Company and
its Subsidiaries pursuant to applicable Environmental Laws, and all pending
applications for new or renewed permits, licenses and authorizations, are set
forth on Schedule
3.18.  Sellers represent that they have provided or made
available to Purchaser copies of all such permits, license, authorizations and
pending applications;

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    (c)    
Neither the Company nor any of its Subsidiaries nor any of their respective
facilities or operations is subject to any outstanding order, judgment, decree
or settlement agreement with any Person relating to any Environmental Law or is
subject to any Environmental Claim;

     

    (d)    
There have been no releases, spills or discharges of Hazardous Substances on or
underneath any real property that is currently or formerly owned, leased or
operated by the Company or any of its Subsidiaries that could result in an
Environmental Claim against the Company or any of its Subsidiaries;

     

    (e)    
Neither the Company nor any of its Subsidiaries has disposed of or arranged for
the treatment, storage or disposal of Hazardous Substances at any facility as
could result in an Environmental Claim against the Company or any of its
Subsidiaries;

     

    (f)    
No employee of the Company or any of its Subsidiaries, in the course of his or
her employment with the Company or any of its Subsidiaries, or employee of a
third party contractor, has been exposed to any Hazardous Substance in a manner
that could result in an Environmental Claim against the Company or any of its
Subsidiaries;

     

    (g)    
In connection with the sale of any real property, Subsidiaries or other assets
or businesses, the Company and its Subsidiaries have not entered into any
agreement requiring the Company or its Subsidiaries to provide indemnification
to any other person with respect to environmental matters or to retain
liabilities with respect to environmental matters;

     

    (h)    
To the Sellers’ Knowledge, neither the Company nor any of its Subsidiaries will
be required to expend monies, within the next five years, for capital
improvements in order to get into compliance or maintain compliance with
applicable Environmental Laws;

     

    (i)    
There are no facts, circumstances or events that are reasonably likely to form
the basis of a material liability against the Company or any of its Subsidiaries
pursuant to Environmental Law or with respect to Hazardous Substances;
and

     

    (j)    
The Company has provided or made available to Purchaser all material
environmental reports, studies, assessments, audits, analyses or communications
relating to Environmental Claims, relating to the Company or its Subsidiaries,
that are in the possession, custody, or reasonable control of the Company or its
Subsidiaries.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    (k)    
Except for the facility owned and operated by Lafayette Energy Partners, L.P.,
neither Sellers nor any Acquired Company owns or operates any facilities that,
as a result of the transactions contemplated by this Agreement, will be subject
to any “transaction-triggered” Environmental Laws such as ISRA.

     

    3.19    
Real
Estate.

     

    (a)    
Schedule
3.19(a)(i) lists as of the date of this Agreement, all real property
owned in fee by the Company and each of its Subsidiaries (together with all
easements, rights of way, servitudes, leases, permits, licenses, options and
other real property rights appurtenant thereto and all Improvements on the land
owned in fee, the “Owned Real Property”)
and Schedule
3.19(a)(ii) lists all real property (whether by virtue of direct lease,
ground lease or sublease) leased by the Company and each of its Subsidiaries as
lessee (the “Leased
Real Property” and together with the Owned Real Property, the “Real Property”). The
Real Property constitutes all of the land, buildings and structure used by the
Company and each of its Subsidiaries in the conduct of the
Business.

     

    (b)    
With respect to the Real Property:

     

    (i)    
there are no (i) pending or, to Sellers’ Knowledge, threatened condemnation
proceedings relating to such Real Property or (ii) pending or, to Sellers’
Knowledge, threatened litigation, claims, actions, suits, proceedings,
investigations or administrative actions relating to such Real Property except
to the extent set forth in Schedule
3.19(b)(i);

     

    (ii)    
there are no leases, subleases, licenses or agreements, written or oral to which
the Company or any Subsidiary is party, granting to any party or parties (other
than the Company or any Subsidiary) the right of use or occupancy (other than,
in the case of leases, the Lessor) of any portion of any Real Property except to
the extent set forth in Schedule
3.19(b)(ii);

     

    (iii)    
neither the Company nor any of its Subsidiaries has received written notice of
any, and to the Sellers’ Knowledge there is no, proposed or pending proceeding
to change or redefine the zoning classification of all or any portion of such
Real Property;

     

    (iv)    
no portion of such Real Property has suffered any damage by fire or other
casualty loss which has not heretofore been completely repaired and restored to
its original condition (ordinary wear and tear excepted), except as would not,
individually or in the aggregate, reasonably be expected to materially interfere
with the Company’s use of such Real Property; and

    
      
         

      

      
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    (v)    
the Company has delivered to Purchaser complete and accurate copies of all of
the following materials relating to such Real Property, to the extent in the
Company’s or any Subsidiary’s possession: all Leases (including any amendments,
modifications or supplements thereto); title insurance policies; deeds;
encumbrance and easement documents and other documents and agreements affecting
title to or for operation of such Real Property; surveys; as-built construction
plans; warranties; appraisals; structural inspection, soils, environmental
assessment and similar reports, and leases, subleases, licenses or agreements
(including any amendments or modifications thereto) granting to any other party
the right of use or occupancy of any portion of such Real Property.

     

    (c)    
With respect to the Owned Real Property:

     

    (i)    
Schedule
3.19(c)(i) identifies the property address, the approximate lot size and
the record owner of such Owned Real Property;

     

    (ii)    
the Company or the applicable Subsidiary has good and marketable fee simple
title to such Owned Real Property, free and clear of all Liens other than
Permitted Liens and Liens listed or described in Schedule
3.19(c)(ii);

     

    (iii)    
the material Improvements located on such Owned Real Property are located
entirely within the boundary lines of such Owned Real Property or on permanent
easements on adjoining land benefiting such Owned Real Property and may lawfully
be used under applicable zoning and land use laws (either as of right, by
special permit or variance, or as a grandfathered use) for their current use;
and such Owned Real Property is not located within any flood plain or subject to
any similar type restriction for which any permits or licenses, if any,
necessary to the use thereof have not been obtained;

    

    (iv)    
there are no outstanding options or rights of first refusal to purchase such
Owned Real Property, or any portion thereof or interest therein except to the
extent set forth on Schedule 3.19(c)(iv);
and

    

    (v)    
such Owned Real Property is assessed by local property assessors as a tax parcel
or parcels separate from all other tax parcels.

     

    (d)    
With respect to the Leased Real Property:

     

    (i)    
Schedule
3.19(d)(i) lists each lease, ground lease or sublease of the Leased Real
Property to which Company or a Subsidiary is party (each, a “Lease”) and lists the
term of such Lease, the parties to such Lease, including the Company or the
applicable Subsidiary that is lessee thereunder, the street address of the
applicable Leased Real Property, any extension and expansion options, and the
rent payable thereunder;

     

    
      
        
        

      

      
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    (ii)    
the Company or the applicable Subsidiary has title to each Lease and a good and
valid leasehold interest in the Leased Real Property (subject to the terms of
the applicable Lease governing its interests therein), in each case free and
clear of all Liens other than Permitted Liens and Liens listed or described in
Schedule
3.19(d)(ii);

     

    (iii)    
Schedule
3.19(d)(iii) lists all consents required to be obtained from any landlord
with respect to the transactions contemplated by this Agreement and no other
third party consents are required by any of the Leases to consummate
transactions contemplated by this Agreement;

     

    (iv)    
each Lease is the legal, valid, binding, and enforceable obligation of the
Company or the applicable Subsidiary that is lessee thereunder, and, to Sellers’
Knowledge is in full force and effect and the binding obligation of the other
parties thereto and will continue to be the legal, valid, binding, and
enforceable obligation of the Company or the applicable Subsidiary following the
consummation of the transactions contemplated by this Agreement;

     

    (v)    
neither the Company nor any Subsidiary has received any written notice that it
is in default under any Lease, nor to Sellers’ Knowledge is the Company nor any
Subsidiary or any other party to such Lease in default under any such Lease, and
no event has occurred, which, after the giving of notice, with lapse of time, or
otherwise, would constitute a default by the Company or any Subsidiary or, to
Sellers’ Knowledge, any other party under such Lease;

    

    (vi)    
there are no material disputes, oral agreements or forbearance programs in
effect as to any Lease;

    

    (vii)    
neither the Company nor any Subsidiary has assigned, subleased, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold created by such Lease except as set forth in Schedule 3.19(d)(vii)
or as contemplated by the USEB Credit Documents;

     

    (viii)    
there are no outstanding options or rights of any party to terminate such Lease
prior to the expiration of the term thereof except to the extent set forth on
Schedule
3.19(d)(vii)(i); and

     

    (ix)    
all Improvements are located entirely within the boundary lines of such Leased
Real Property or on permanent easements on adjoining land benefiting such Leased
Real Property and may lawfully be used under applicable zoning and land use laws
for their current use.

    
      
         

      

      
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    3.20    
Compliance with
Laws.  To
Sellers’ Knowledge, the Sellers, the Acquired Companies and their respective
Affiliates are in material compliance with their organizational documents and
all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all Governmental Authorities, in respect of the conduct
of its business and the ownership of its property, except such non compliance
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

     

    3.21    
Credit Support
Obligations.  Schedule
3.21 sets forth each Contract that obligates the Company or its
Subsidiaries to directly or indirectly provide financial support of any kind,
collateral on behalf of, guarantees in respect of or otherwise make any capital
contribution to or in respect of any Subsidiary of the Company (whether or not
any such obligation is contingent upon any other event, fact or occurrence and
whether or not any such obligation is subject to the giving of notice or the
passage of time, or both) (“Credit
Support Obligations”).  Each Credit Support Obligation that
requires the issuance of a letter of credit or posting of a surety bond or cash
collateral upon the occurrence of another event, fact or occurrence is so noted
on Schedule
3.21.  There is no current obligation to make payment under or
in respect of any such Credit Support Obligation, and no payments have been made
by the Company or its Affiliates under any such Credit Support Obligation during
the past five years.  To Sellers’ Knowledge, no event or condition
currently exists that, solely with the passage of time, the giving of notice, or
both, would create a current or future obligation to make any payment under any
such Credit Support Obligation, and neither the Company nor its Subsidiaries has
received any written notice of such events or conditions.

     

    3.22    
Labor and Employment
Matters.  Except
as set forth on Schedule
3.22:

    

    (a)    
Neither the Company nor any of its Subsidiaries is a party to or bound by any
collective bargaining agreement, work rule or practice, or any other
labor-related agreement or arrangement with any labor union or labor
organization; there are no collective bargaining agreements, work rules or
practices, or any other labor-related agreements or arrangements that pertain to
any employees of the Company or any of its Subsidiaries, including, without
limitation, any agreement or arrangement respecting employee benefits; and no
employees of the Company or any of its Subsidiaries are represented by any labor
organization with respect to their employment with the Company or any of its
Subsidiaries.  No labor union, labor organization or group of
employees of the Company or any of its Subsidiaries has prior to the date of
this Agreement organized or attempted to organize any employees of the Company
or any of its Subsidiaries into one or more collective bargaining
units.

    

    (b)    
There is not now, and there has not been during the three-year period preceding
the date of this Agreement, any actual or threatened labor dispute, labor
arbitration, grievance, strike, lockout, work slow down or work stoppage which
has affected, which affects, or which may affect the businesses of the Company
or any of its Subsidiaries or which may interfere with their continued
operations.  To Sellers’ Knowledge, neither the Company nor any of its
Subsidiaries, nor any employee, agent or representative thereof, has committed
any material unfair labor practice as defined in the National Labor Relations
Act, as amended, or similar applicable law, and there is no pending or
threatened unfair labor practice charge or complaint against the Company or any
of its Subsidiaries by or with the National Labor Relations Board or any other
Governmental Authority.

    
      
         

      

      
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    (c)    
The Company and its Subsidiaries are in material compliance with all applicable
laws respecting employment and employment practices, including, without
limitation, all laws respecting terms and conditions of employment, health and
safety, wages and hours (including classification of workers for overtime pay),
child labor, immigration, employment discrimination, disability rights or
benefits, equal opportunity, plant closures and layoffs, affirmative action,
workers’ compensation, labor relations, employee leave issues and unemployment
insurance.

     

    (d)    
The Company and its Subsidiaries are and have been in compliance with all notice
and other requirements under the WARN Act and neither the Company nor any of its
Subsidiaries have any liabilities under the WARN Act.  During the
six-month period prior to the date hereof: (i) neither the Company nor any of
its Subsidiaries have effectuated a “plant closing” (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any of its
Subsidiaries, (ii) there has not occurred a “mass layoff” (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any of
its Subsidiaries, (iii) neither the Company nor any of its Subsidiaries have
been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state,
provincial, local or foreign law or regulation and (iv) neither the Company’s
nor any of its Subsidiaries’ employees have suffered an “employment loss” (as
defined in the WARN Act).

    

    (e)    
Neither the Company nor any of its Subsidiaries is or has been:  (i) a
“contractor” or “subcontractor” (as defined by Executive Order 11246), (ii)
required to comply with Executive Order 11246 or (iii) required to maintain an
affirmative action plan.

    

    (f)    
Neither the Company nor any of its Subsidiaries (i) is a joint employer with any
entity, agency, organization or third party service provider; or (ii) has any
liabilities with respect to any employee or independent contractor leased by, or
who provides services to the Company or any of its Subsidiaries through, another
employer or service provider.

     

    (g)    
The Company and its Subsidiaries are not delinquent in payments to any employees
or former employees for any services or amounts required to be reimbursed or
otherwise paid.

     

    (h)    
The Company and its Subsidiaries have not received (i) notice of any complaints,
grievances or arbitrations arising out of any collective bargaining agreement,
(ii) notice of any charge or complaint with respect to or relating to them
pending before the Equal Employment Opportunity Commission, Occupational Health
and Safety Administration or any other Governmental Authority responsible for
the prevention of unlawful employment practices, (iii) notice of the intent of
any Governmental Authority responsible for the enforcement of labor, employment,
wages and hours of work, child labor, immigration, or occupational safety and
health laws to conduct an investigation with respect to or relating to them or
notice that such investigation is in progress, or (iv) notice of any Adverse
Proceeding pending or threatened in any forum by or on behalf of any present or
former employee of such entities, any applicant for employment or classes of the
foregoing alleging breach of any express or implied contract of employment, any
applicable law governing employment or the termination thereof or other
discriminatory, wrongful or tortuous conduct in connection with the employment
relationship.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    (i)    
To Sellers’ Knowledge, no employee of the Company or any of its Subsidiaries is
in any respect in violation of any term of any employment agreement,
nondisclosure agreement, common law nondisclosure obligation, fiduciary duty,
noncompetition agreement, restrictive covenant or other obligation to a former
employer of any such employee relating (i) to the right of any such employee to
be employed by the Company or any of its Subsidiaries or (ii) to the knowledge
or use of trade secrets or proprietary information.

     

    (j)    
Schedule
3.22(j) identifies by job title all of the employees employed by the
Company and its Subsidiaries as of the date hereof.  To Sellers’
Knowledge, no current employee of the Company or any of its Subsidiaries with an
annual compensation of $100,000.00 or more intends to terminate his or her
employment.

     

    (k)    
The execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in any breach or other violation
of any collective bargaining agreement, employment agreement, consulting
agreement or any other labor-related agreement to which the Company or any of
its Subsidiaries is a party or is bound.

    

    3.23    
Employee Benefit
Plans.

     

    (a)    
Schedule 3.23
contains a true and complete list of each deferred compensation and each
incentive compensation, equity compensation plan, “welfare” plan, fund or
program (within the meaning of section 3(1) of ERISA); “pension” plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment,
consulting, termination, severance or change in control agreement; and each
other employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or any of its Subsidiaries or by any trade or
business, whether or not incorporated, that together with the Company and/or any
of its Subsidiaries would be deemed a “single employer” within the meaning of
section 4001(b) of ERISA (an “ERISA Affiliate”), or
to which the Company or any of its Subsidiaries or an ERISA Affiliate of the
Company or any of its Subsidiaries is party, whether written or oral, for the
benefit of any current or former employee, director or consultant of the Company
or any of its Subsidiaries or any ERISA Affiliate (the “Employee Benefit
Plans”).

     

    (b)    
With respect to each Employee Benefit Plan, the Company has delivered to
Purchaser true and complete copies of the Employee Benefit Plan and any
amendments thereto, any related trust or other funding vehicle, any annual
reports or summaries required under ERISA or the Code, any contracts relating to
any Employee Benefit Plan and the most recent determination letter received from
the Internal Revenue Service with respect to each Employee Benefit Plan intended
to qualify under Section 401 of the Code.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    (c)    
At no time has the Company or any of its Subsidiaries or any ERISA Affiliate
ever maintained, established, sponsored, participated in or contributed to any
Employee Benefit Plan that is subject to Title IV of ERISA.

     

    (d)    
At no time has the Company or any of its Subsidiaries or any ERISA Affiliate
ever contributed to or been required to contribute to any “multiemployer pension
plan,” as such term is defined in Section 3(37) of ERISA.

     

    (e)    
There has been no non-exempt “prohibited transaction,” as such term is defined
in Section 406 of ERISA and Section 4975 of the Code, with respect to any
Employee Benefit Plan.  Each Employee Benefit Plan has been operated
and administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, and each
Employee Benefit Plan intended to be “qualified” within the meaning of section
401(a) of the Code has received a favorable determination from the IRS to the
effect that such plan is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code, and no event has occurred
which would reasonably be expected to result in the loss of such qualified
status. Each Employee Benefit Plan may be amended, terminated or otherwise
discontinued after the Closing Date in accordance with its terms, and without
material liability to Purchaser, other than for benefits accrued and vested
thereunder at the time of such termination.  All contributions and
premiums which the Company or any of its Subsidiaries or any ERISA Affiliate are
required to pay under the terms of each of the Employee Benefit Plans have, to
the extent due, been paid in full or properly recorded on the financial
statements or records of the applicable Company, Subsidiary of the Company or
ERISA Affiliate.

    

    (f)    
No Employee Benefit Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for current or former employees,
directors or consultants of the Company or any of its Subsidiaries or any ERISA
Affiliate for periods extending beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable law, (B) death benefits
under any “pension plan,” or (C) benefits the full cost of which is borne by the
current or former employee, director or consultant (or his
beneficiary).

     

    (g)    
[Reserved]

     

    (h)    
Except as otherwise disclosed on Schedule 3.23(h), the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, (A) entitle any current or former employee,
director or consultant of the Company or any of its Subsidiaries or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (B) accelerate the time of
payment or vesting, increase the amount of compensation due or otherwise enhance
any benefit to such employee, director or consultant.

    
      
         

      

      
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    (i)    
There are no pending, threatened or anticipated claims by or on behalf of any
Employee Benefit Plan, by any employee or beneficiary covered under any such
Employee Benefit Plan, or otherwise involving any such Employee Benefit Plan
(other than routine claims for benefits).

     

    (j)    
No Employee Benefit Plan has been established or maintained outside of the
United States for the benefit of any current or former employee, director or
consultant of the Company or any of its Subsidiaries or any ERISA Affiliate
residing outside the United States.

     

    (k)    
None of the Company, any of its Subsidiaries nor any ERISA Affiliate has, prior
to the Closing Date and in any material respect, violated any of the health care
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, or the Health Insurance Portability Accountability Act of
1996, as amended, or any similar provision of state law applicable to their
employees.

     

    3.24    
Taxes.  Except
as set forth on Schedule 3.24
hereto:

     

    (a)    
Each Tax Group Member has (i) timely filed all Tax Returns required to be filed
by it and all such Tax Returns are true, correct and complete in all material
respects, and (ii) paid in full all Taxes due or, to Sellers’ Knowledge, claimed
to be due by any Governmental Authority.

    

    (b)    
No waiver, extension or comparable consent given by a Tax Group Member regarding
the application of the statute of limitations with respect to any Taxes or Tax
Return is outstanding, nor has any request for any such waiver or consent been
made; no Tax Group Member is currently the beneficiary of any extension of time
within which to file any Tax Return;

     

    (c)    
No Tax Group Member has granted to any person any power of attorney that is
currently in force with respect to any Tax matter;

     

    (d)    
USEY has established in the Financial Statements (i) reserves that are adequate
for the payment of any Taxes of a Tax Group Member not yet due and payable, and
(ii) reserves as would be required under Interpretation No. 48 of the Financial
Accounting Standards Board as if such pronouncement were in effect as of the
date of such Financial Statements; since the date of the Financial Statements,
no Tax Group Member has incurred any liability for Taxes other than in the
ordinary course of business consistent with past practice;

     

    (e)    
No deficiency for Taxes has been proposed, asserted or assessed by a taxing
authority against a Tax Group Member which has not been resolved and paid in
full; there are no audits, actions, suits, proceedings, investigations, claims
or administrative proceedings (“Audits”) relating to
Taxes or any Tax Returns of a Tax Group Member now pending, proposed or
threatened by a taxing authority;

     

    (f)    
All amounts required to be collected or withheld by or on behalf of a Tax Group
Member with respect to Taxes have been duly collected or withheld and any such
amounts that are required to be remitted to any Governmental Authority have been
duly and timely remitted;

    
      
         

      

      
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    (g)    
No Governmental Authority in any jurisdiction where a Tax Group Member does not
file a Tax Return has made a written claim that the Company or such Subsidiary
is required to file a Tax Return for such jurisdiction;

     

    (h)    
No Tax Group Member (i) is a party to, is bound by, or has any obligation under,
any Tax sharing agreement, Tax indemnification agreement or similar contract or
arrangement, whether written or unwritten (collectively, “Tax Sharing
Agreements”) or (ii) has any potential liability or obligation to any
person as a result of, or pursuant to, any such Tax Sharing
Agreement;

     

    (i)    
No Tax Group Member (i) is or has ever been a member of any consolidated,
combined, affiliated or similar group of corporations for Tax purposes (other
than consolidated, combined, affiliated or similar group of which USEY or the
Company is the common parent (the “Seller Tax Group”))
or (ii) has any liability for Taxes of any Person under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law) or as
a transferee or successor, by contract or otherwise;

     

    (j)    
None of the assets of any of the Company or any of its Subsidiaries is required
to be treated for Tax purposes as being owned by any other person;

    

    (k)    
The United States federal income Tax Returns of the Seller Tax Group have been
examined by the Internal Revenue Service (or the applicable statute of
limitations for the assessment of Taxes for such Tax Return has expired) only
for such taxable periods set forth on Schedule
3.24(k);

    

    (l)    
No Tax Group Member has entered into or participated in (i) any reportable
transaction within the meaning of Treasury Regulations Section 1.6011-4(b) or
(ii) any confidential corporate tax shelter within the meaning of Section
6111(d) of the Code and Treasury Regulations Section 301.6111-2, as in effect
prior to the enactment of the American Jobs Creation Act of 2004;

     

    (m)    
There are no Liens for Taxes upon any assets of the Company or any of its
Subsidiaries, except for Liens for Taxes not yet due or payable;

     

    (n)    
None of the Acquired Companies is or will be required to include an item of
income, or exclude an item of deduction, for any period after the Closing Date
as a result of (i) an installment sale transaction occurring on or before the
Closing Date governed by Section 453 of the Code (or any similar provision of
state, local or foreign law), (ii) a transaction occurring on or before the
Closing Date reported as an open transaction for U.S. federal income tax
purposes (or any similar provision of state, local or foreign law), (iii)
prepaid amounts received on or prior to the Closing Date, (iv) a change in
method of accounting or similar adjustment under Section 481(a) of the Code (or
any similar provision of state, local or foreign law) that the Company or any of
its Subsidiaries agreed to, requested, or was required to make on or before the
Closing Date, or (v) an agreement entered into with any Governmental Authority
with respect to Taxes on or prior to the Closing Date;

    
      
         

      

      
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    (o)    
[Reserved]

     

    (p)    
Sellers have made available to Purchaser for inspection (i) complete and correct
copies of the U.S. federal income Tax Returns and all other material Tax Returns
of the Company, each of its Subsidiaries, and the Seller Group to the extent
such Tax Returns reasonable relate to the Taxes of the Company or any of its
Subsidiaries for all taxable periods for which the applicable statute of
limitations has not yet expired and (ii) complete and correct copies of all
private letter rulings, revenue agent reports, information document requests,
notices of proposed deficiencies, deficiency notices, protests, petitions,
closing agreements, settlement agreements, pending ruling requests, and any
similar documents, submitted by, received by or agreed to by or on behalf of a
Tax Group Member for all taxable periods for which the statute of limitations
has not yet expired; and

     

    (q)    
Neither the Company nor any of its Subsidiaries is or has been a “United States
real property holding corporation” within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.

     

    (r)    
Each of the Acquired Companies is and at all times has been a Pass-Through
Acquired Company.

     

    (s)    
No Acquired Company has any liability or obligation with respect to Section 29
tax credits.

     

    3.25    
Insurance.  Schedule 3.25 sets
forth a list of all insurance maintained by or on behalf of the Company and each
of its Subsidiaries as of the Closing Date and the Company and each of its
Subsidiaries are adequately insured in such amounts, with such deductibles and
covering such risks and otherwise on terms and conditions as are customarily
carried or maintained by Persons of established reputation of similar size and
engaged in similar businesses.  As of the Closing Date, all premiums
in respect of such insurance have been paid.  Schedule 3.25 sets
forth a list of all insurance claims made by the Company or any of its
Subsidiaries subsequent to January 1, 2007 and any amounts paid in respect of
such claims.

     

    3.26    
Permits.  The
Company and each of its Subsidiaries has, and is in material compliance with,
all permits, licenses, authorizations, approvals, entitlements and
accreditations (“Permits”) required
for such Person lawfully to own, lease, manage or operate, or to acquire, each
business currently owned, leased, managed or operated, or to be acquired, by
such Person, which, if not obtained or complied with, could not reasonably be
expected to have a Material Adverse Effect, and each such Permit is held by one
of the Acquired Companies.  No condition exists or event has occurred
which, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such Permit, and there is no claim that any thereof is not in full force and
effect, except, to the extent any such condition, event or claim could not be
reasonably be expected to have a Material Adverse Effect.

    
      
         

      

      
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    3.27    
Utility Service
Available.  Electricity
and other utility services and all roadway access and fuel, transmission and
power connection services required for the construction (as applicable),
operation and maintenance of the Projects for their intended purposes are
available on the Project Land.

     

    3.28    
Lines of
Business.  Each
of the Project Owners is engaged solely in the ownership, operation and
maintenance of its Project.  Zapco Energy Tactics Corp. is engaged
solely in the operation and maintenance of certain of the Projects pursuant to
certain of the Project Documents.  The Company is engaged solely in
the businesses of alternative energy, cogeneration, power marketing and
landfill-related products and services.  Illinois Electrical
Generation Partners, L.P. is engaged solely in the business of indirectly
owning, operating and maintaining certain of the Illinois Projects and Illinois
Electrical Generation Partners II, L.P. is engaged solely in the business of
indirectly owning, operating and maintaining certain of the Illinois Projects,
and in owning the limited partnership interest in Master Gasco,
L.P.  Each of the other Subsidiaries of the Company is engaged solely
in the direct and indirect ownership of the Project Owners and other alternative
energy-related businesses.

    

    3.29    
Marketing of
Production.  Except for contracts listed and in effect on the
date hereof on Schedule 3.29,
and thereafter disclosed in writing to Purchaser and approved by Purchaser (with
respect to all of which contracts the Company represents that it or a Subsidiary
is receiving a price for all production sold thereunder which is computed
substantially in accordance with the terms of the relevant contract and are not
having deliveries curtailed substantially below the subject property’s delivery
capacity), no material agreements exist that are not cancelable on sixty
(60) days notice or less without penalty or detriment for the sale of production
from any of the Company’s or any of its Subsidiaries’ Hydrocarbons (including,
without limitation, calls on or other rights to purchase, production, whether or
not the same are currently being exercised) that (i) pertain to the sale of
production at a fixed price and (ii) have a maturity or expiry date of longer
than six (6) months from the date hereof.  Except as set forth in
Schedule 3.29, none of the Gas
Properties of the Company are subject to any contractual or other arrangement
whereby payment for production therefrom is to be deferred for a substantial
period of time after the month in which such production is delivered (i.e., in
the case of oil, not in excess of sixty (60) days, and in the case of gas, not
in excess of ninety (90) days).

    
      
         

      

      
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    3.30    
Intellectual
Property.  The Company and its
Subsidiaries own, or have a valid right to use, all trademarks, service marks,
tradenames, domain names, copyrights, patents, hardware, software, trade
secrets, information and know-how and other intellectual property (collectively,
“Intellectual
Property”) necessary to conduct, or used or held for use in, the Business
as currently conducted, a correct and complete list of which, other than as to
any non-proprietary and non-material Intellectual Property, as of the date of
this Agreement, is set forth on Schedule 3.30, and
the conduct of the Business (including the products and services of the Company
and its Subsidiaries) does not infringe upon, misappropriate or otherwise
violate the rights of any other Person, and the Company’s and its Subsidiaries’
rights thereto are not subject to any licensing agreement or similar
arrangement.  There has been no claim asserted or, to Sellers’
Knowledge, threatened in the past three (3) years against the Company or any of
its Subsidiaries asserting that the conduct of the Business infringes upon,
misappropriates, or otherwise violates the rights of any other
Person.  To Sellers’ Knowledge, no Person is infringing,
misappropriating, or otherwise violating any Intellectual Property owned, used,
or held for use by the Company or any of its Subsidiaries in the conduct of the
Business, and no such claims have been asserted or threatened against any Person
by the Company or any of its Subsidiaries, to Sellers’ Knowledge, any other
Person, in the past three (3) years.  The Company and its Subsidiaries
take reasonable measures to protect the confidentiality of material trade
secrets.  During the three (3) years prior to the date hereof, (i)
there have been no material security breaches in the Company’s or any
Subsidiary’s information technology systems, and (ii) there have been no
disruptions in the Company’s or any Subsidiary’s  information
technology systems that materially adversely affected the Company’s or any
Subsidiary’s business or operations.  The Company and its Subsidiaries
have evaluated their disaster recovery and backup needs and have implemented
plans and systems that reasonably address their assessment of
risk.  No current or former Affiliate (except the Acquired Companies),
partner, director, stockholder, officer, or employee of the Company or any
Subsidiary will, after giving effect to the transactions contemplated hereby,
own or retain any rights to use any of the Intellectual Property owned, used, or
held for use by the Company or its Subsidiaries in the conduct of the
Business.

     

    3.31    
Contracts.  Schedule 3.31 sets
forth a list of each Material Contract (as defined below) to which the Company
and its Subsidiaries is a party, true, correct and complete copies of which have
been provided to Purchaser; provided, however, that Schedule 3.31 shall
not contain Project Documents not otherwise required to appear in Schedule
3.31.  Schedule 3.31
identifies those Material Contracts that require the Consents of third parties
to the transactions contemplated hereby.  The copy of each Material
Contract furnished to Purchaser is a true and complete copy of the document it
purports to represent and reflects all amendments thereto made through the date
of this Agreement.  None of the Company and its Subsidiaries has
violated any of the terms or conditions of any Material Contract which would
permit termination or modification of any Material Contract and no claims have
been made or issued for breach or indemnification or notice of default or
termination under any Material Contract.  Each of the Material
Contracts constitutes the legal, valid and binding obligation of each of the
Company and its Subsidiaries that is a party to such Material Contract, each in
accordance with its express terms.  No event has occurred which
constitutes, or after notice or the passage of time, or both, would constitute,
a default by the Company or its Subsidiaries under any Material Contract, and,
to Sellers’ Knowledge no such event has occurred which constitutes or would
constitute a default by any other party.  None of the Company and its
Subsidiaries is subject to any liability or payment resulting from renegotiation
of amounts paid under any Material Contract.  The Company and its
Subsidiaries are not subject to any Contract, decree or injunction that
restricts the continued operation of any business or the expansion thereof to
other geographical areas, customers and suppliers or lines of
business.

    
      
         

      

      
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    As used in this Section 3.31, “Material Contracts”
shall mean written or oral (a) loan agreements, indentures, mortgages, pledges,
hypothecations, deeds of trust, conditional sale or title retention agreements,
security agreements, equipment financing obligations or guaranties, or other
sources of contingent liability in respect of any indebtedness or obligations to
any other Person, or letters of intent or commitment letters with respect to
same; (b) contracts obligating the Company and its Subsidiaries to provide or
obtain products or services for a period of one year or more, excluding standard
warranty contracts entered into in the ordinary course of its business without
modification from the preprinted forms used by the Company and its Subsidiaries
in the ordinary course of business, copies of which forms have been supplied to
Purchaser; (c) leases of real property; (d) leases of personal property (other
than those which individually provide for annual payments of less than $10,000
and which do not in the aggregate provide for payments in excess of $100,000);
(e) distribution, agency or franchise or similar agreements, or agreements
providing for an independent contractor’s services, or letters of intent with
respect to same (other than those which individually provide for annual payments
of less than $10,000 and which do not in the aggregate provide for payments in
excess of $100,000); (f) employment agreements, collective bargaining
agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements and any other agreements
relating to any employee, independent contractor, third party service provider,
officer or director of the Company and its Subsidiaries; (g) any Intellectual
Property license agreement to which any of the Sellers are a party, whether as
licensee or licensor thereunder (other than non-exclusive licenses for the use
of commercially-available software which was acquired for a cost of less than
$5,000) and any “consent to use”, “non-assertion”, or other agreement
restricting any of the Sellers’ ownership or rights to use or register
Intellectual Property or permitting any other Person to use, enforce or register
any Intellectual Property; (h) contracts relating to pending capital
expenditures by the Company and its Subsidiaries; (i) contracts obligating the
Company and its Subsidiaries to purchase parts, accessories, supplies,
equipment, (other than those which individually provide for annual payments of
less than $10,000 and which do not in the aggregate provide for payments in
excess of $100,000); (j) any contracts obligating the Company and its
Subsidiaries to make or receive payments in excess of $25,000, in the aggregate,
over the remaining term of such contract; (k) any contracts, agreements or
arrangements that entitle the Company and its Subsidiaries to rebates, discounts
or incentives for the purchase of parts, accessories, supplies, equipment or
other goods and services; (l) all other Contracts or understandings which are
material to the Company and its Subsidiaries or its businesses, assets or
properties; and (m) all modifications, amendments, supplements, extensions and
consents relating to each of (a) through (l) above.

     

    For (a)
through (k) above, each instance shall be deemed to include all amendments,
modifications, consents and supplements relating thereto.

    
      
         

      

      
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    3.32    Gasco
Acquisitions.  Schedule 3.32 sets
forth a true, correct and complete list of each of the Gascos (the “Gascos”).  Schedule 3.32
contains the true, correct and complete description of each transaction by which
the Company acquired 100% of the equity interests of the Gascos (the “Gasco Acquisitions”),
including the date, manner of acquisition and consideration paid for each Gasco
Acquisition.  Except as set forth on Schedule 3.32, the
Company has no liabilities or obligations arising from any Gasco Acquisition and
the consummation of each Gasco Acquisition did not (i) violate any provision of
any law or any governmental rule or regulation applicable to Seller, the
Company, any of their respective Subsidiaries, any of the organizational
documents of the Company or any of its Subsidiaries, or any order, judgment or
decree of any Governmental Authority binding on the Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Material Contract of the
Company or any of its Subsidiaries or give rise to any right of termination,
cancellation, modification, amendment, suspension, revocation or acceleration of
remedies or rights pursuant to any Material Contract of Seller, the Company or
any of their respective Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries, (iv) result in any default, noncompliance, suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to its operations or any of the properties
of the Company or any of its Subsidiaries or (v) require any approval of
stockholders, members or partners of the Company or any of its Subsidiaries or
any approval or consent of any Person under any Material Contract
of  the Company or any of its Subsidiaries.

     

    3.33    Accuracy of Information
Furnished.  No
representation, statement or information contained in this Agreement (including,
without limitation, the various Schedules attached hereto) or any agreement
executed in connection herewith or in any certificate delivered pursuant hereto
or thereto or made or furnished to Purchaser or its representatives by the
Sellers, contains or shall contain any untrue statement of a material fact or
omits or shall omit any material fact necessary to make the information
contained therein not misleading.  Sellers have not failed to disclose
to Purchaser any facts material to the business, results of operations, assets,
liabilities, financial condition or prospects of the Company or any of its
Subsidiaries.  Sellers have provided Purchaser with true, accurate and
complete copies of all documents listed or described in the various schedules
attached hereto.

     

    3.34    No
Commissions.  Neither
the Company nor any other Seller have incurred or will incur any obligation for
a finder’s, broker’s or agent’s fee or commission or similar consideration in
connection with the transactions contemplated hereby, other than those
obligations approved by the Bankruptcy Court.

     

    3.35    Assets.  (i)
The assets and Real Property owned, leased or licensed by the Company and its
Subsidiaries include all of the tangible and intangible assets, properties and
rights used in or material to the business and operations of the Company and its
Subsidiaries; (ii) the Company and its Subsidiaries have good and marketable
title to, or a valid leasehold interest in or a valid right to use, all assets,
property and rights used by the Company or any Subsidiary, in each case free and
clear of all Liens other than Permitted Liens; and (iii) all material assets
(including, without limitation, the Real Property) are in good condition and
repair and are useable in the ordinary course of business and none of the assets
require any repair or replacement except for maintenance in the ordinary course
of business.  After consummation of the transactions contemplated
hereby, the assets and Real Property owned, leased or licensed by the Company
and its then Subsidiaries will have an aggregate fair market value (net of
required site restoration costs) of less than $250,000.

    
      
         

      

      
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    3.36    Inventory.  All
of the inventories of the Company and its Subsidiaries, whether reflected in the
balance sheet or otherwise, consist of a quality and quantity usable and salable
in the ordinary and usual course of business, except for items of obsolete
materials and materials of below-standard quality, all of which items have been
written off or written down on the balance sheet to fair market value or for
which adequate reserves have been provided therein.  All inventories
not written off have been priced at the lower of average cost or
market.  The quantities of each type of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable and warranted in the present circumstances of the Company and its
Subsidiaries. All work in process and finished goods inventory owned by the
Company and its Subsidiaries is free of any Defect or other
deficiency.

     

    3.37    Accounts
Receivable.  All
accounts receivable of the Company and its Subsidiaries, whether reflected in
the balance sheet or otherwise, represent sales actually made in the ordinary
course of business, and are current and collectible net of any reserves shown on
the balance sheet.  Subject to such reserve, each of the accounts
receivable included in the balance sheet of the Company and its Subsidiaries
either has been collected in full or will be collected in full, without any
set-off, within 60 days after the day on which it became due and
payable.

     

    3.38    Propriety of Past
Payments.  (a)  No
unrecorded fund, asset or account of the Company or any Subsidiary has been
established for any purpose, (b) no accumulation or use of corporate funds of
the Company or any Subsidiary has been made without being properly accounted for
in the books and records of the Company and its Subsidiaries, (c) no payment has
been made by or on behalf of the Company or any Subsidiary with the
understanding that any part of such payment is to be used for any purpose other
than that described in the documents supporting such payment and (d) none of
Company and its Subsidiaries, any director, officer, employee or agent of the
Company and its Subsidiaries or any other Person associated with or acting for
or on behalf of the Company and its Subsidiaries has, directly or indirectly,
made any illegal contribution, gift, bribe, rebate, payoff, influence payment,
kickback or other payment to any Person, private or public, regardless of form,
whether in money, property or services, (i) to obtain favorable treatment for
the Company or any Subsidiary, in securing business, (ii) to pay for favorable
treatment for business secured for the Company or any Subsidiary, (iii) to
obtain special concessions, or for special concessions already obtained, for or
in respect of the Company or any Subsidiary or (iv) otherwise for the benefit of
the Company or any Subsidiary, in violation of any federal, state, local,
municipal, foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty (including existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans relating to Real
Property).  Neither the Company nor any Subsidiary nor any current
director, officer, agent, employee of the Company and its Subsidiaries or other
Person acting on behalf of the Company or any Subsidiary, has accepted or
received any unlawful contribution, payment, gift, kickback, expenditure or
other item of value.

    
      
         

      

      
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    3.39    Equipment Held by Other
Persons.  Schedule 3.39 lists
each piece of equipment owned by the Company and its Subsidiaries which is not
in the possession of the Company and its Subsidiaries, if any, together, in each
case, with the name, address and telephone number of each Person who holds such
property and the address of the location of such property except for laptop
computers and personal communication devices in the possession of employees and
other Persons.

     

    ARTICLE
IV

     

    REPRESENTATIONS
AND WARRANTIES

    OF
PURCHASER

     

    As a
material inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser makes the following
representations and warranties to Sellers as of the date of this Agreement (or
if made as of a specific date, as of such date) and as of the Closing
Date:

     

    4.1      Corporate
Status.  Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware.

     

    4.2      Corporate Power and
Authority.  Purchaser
has all requisite power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.  Purchaser has taken all action necessary to
authorize the execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby.

     

    4.3      Enforceability.  This
Agreement has been duly executed and delivered by Purchaser and, assuming due
and valid authorization, execution and delivery by Seller and the Company,
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors rights generally and general
equitable principles regardless of whether such enforceability is considered in
a proceeding at law or in equity.

     

    4.4      No
Violation.  Except
as set forth on Schedule 4.4, the
execution, delivery and performance by Purchaser and the consummation of the
transactions contemplated by this Agreement do not and will not (a) violate any
provision of any law or any governmental rule or regulation applicable to
Purchaser, any of the organizational documents of Purchaser, or any order,
judgment or decree of any court or other agency of government binding on
Purchaser, (b) result in or require the creation or imposition of any Lien upon
any of the properties or assets of Purchaser, or (c) result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to its operations or
any of its properties.

    
      
         

      

      
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    4.5      No
Commissions.  Purchaser
has not incurred any obligation for any finder’s or broker’s or agent’s fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.

     

    4.6      Financial
Resources.  Purchaser
or its permitted designees have cash or credit available, and will have cash
available at the Closing, to enable it to purchase the Acquired Assets and the
Interests on the terms hereof and to undertake the agreements and obligations
contemplated by this Agreement.

     

    ARTICLE
V

     

    CONDUCT
OF BUSINESS PENDING THE CLOSING

     

    5.1      Conduct of Business by the
Company Pending the Closing.  The
Sellers covenant and agree that, except as otherwise expressly required or
permitted by the terms of this Agreement or except as expressly approved or
directed by Purchaser between the date of this Agreement and the Closing Date,
the business of the Company and each of its Subsidiaries shall be conducted only
in, and the Company and its Subsidiaries shall not take any action except in,
the ordinary course of business consistent with past practice, and the Company
and its Subsidiaries shall not change their operations or
policies.  The Company shall use, and shall cause its Subsidiaries to
use, reasonable efforts to preserve intact the Company’s and its Subsidiaries’
business organizations, to keep available the services of their current
officers, employees and consultants, and to preserve their present relationships
with customers, suppliers and other Persons with which they have business
relations.  By way of amplification and not limitation, neither the
Company nor any of its Subsidiaries shall, except as expressly required or
permitted by the terms of this Agreement between the date of this Agreement and
the Closing, directly or indirectly, do or propose or agree to do any of the
following without the prior written consent or direction of
Purchaser:

     

    (a)    amend
or otherwise change its Articles of Incorporation, By-laws or other
organizational or governing documents;

     

    (b)    issue,
sell, pledge, dispose of, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of, any shares of its capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock or any other ownership
interest;

     

    (c)    declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, on or with respect to its capital stock or other
securities, or reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;

     

    (d)    sell,
lease, license or transfer any of its properties or assets other than in the
ordinary course of business consistent with past practice;

     

    (e)    grant,
acquire, dispose of, abandon or fail to maintain any rights in Intellectual
Property;

     

    
      
         

      

      
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    (f)     (i)  acquire
(including, without limitation, for cash or shares of stock, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets, or make any investment either by purchase of stock or securities,
contributions of capital or property transfer or, except in the ordinary course
of business consistent with past practice, purchase any property or assets of
any other Person, (ii) make or obligate itself to make capital expenditures in
excess of $250,000, (iii) other than in the ordinary course consistent with
past practice, incur any obligations or liabilities, including, without
limitation, Indebtedness, (iv) issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, (v) modify, terminate, or enter
into any Contract other than as provided herein or in the ordinary course of
business consistent with past practice, or (vi) impose any security interest or
other Lien on any of its Assets or on the Leased Real Property, as
applicable;

     

    (g)    waive,
cancel, compromise or release any rights other than in the ordinary course of
business consistent with past practice;

     

    (h)    make
any payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice;

     

    (i)     increase
the compensation payable or to become payable to its employees, officers or
directors or, except as presently bound to do, grant or pay any bonus, severance
or termination pay to, or enter into any bonus, employment, change of control or
severance agreement with, any of its directors, officers, or employees, or
establish, adopt, enter into or amend or take any action to accelerate or create
any rights or benefits with respect to any collective bargaining, bonus, profit
sharing trust, compensation, stock option, restricted stock pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;

     

    (j)     make
any loans to any of its officers, directors, employees, Affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such persons, whether pursuant to an Employee Benefit
Plan or otherwise;

     

    (k)    create
any additional employee benefit or compensation plans, policies or arrangements
or, except as may be required by law, to modify any Employee Benefit
Plan;

     

    (l)     conduct
any operations or adopt any policies other than in the ordinary course of
business consistent with past practice;

     

    (m)   take
any action with respect to accounting policies or procedures or make any
adjustment to its books and records other than in the ordinary course of
business and in a manner consistent with past practices;

    
      
         

      

      
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    (n)    enter
into, or amend in any material respect the terms of, any collective bargaining
agreement or other labor-related agreement or arrangement;

     

    (o)    pay,
discharge or satisfy any existing claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business of due and
payable liabilities reflected or reserved against in its financial statements,
as appropriate, or liabilities incurred after the date thereof in the ordinary
course of business and consistent with past practices;

     

    (p)    unless
required by law, make or change any election in respect of Taxes except in the
ordinary course of business consistent with past practice, amend any Tax Return
previously filed, adopt or change any accounting method in respect of Taxes,
enter into any closing agreement, settle or compromise any claim or assessment
in respect of Taxes, or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;

     

    (q)    delay
paying any account payable beyond the date on which it is due and payable except
to the extent being contested in good faith other than in a manner consistent
with past practices;

     

    (r)     enter
into any transaction or modify the terms of any existing transaction with Seller
or any of its Affiliates (other than the Company and its
Subsidiaries);

     

    (s)    make
or pledge any charitable contributions;

     

    (t)     enter
into, amend or modify any agreement or arrangement that may subject the Company
or any of its Subsidiaries to any liability relating to any Section 29 tax
credit indemnification obligations; or

     

    (u)    authorize
any of the foregoing actions or any action which would make any representation
or warranty in Article III untrue or incorrect in any respect.

     

    ARTICLE
VI

     

    ADDITIONAL
AGREEMENTS

     

    6.1      Compliance with
Covenants.  The
Sellers shall cause each Acquired Company to comply with all of its covenants
under this Agreement.

     

    6.2      Efforts and Actions to Cause
Closing to Occur.

     

     
(a)     Prior to the Closing, upon the terms and
subject to the conditions of this Agreement, Purchaser and each Seller shall use
their respective reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done and cooperate with each other in order to do, all
things necessary, proper or advisable (subject to any applicable laws) to
consummate the Closing and the other transactions contemplated hereby as
promptly as practicable including, but not limited to, the preparation and
filing of all forms, registrations and notices required to be filed to
consummate the Closing and the other transactions contemplated hereby and the
taking of such actions as are necessary to obtain any requisite approvals,
authorizations, consents, orders, licenses, permits, qualifications, exemptions
or waivers by any third party or Governmental Authority.  In addition,
no party hereto shall take any action after the date of this Agreement that
could reasonably be expected to materially delay the obtaining of, or result in
not obtaining, any permission, approval or consent from any Governmental
Authority or other Person required to be obtained prior to
Closing.

    
      
         

      

      
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    (b)      Prior
to the Closing, each party shall promptly consult with the other parties hereto
with respect to, provide any necessary information with respect to, and provide
the other parties (or their respective counsel) with copies of, all filings made
by such party with any Governmental Authority or any other information supplied
by such party to a Governmental Authority in connection with this Agreement and
the transactions contemplated hereby.  Each party hereto shall
promptly inform the others of any communication received by such party from any
Governmental Authority regarding any of the transactions contemplated
hereby.  If any party hereto or Affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Authority with respect to any of the transactions contemplated hereby, then such
party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request.  To the extent
that transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the transactions contemplated hereby, Sellers shall use
their commercially reasonable efforts to effect such transfers, amendments or
modifications.

     

    (c)       In
addition to and without limiting the agreements of the parties contained above,
as soon as reasonably practicable (and, in any event, within three (3) Business
Days) following conclusion of the Auction if Purchaser is the Successful Bidder
(or earlier if Purchaser and Sellers agree), the Company and Purchaser shall (i)
take promptly all actions necessary to make the filings, if any, required of
them or any of their Affiliates under the HSR Act or any other applicable
Competition Law, (ii) comply at the earliest practicable date with any request
for additional information or documentary material received by the Company,
Purchaser or any of their Affiliates from the Federal Trade Commission (the
“FTC”) or the
Department of Justice (the “DOJ”) pursuant to the
HSR Act or from any State Attorney General or other Governmental Authority in
connection with antitrust matters, (iii) cooperate with each other in connection
with any filing under the HSR Act or any other applicable Competition Law and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated hereby commenced by  the FTC, DOJ, any State
Attorney General or any other Governmental Authority, (iv) use all reasonable
commercial efforts to resolve such objections, if any, as may be asserted with
respect to the transactions contemplated hereby under any antitrust law and (v)
advise the other parties promptly of any material communication received by such
party from the FTC, DOJ, any State Attorney General or any other Governmental
Authority regarding any of the transactions contemplated hereby, and of any
understandings, undertakings or agreements (oral or written) such party proposes
to make or enter into with the FTC, DOJ, any State Attorney General or any other
Governmental Authority in connection with the transactions contemplated
hereby.

    
      
         

      

      
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(d)    Notwithstanding the foregoing or any other covenant
herein contained, in connection with the receipt of any necessary approvals
under the HSR Act or any other applicable Competition Law, the Sellers shall not
divest or hold separate or otherwise take or commit to take any action that
limits Purchaser’s freedom of action with respect to, or its ability to retain,
the Interests and the Acquired Assets, without Purchaser’s prior written
consent.

     

     
(e)     Notwithstanding the foregoing or any other
covenant herein contained, nothing in this Agreement shall be deemed to require
Purchaser (i) to divest or hold separate any of the Interests or the Acquired
Assets or agree to limit its future activities, method or place of doing
business, (ii) to commence any litigation against any entity in order to
facilitate the consummation of any of the transactions contemplated hereby or
(iii) to defend against any litigation brought by any Governmental Authority
seeking to prevent the consummation of, or impose limitations on, any of the
transactions contemplated hereby.

     

    6.3      Access to
Information.  From
the date of this Agreement to the Closing, the Company and its Subsidiaries
shall, and shall cause their directors, officers, employees, auditors, counsel
and agents to, afford Purchaser and Purchaser’s officers, employees, auditors,
counsel and agents reasonable access at all reasonable times to its properties,
offices and other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and other
data and information on the company and its Subsidiaries as may be
requested.  Purchaser shall be entitled to conduct prior to Closing a
due diligence review of the assets, properties, books and records of the Company
and its Subsidiaries.  No information provided to or obtained by
Purchaser shall affect any representation or warranty in this
Agreement.  The Company shall also provide to Purchaser, as soon as
available, unaudited combined balance sheet and unaudited combined statements of
income and cash flows of the Company and its Subsidiaries on a monthly
basis.  The Purchaser shall furnish or cause to be furnished to
Sellers, upon request, as promptly as practicable, such information (including
access to books and records) relating to the Acquired Companies and the Business
as is reasonably requested for the administration of the New Bankruptcy
Cases.

     

    6.4      Bankruptcy Court
Approval.

     

     
(a)     Sellers and Purchaser acknowledge that this
Agreement and the purchase of the Acquired Assets are subject to Bankruptcy
Court approval.  Sellers and Purchaser acknowledge that to obtain such
approval, Sellers must demonstrate that they have taken reasonable steps to
obtain the highest or otherwise best offer possible for the Acquired Assets,
including, but not limited to, giving notice of the transactions contemplated by
this Agreement to creditors and certain other interested parties as ordered by
the Bankruptcy Court, and conducting an auction in respect of the Interests and
the Acquired Assets (the “Auction”).

    
      
         

      

      
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    (b)      As
soon as reasonably possible after execution of this Agreement, but in any event
no later than two (2) Business Days after execution of this Agreement, Sellers
shall file the Bidding Procedures and Sale Motion with the Bankruptcy Court,
together with appropriate supporting papers and notices.

     

    (c)       Sellers
shall use their commercially reasonable efforts to obtain entry of the Bidding
Procedures Order no later than seven (7) Business Days after filing the Bidding
Procedures and Sale Motion.

     

    (d)      In
the event an appeal is taken or a stay pending appeal is requested, with respect
to the Bidding Procedures Order or the Sale Order, Sellers shall promptly notify
Purchaser of such appeal or stay request and shall promptly provide to Purchaser
a copy of the related notice of appeal or order of stay.  Sellers
shall also provide Purchaser with written notice of any motion or application
filed in connection with any appeal from either of such orders.

     

    (e)       From
and after the Effective Date, provided that Purchaser is the Successful Bidder
at the Auction and has not defaulted in any material respect in the performance
of any of its obligations under this Agreement, Sellers shall not take any
action that is intended to result in, or fail to take any action the intent of
which failure to act would result in, the reversal, voiding, modification or
staying of the Bidding Procedures Order or the Sale Order.

     

    6.5       Bankruptcy
Filings.

     

    (a)       Within
two (2) days of the execution of this Agreement, the Sellers set forth on Schedule 6.5(a) shall
file voluntary petitions under Chapter 11 of the Bankruptcy Code with the
Bankruptcy Court in respect of the New Bankruptcy Cases.

     

    (b)      
From and after the Effective Date, Sellers shall use their reasonable efforts to
provide such prior notice as may be reasonable under the circumstances before
filing any papers in the Bankruptcy Case or the New Bankruptcy Cases that
relate, in whole or in part, to this Agreement or Purchaser.

     

    6.6      Break-Up
Fee.  Notwithstanding
anything in this Agreement to the contrary, commencing on the entry of the
Bidding Procedures Order, the Company agrees to pay Purchaser the Break-Up Fee
specified in accordance with Section 10.2 in the
event this Agreement is terminated.

     

    6.7      Notification of Certain
Matters.  Each
of the parties to this Agreement shall give prompt notice to the other parties
of the occurrence or non-occurrence of any event which would likely cause any
representation or warranty made by such party herein to be untrue or inaccurate
or any covenant, condition or agreement contained herein not to be complied with
or satisfied; provided, however, that any
such disclosure shall not in any way be deemed to amend, modify or in any way
affect the representations, warranties and covenants made by any party in or
pursuant to this Agreement.

    
      
         

      

      
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    6.8       Supplemental
Disclosure.  Sellers
will have the continuing obligation until the Closing Date to promptly
supplement or amend the disclosure schedules to this Agreement with respect to
any matter hereafter arising or discovered that, if existing or known at the
Effective Date, would have been required to be set forth or described in the
disclosure schedules to this Agreement; provided, however, that no
supplement or amendment to such disclosure schedule will have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VII.

     

    6.9       Tax
Matters.

     

    (a)    Tax
Indemnification.  Sellers agree to indemnify and hold the
Purchaser and any Acquired Company harmless from and against all Taxes and
related expenses:

     

    (i)      imposed
on the Purchaser or any Acquired Company relating or attributable to any
Pre-Closing Period and, with respect to any Straddle Period, the portion of such
Straddle Period deemed to end on and include the Closing Date;

     

    (ii)     imposed
on the Purchaser or any Acquired Company under Treasury Regulations Section
1.1502-6 (and all corresponding provisions of state, local or foreign Law) as a
result of being a member of any federal, state, local or foreign consolidated,
unitary, combined or similar group for any Pre-Closing Period or Straddle
Period;

     

    (iii)    arising
out of any breach of or inaccuracy in any representation or warranty contained
in Section
3.24; and

     

    (iv)    arising
out of any breach or failure by Seller or the Company to perform any of the
covenants made by it or agreements entered into or contained in this Section 6.9 or Section 5.1(p);
and

     

    (v)     any
payments under any tax indemnification agreements.

     

    (b)    Allocation of Straddle
Period Taxes.  For purposes of this Section 6.9, in order to
apportion appropriately any Taxes relating to a Straddle Period, the parties
shall, to the extent permitted or required under applicable law, treat the
Closing Date as the last day of the taxable year or period for all Tax
purposes.  In any case where applicable Law does not permit the
parties to treat the Closing Date as the last day of the taxable year or period,
the portion of any Taxes that are allocable to the portion of the Straddle
Period ending on the Closing Date shall be:

     

     
(i)         in the case of Taxes
that are imposed on a periodic basis, deemed to be the amount of such Taxes for
the entire period multiplied by a fraction the numerator of which is the number
of calendar days in the Straddle Period ending on (and including) the Closing
Date and the denominator of which is the number of calendar days in the entire
relevant Straddle Period; and

    
      
         

      

      
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(ii)       in the case of Taxes not described
in clause (i) (such as Taxes that are either (x) based upon or related to income
or receipts, or (y) imposed in connection with any sale or other transfer or
assignment of property), deemed equal to the amount that would be payable if the
taxable year or period ended on the Closing Date.

     

    (c)    Allocation of
Consideration.

     

     
   (i)     [Reserved]

     

      
 (ii)     Purchaser shall prepare and deliver to
the Company an allocation of the consideration paid by the Purchaser for the
assets treated as acquired hereby for Tax purposes (the “Allocation
Schedule”).  Solely for purposes of this paragraph, (A) the
consideration paid shall include the Assumed Liabilities, and the liabilities of
any Pass-Through Acquired Company, and (B) the assets acquired hereby shall
include the Interests, the Acquired Assets, and the assets of any Pass-Through
Acquired Company.  The Allocation Schedule shall be reasonable and
shall be prepared in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder.

     

    (iii)    The
Company shall have 30 days following receipt by it of the Allocation Schedule
during which to reasonably dispute any item contained in the Allocation
Schedule.  If the Company fails to notify Purchaser of any such
dispute within such 30-day period, the Allocation Schedule shall be deemed to
have been accepted by Sellers.  If the Company timely notifies
Purchaser of any such reasonable dispute, and the Company and Purchaser cannot
resolve any such dispute within 20 days of receipt by Purchaser of such notice,
such dispute shall be resolved by an independent accounting firm selected by the
Purchaser and the Company (the “Independent Accounting Firm”); the determination
of the Independent Accounting Firm with respect to such dispute shall be made as
promptly as practicable and shall be final and binding on both Purchaser and
Sellers.  One half of the expenses relating to engagement of the
Independent Accounting Firm shall be paid by Purchaser and the other half of
such expenses shall be paid by Parent Sellers.  For purposes of this
Section
6.9(c)(iii), a dispute shall be unreasonable unless it would have a
material and adverse impact on the Sellers’ Tax liability for the taxable year
in which the Closing occurs, and not merely if it would affect any Tax attribute
of any Seller or any Affiliate of a Seller.

    
      
         

      

      
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    (iv)    Purchaser
and each Seller shall report the acquisition pursuant to this Agreement
consistent with the Allocation Schedule (including on IRS Form 8594 and/or IRS
Forms 8883), and shall take no position to the contrary thereto in any Tax
Return, or in any proceeding before any Governmental Authority or
otherwise.  Neither Purchaser nor any Seller shall take any action to
modify any forms without the written consent of such other party, which consent
shall not be unreasonably be delayed or withheld.

     

    (d)    Assistance and
Cooperation.  The Sellers and the Purchaser shall agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information (including access to books and records) and
assistance relating to the Company and its Subsidiaries as is reasonably
requested for the filing of any Tax Returns, for the preparation of any Audit
and for the prosecution or defense of any Tax claim.  The Sellers and
their Affiliates shall each preserve and keep all books and records with respect
to Taxes and Tax Returns of the Company and its Subsidiaries in such party’s
possession as of the Closing Date, or as later come into such party’s
possession, until the expiration of the applicable statute of limitations and
shall give reasonable written notice to the other party prior to transferring,
destroying or discarding any such information, returns, books, records or
documents and, if the other party so requests, allow the other party to take
possession of such information, returns, books, records or
documents.  The party requesting assistance hereunder shall reimburse
the other for reasonable out-of-pocket expenses incurred in providing such
assistance.  Any information obtained under this Section 6.9(d) shall
be kept confidential except (i) as may be otherwise necessary in connection with
the filing of Tax Returns or claims for refund or in conducting an Audit or
other proceeding or (ii) with the consent of both of the Company and
Purchaser.

     

    (e)    Transfer
Taxes.  To the extent that the obligation to pay all sales,
use, real property transfer, real property gains, transfer, stamp, registration,
documentary, recording or similar Taxes (“Transfer Taxes”) is
not exempted by the Sale Order, all Transfer Taxes incurred in connection with
this Agreement shall be borne solely by the Purchaser.  The party
required by applicable law shall file all necessary Tax Returns and other
documentation with respect to all such Transfer Taxes, and, if required by
applicable law, the other parties shall, and shall cause their Affiliates to
join in the execution of any such Tax Returns and other
documentation.

     

    (f)     Survival.  Notwithstanding
anything to the contrary contained in this Agreement, Sellers’ indemnification
obligations pursuant to Section 6.9 shall
survive the Closing until ninety (90) days following the expiration of the
applicable statute of limitations (including any extensions thereof) relevant to
each particular item provided that if notice of indemnification under Section 6.9(a) is
provided to a Seller prior to any such expiration date, any obligation to
indemnify for any claim described in such notice shall continue indefinitely
until such claim is finally resolved.

     

    6.10    [Reserved]

     

    6.11    Change of Control and
Prepayment Obligations.  The
Company shall, prior to the Closing, take such steps as are necessary to ensure
that no sums are owed or payable by the Acquired Companies or Purchaser to any
Person due to the execution of this Agreement, the consummation of the
transactions contemplated hereby or any change of control or assignment by
operation of law affecting the Company or the Acquired
Companies.

    
      
         

      

      
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    6.12    Publicity.  Until
the Closing, or the date the transactions contemplated hereby are terminated or
abandoned pursuant to Article X, none of the Company, any of its Subsidiaries,
Purchaser or any of their respective Affiliates shall issue or cause the
publication of any press release or other announcement with respect to this
Agreement or the other transactions contemplated hereby without prior approval
of the other party, except as may be required by law or by any listing agreement
with a national securities exchange or trading market, it being understood and
acknowledged that Sellers shall issue a press release with respect to the
execution of this Agreement immediately subsequent to the execution of this
Agreement.

     

    6.13    Employee
Matters.

     

    (a)    Within
five (5) Business Days of the date that the Sale Order shall have become a Final
Order, the Purchaser shall make offers of employment, effective as of the
Closing Date, to the employees of the Sellers listed on Schedule 6.13(a) who
are primarily engaged in the operation of the Business and who are not covered
by a collective bargaining agreement (the “Transferred
Employees”), on terms and conditions that, with respect to salary, are
reasonably equivalent to those currently offered to each such employee by the
Sellers, and with respect to other matters, are, subject to any overriding legal
and regulatory requirements, substantially similar, in the aggregate, to those
currently offered to such employee by Sellers, which terms and conditions shall
continue for a period of at least six (6) months from the Closing Date or for
such period as the employee is employed by the Purchaser, whichever period is
shorter.  For the avoidance of doubt, Purchaser is not hereby
obligated to employ any of the Transferred Employees for any particular
period.  Notwithstanding the foregoing, the Purchaser shall not be
responsible for any obligations or liabilities of any Transferred Employees,
including, without limitation, any amount of sales commissions, annual bonus or
retention bonus attributable to any period on or prior to the
Closing.

     

    (b)    The
Purchaser agrees to be obligated by the collective bargaining agreement between
US Energy Biogas-Zapco Energy and the United Service Workers Union, Local 355,
effective November 1, 2006 to October 31, 2009 (the “CBA”) solely with
respect to events and circumstances arising after the Closing Date; provided,
however, that Purchaser shall not assume, and Sellers shall retain sole
responsibility for, any and all obligations or liabilities arising under the CBA
on or prior to the Closing Date.  Schedule 6.13(b)
lists the employees of Sellers covered by the CBA.

     

    6.14    Further
Assurances.  After
the Closing, Sellers shall, from time to time, at the request of Purchaser, and
without further expense to Purchaser, execute and deliver such other instruments
of conveyance and transfer (including powers of attorney) as Purchaser may
reasonably request, in order to more effectively consummate the transactions
contemplated hereby and to vest in Purchaser good and marketable title (or in
the case of the Leases, valid leasehold interests) to the Interests and the
Acquired Assets (including, without limitation, the Real
Property).

    
      
         

      

      
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    6.15    Environmental
Matters

     

     
(a)     Prior to the
Closing.  Prior to the Closing Date, except as set forth in
Section
6.15(b), Sellers shall be responsible for taking all necessary actions to
comply with the requirements of ISRA with respect to the Lafayette Energy
Partners, L.P. facility, including filing all necessary forms and conducting any
investigation and remediation as may be required by NJDEP criteria, procedures
and time schedules then in effect.  Purchaser shall use commercially
reasonable efforts to cooperate with Sellers in connection with such compliance,
including by executing any forms necessary to allow the parties to consummate
the transactions contemplated by this Agreement in accordance with ISRA
requirements.  Sellers shall provide Purchaser and its representatives
with an opportunity to participate in strategy discussions with respect to
compliance with ISRA and, to the extent that there are any face-to-face meetings
with representatives of the NJDEP or significant telephone communications with
such representatives (other than with respect to routine matters), Purchaser and
its representatives shall have an opportunity to participate in such meetings
and communications.  Sellers shall provide Purchaser with copies of
all notices, correspondence, draft reports, submissions, work plans, and final
reports and shall give Purchaser an opportunity to comment on any submissions
Sellers intend to deliver or submit to the NJDEP, and Sellers shall endeavor to
accept Purchaser’s comments.  Without limiting the foregoing, Sellers
shall undertake commercially reasonable efforts to obtain a no further action
letter from the NJDEP prior to the Closing Date or to obtain approval of a
minimal environmental concern application pursuant to N.J.A.C
7:26B-5.6.

     

     
(b)    Remediation Agreement
Covenant.  Sellers, on behalf of Lafayette Energy Partners,
L.P. shall apply for a Remediation Agreement in a timely manner in order to
close the transaction contemplated by this Agreement in accordance with
ISRA.  Lafayette Energy Partners, L.P. shall be designated as the
responsible party with respect to compliance with ISRA pursuant to the
Remediation Agreement.  Purchaser shall fully cooperate with Sellers
with respect to such application, including executing, to the extent necessary,
the Remediation Agreement.  Unless Lafayette Energy Partners, L.P. can
comply with the financial assurance obligation required by a Remediation
Agreement pursuant to a self-guarantee, Purchaser will determine the mechanism
by which Lafayette Energy Partners, L.P. shall satisfy said
obligation.  Lafayette Energy Partners, L.P. shall only be obligated
to enter into a Remediation Agreement with the NJDEP if Sellers are not able to
obtain a no further action letter, or approval of a minimal environmental
concern application, as described in Section
6.15(a).

     

     
(c)     Post-Closing.  If
Sellers are not able to obtain a no further action letter from the NJDEP prior
to the Closing Date, Lafayette Energy Partners, L.P. shall be liable for
compliance with ISRA after the Closing Date.

     

    6.16    Termination of Intercompany
Agreements.  On
or prior to the Closing Date, the Sellers and their Subsidiaries shall
terminate, or shall cause to be terminated, all of the agreements, contracts or
arrangements between any Seller or Excluded Sub on the one hand and any
Subsidiary of any Seller (other than an Excluded Sub) on the other.

     

    
      
         

      

      
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    ARTICLE
VII

     

    CONDITIONS
TO THE OBLIGATIONS OF PURCHASER

     

    The
obligations of Purchaser to effect the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, any or all of which may be waived in whole or in part by
Purchaser:

     

    7.1      Accuracy of Representations
and Warranties; Compliance with Obligations.  (i)
The representations and warranties of the Sellers contained in Section 3.4 and Section 3.24(s) of
this Agreement shall be true and correct in all respects and (ii) the other
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all respects (without giving effect to any knowledge,
materiality or Material Adverse Effect exceptions or qualifications contained
therein), except where the failure of such representations and warranties to be
so true and correct, individually or in the aggregate, does not, and would not
be reasonably expected to have a Material Adverse Effect.  Sellers
shall have performed or complied in all material respects with all of their
respective obligations required by this Agreement to be performed or complied
with at or prior to the Closing.  Sellers shall have delivered to
Purchaser a certificate, dated as of the Closing Date, (which in case of the
Company shall be duly signed by its Chief Executive Officer and Chief Financial
Officer) certifying to the foregoing.

     

    7.2      No Order or
Injunction.  There
shall not be issued and in effect by or before any court or other governmental
body an order or injunction restraining or prohibiting the transactions
contemplated hereby.

     

    7.3      Government
Authorizations.  All
requisite Governmental Authorizations or waiting periods following governmental
filings, including under the HSR Act, shall have been obtained or
expired.

     

    7.4      Final
Order.  The
Sale Order shall have become a Final Order.

     

    7.5      No Material Adverse
Change.  Between
the date of this Agreement and the Closing Date, there shall not have occurred
any change, event, occurrence, development or circumstance which individually or
in the aggregate, has had, or would reasonably be expected to have, a Material
Adverse Effect.

     

    7.6      Corporate
Certificate.  Sellers
shall have delivered to Purchaser (i) copies of the Certificate or Articles of
Incorporation, or other corporate, limited liability company or limited
partnership formation document, of each Seller and each Transferred Sub
certified by the Secretary of State (or other applicable agency) of its state of
organization, no longer than ten (10) days prior to the Closing, (ii) copies of
resolutions adopted by the Boards of Directors (or similar governing body) of
each Seller authorizing the transactions contemplated by this Agreement and
(iii) a Good Standing Certificate with respect to each Seller and each
Transferred Sub issued by the Secretary of State (or other applicable agency)of
its state of organization as of a date not more than two (2) days prior to the
Closing Date, and all of such documents of such entities shall be certified as
of the Closing Date by their respective Secretaries as being true, correct and
complete.

    
      
         

      

      
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    7.7      Consents
Obtained.  All
consents of any Person necessary to the consummation of the Closing and the
other transactions contemplated hereby with respect to any material loan,
material contract, material lease or other material agreement (including,
without limitation, any material Acquired Contract), shall have been obtained,
and a copy of each such consent shall have been provided to Purchaser at or
prior to the Closing.

     

    7.8      No Adverse
Litigation.  There
shall not be pending or threatened any action or proceeding by or before any
court or other governmental body which shall seek to restrain, prohibit,
invalidate or collect material damages arising out of the transactions
hereunder.

     

    7.9      Sale
Order.  The
Sale Order shall provide that the USEO Indebtedness and the liens and security
interests granted for the benefit of the USEO Lenders under the USEO Credit
Agreement are valid and perfected and may not be disallowed, avoided,
recharacterized or equitably subordinated.

     

    7.10    [Reserved].

     

    7.11    Employment
Agreements.  Richard
J. Augustine, Steven Laliberty and Mary Lou Kachnowski shall have accepted the
offers of employment from Purchaser on the terms and conditions set forth in
such offers.

     

    7.12    Permits.  All
Permits necessary to own and operate any material portion of the Business and
the Acquired Assets have been transferred to or obtained by Purchaser as a
result of the acquisition of the Interests of the Acquired Companies; provided,
that where Purchaser may lawfully operate the Business and the Acquired Assets
as a result of the filing of an application or request to transfer or obtain a
Permit, prior to obtaining such Permit, such filing shall suffice to satisfy
this condition if in Purchaser's reasonable judgment, such Permit will be issued
to Purchaser; provided further, that where applicable law allows Purchaser to
own and operate the Business and the Acquired Assets as of the Closing Date and
submit an application or request to transfer or obtain a Permit after the
Closing Date, this condition shall be satisfied if in Purchaser's reasonable
judgment, such permit, license or other authorization will be issued to
Purchaser.

     

    7.13    ISRA.  A
no further action letter or approval of a minimal environmental concern
application has been obtained from the NJDEP or a Remediation Agreement has been
executed by the NJDEP, with respect to the Lafayette Energy Partners, L.P.
facility.

     

    7.14    Release and
Conveyance.  USEY
and Sellers shall have delivered a duly executed Seller Release to Purchaser and
USEY shall have conveyed its 67.5% limited partnership interest in ZFC Royalty
Trust to Purchaser or its designee.

    
      
         

      

      
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    7.15    2007 Financial
Statements.  The
Company shall have received audited Financial Statements for the Company and its
Subsidiaries for the year ended December 31, 2007 that are substantially
consistent with the information set forth in Schedule
7.15.

     

    7.16    Termination of Intercompany
Agreements.  On
or prior to the Closing Date, Sellers and their Subsidiaries shall have caused
the termination of all agreements, contracts or arrangements between any Seller
or Excluded Sub on the one hand and any Subsidiary of any Seller (other than an
Excluded Sub) on the other.

     

    ARTICLE
VIII

     

    CONDITIONS
TO THE OBLIGATIONS OF SELLERS

     

    The
obligations of the Sellers to effect the transactions contemplated hereby shall
be subject to the fulfillment at or prior to the Closing of the following
conditions, any or all of which may be waived in whole or in part by
Sellers.

     

    8.1      Accuracy of Representations
and Warranties; Compliance with Obligations.  The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects (except for representations and
warranties that have any materiality qualifiers, which shall be true and correct
as written).  Purchaser shall have performed or complied with all of
its obligations required by this Agreement to be performed or complied with at
or prior to the Closing.  Purchaser shall have delivered to Sellers a
certificate, dated as of the Closing Date, and signed by an authorized officer,
certifying that such representations and warranties are true and correct in all
material respects (except for representations and warranties with a materiality
or Material Adverse Effect qualifier, which shall be true and correct as
written) and that all such obligations have been performed and complied with in
all material respects.

     

    8.2      Government
Authorizations.  All
requisite Governmental Authorizations or waiting periods following governmental
filings, including under the HSR Act, shall have been obtained or
expired.

     

    8.3      Final
Order.  The
Sale Order shall have become a Final Order.

     

    8.4      No Order or
Injunction.  There
shall not be issued and in effect by or before any court or other governmental
body an order or injunction restraining or prohibiting the transactions
contemplated hereby.

     

    8.5      Release.  Purchaser
shall have delivered a duly executed Purchaser Release to Sellers and
USEY.

     

    ARTICLE
IX

     

    DEFINITIONS

     

    9.1      Defined
Terms.  As
used herein, the following terms shall have the following
meanings:

    
      
         

      

      
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    “Acquired Assets” has
the meaning set forth in Section 1.1(b).

     

    “Acquired Companies”
shall mean the Transferred Subs and the Subsidiaries of the Transferred
Subs.

     

    “Administrative
Expenses” shall have the meaning set forth in Section
1.4(h).

     

    “Adverse Proceeding”
means any action, charge, complaint, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or arbitration (whether or
not purportedly on behalf of Seller or Company or any of its Subsidiaries) at
law or in equity, or before or by any Governmental Authority, domestic or
foreign (including any Environmental Claims) or other regulatory body or any
arbitrator whether pending or, to the Sellers’ Knowledge, threatened against or
affecting Seller or Company or any of its Subsidiaries or any property of Seller
or Company or any of its Subsidiaries.

     

    “Agreement” has the
meaning set forth in the Preamble.

     

    “Affiliate” shall have
the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.

     

    “Allocation Schedule”
has the meaning set forth in Section 6.9(c)(ii).

     

    “Assigned Contract”
means a Contract that is assigned to the Purchaser pursuant to the Sale
Order.

     

    “Assumed Liabilities”
has the meaning set forth in Section 1.4.

     

    “Assumption
Agreements” means the Assumption Agreements between the Sellers and
Purchaser and its applicable designees in substantially the form attached hereto
as Exhibit
H.

     

    “Auction” has the
meaning set forth in Section 6.4(a).

     

    “Audit” has the
meaning set forth in Section 3.24(e).

     

    “Bankruptcy Cases” has
the meaning set forth in the Recitals.

     

    “Bankruptcy Court” has
the meaning set forth in the Recitals.

     

    “Bankruptcy Code” has
the meaning set forth in the Recitals.

     

    “Bidding Procedures”
means bid procedures in substantially the form attached hereto as Exhibit I to be
approved by the Bankruptcy Court pursuant to the Bidding Procedures
Order.

     

    “Bidding Procedures
Order” means an Order of the Bankruptcy Court in substantially the form
attached hereto as Exhibit
J.

     

    
      
         

      

      
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    “Bill of Sale and Assignment
Agreements” means the Bill of Sale and Assignment Agreements executed by
each of the Sellers in favor of Purchaser and its applicable designees in
substantially the form attached hereto as Exhibit
K.

     

    “Break-Up Fee” means
an amount equal to $3.0 million, which shall,
subject to Bankruptcy Court approval, constitute a super priority administrative
expense under Section 503(b)(1) of the Bankruptcy Code and shall be paid as set
forth in Section 10.2.

     

    “Business” has the
meaning set forth in the Recitals.

     

    “Business Day” means
any day other than a Saturday, a Sunday or a day on which banks are required to
be closed in New York, New York.

     

    “CBA” has the meaning
set forth in Section 6.13(b).

     

    “Closing” has the
meaning set forth in Section 2.1.

     

    “Closing Date” has the
meaning set forth in Section 2.1.

     

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

     

    “Company” has the
meaning set forth in the Preamble.

     

    “Competition Law”
means any Law, excluding the Federal Power Act, that is designed or intended to
prohibit, restrict or regulate antitrust, monopolization, restraint of trade or
competition.

     

    “Contract” means any
agreement, contract, lease, note, mortgage, indenture, loan agreement, franchise
agreement, covenant, employment agreement, consulting or independent contractor
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral.

     

    “Contract Designation
Date” has the meaning set forth in Section 1.2(a).

     

    “Credit Support
Obligations” has the meaning set forth in Section 3.21.

     

    “Cure Costs” has the
meaning set forth in Section 1.6.

     

    “Customer Contracts”
has the meaning set forth in Section 1.1(b)(ix)(2).

     

    “Debtor Relief Laws”
means any applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization or similar laws affecting the rights
or remedies of creditors generally, including, without limitation, the
Bankruptcy Code as in effect from time to time.

    
      
         

      

      
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    “Defect” means a
defect or impurity of any kind, whether in design, manufacture, processing, or
otherwise, including any dangerous propensity associated with any reasonably
foreseeable use of a Product, or the failure to warn of the existence of any
defect, impurity, or dangerous propensity.

     

    “DOJ” has the meaning
set forth in Section 6.2(c).

     

    “Effective Date” means
the date as of which this Agreement was executed as set forth in the first
sentence of this Agreement.

     

    “Employee Benefit
Plan” has the meaning set forth in Section 3.23(a).

     

    “Environmental Claim”
means any investigation, notice, notice of violation, claim, action, suit,
proceeding, demand, request for information, abatement order or other order or
directive by any Governmental Authority or any other Person arising (i) pursuant
to or in connection with any actual or alleged violation of any Environmental
Law, (ii) in connection with or related to any Hazardous Substance, including
the release, spill, discharge, disposal, arrangement for disposal, transport or
recycling of any Hazardous Substance, or (iii) in connection with any actual or
alleged damage, injury, threat or harm to health, safety, natural resources or
the environment.

     

    “Environmental Laws”
shall mean all foreign, federal, state and local laws, regulations, rules and
ordinances relating to pollution or protection of the environment or human
health and safety, including, without limitation, laws relating to releases or
threatened releases of Hazardous Substances into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances and all laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Substances, and all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources.

     

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

     

    “ERISA Affiliate” has
the meaning set forth in Section 3.23(a).

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “Excluded Assets” has
the meaning set forth in Section 1.3.

     

    “Excluded Contracts”
has the meaning set forth in Section 1.3(a).

     

    “Excluded Liabilities”
has the meaning set forth in Section 1.5.

     

    
      
         

      

      
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    “Final Order” means an action taken or
Order issued by the applicable Governmental Authority as to which: (i) no
request for stay of the action or Order is pending, no such stay is in effect,
and, if any deadline for filing any such request is designated by statute or
regulation, it is passed, including any extensions thereof, (ii) no petition for
rehearing or reconsideration of the action or Order, or protest of any kind, is
pending before the Governmental Authority and the time for filing any such
petition or protest is passed, (iii) the Governmental Authority does not have
the action or Order under reconsideration or review on its own motion and the
time for such reconsideration or review has passed, and (iv) the action or Order
is not then under judicial review, there is no notice of appeal or other
application for judicial review pending, and the deadline for filing such notice
of appeal or other application for judicial review has passed, including any
extensions thereof; provided,
however, that a request for a
stay, appeal, motion to rehear or reconsider or petition for certiorari referred
to above shall be disregarded for purposes of such clause if such request for a
stay, appeal, motion to rehear or reconsider or petition for certiorari would
not, individually or in the aggregate, reasonably be expected to result in more
than $500,000 of losses to Purchaser.

     

    “Financial Statements” means,
collectively, (i) the audited combined balance sheet of the Company and its
Subsidiaries as of December 31, 2007 and the audited combined statements of
income and cash flows of the Company and its Subsidiaries for each of the three
years in the period ended December 31, 2007 and (ii) the unaudited combined
balance sheet and unaudited combined statements of income and cash flows of the
Company and its Subsidiaries as of and for the year ended December 31, 2006 and
nine months ended September 30, 2008, including, in each case, any notes
thereto.

     

    “Fiscal Year” means the fiscal year of
Company and its Subsidiaries ending on December 31 of each calendar
year.

     

    “Foreign Plan” means an Employee
Benefit Plan that has been adopted or maintained by the Company, whether
formally or informally, for the benefit of employees, directors or consultants
of any such Company outside of the United States.

     

    “FTC” has the meaning set forth in
Section 6.2(c).

     

    “GAAP” means generally accepted
accounting principles in effect in the United States of America from time to
time.

     

    “Gascos” has the meaning set forth in
Section 3.32.

     

    
      
        
        

      

      
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    “Gasco Acquisitions” has the meaning
set forth in Section 3.32.

     

    “Gas Properties” means (a) Hydrocarbon
Interests, (b) the Properties now or hereafter pooled or unitized with
Hydrocarbon Interests, (c) all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created thereby
(including without limitation all units created under orders, regulations and
rules of any Governmental Authority) which may affect all or any portion of the
Hydrocarbon Interests, (d) all operating agreements, contracts and other
agreements, including production sharing contracts and agreements, which relate
to any of the Hydrocarbon Interests or the production, sale, purchase, exchange
or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests, (e) all Hydrocarbons in and under and which may be produced and saved
or attributable to the Hydrocarbon Interests, including all oil in tanks, and
all rents, issues, profits, proceeds, products, revenues and other incomes from
or attributable to the Hydrocarbon Interests, (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests, and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

     

    “Governmental Authority” means any
federal, state, municipal, national or other government, governmental
department, commission, board, bureau, court, agency or instrumentality or
political subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to any government or any court, in each case whether associated with a state of
the United States, the United States, or a foreign entity or
government.

     

    “Governmental Authorization” means any
approval, consent, license, permit, waiver, or other authorization issued,
granted or otherwise made available by or under the authority of any
Governmental Authority.

     

    “Hazardous Substances” means any
chemicals, materials or substances defined as or included in the definition of
“hazardous substances”, “hazardous wastes”, “hazardous materials”, “hazardous
constituents”, restricted hazardous materials”, “extremely hazardous
substances”, “toxic substances”, “contaminants”, “pollutants”, “toxic
pollutants”, or words of similar meaning and regulatory effect under any
applicable Environmental Law including, without limitation, petroleum and
asbestos.

     

    
      
        
        

      

      
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    “HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the relevant rules and
regulations thereunder.

     

    “Hydrocarbon Interests” means all
rights, titles, interests and estates in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual interests of
whatever nature.

     

    “Improvements” means all buildings,
structures, fixtures and other improvements located on the applicable parcel of
land constituting the Real Property.

     

    “Indebtedness” of any Person means all
obligations of such Person (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures or similar instruments, (iii) for the deferred purchase price
of goods or services (other than trade payables or accruals incurred in the
ordinary course of business), (iv) under capital leases, (v) all liabilities
secured by any Lien on any property, (vi) in the nature of guarantees of the
obligations described in clauses (i) through (v) above of any other Person and
(vii) liabilities for income Taxes relating to periods prior to the
Closing.

     

    “Independent Accounting Firm” has the
meaning set forth in Section 6.9(c)(iii).

     

    “Intellectual Property” has the meaning
set forth in Section 3.30.

     

    “Interests” has the meaning set forth
in the recitals to this Agreement.

     

    “ISRA” means the New Jersey Industrial
Site Recovery Act, N.J.S.A. §§ 13:1K-6, et seq. (“ISRA”), and its implementing
regulations.

     

    “Lease” has the meaning set forth in
Section 3.19(d)(i).

     

    “Lease Assignments” has the meaning set
forth in Section 2.2(a)(xi).

     

    “Leased Real Property” has the meaning
set forth in Section 3.19(a).

     

    “Lien“ means (i) any lien, mortgage,
pledge, assignment, security interest, charge or encumbrance of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, and any lease in the nature thereof) and any
option, trust or other preferential arrangement having the practical effect of
any of the foregoing, and (ii) in the case of securities, any purchase option,
call or similar right of a third party with respect to such
securities.

     

    “Material Adverse Effect” means any
change, event or effect that is materially adverse with respect to the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Company and its Subsidiaries taken as a whole.

     

    “Material Contract” has the meaning set
forth in Section 3.31.

     

    
      
        
        

      

      
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    “New Bankruptcy Cases” has the meaning
set forth in the Recitals.

     

    “NJDEP” means New Jersey Department of
Environmental Protection.

     

    “NPI Agreement” means that certain
Conveyance of Net Profit Interests, dated as of May 31, 2007, by and between the
Company and Purchaser.

     

    “NPI Indebtedness” means all of the
obligations outstanding under the NPI Agreement, including all amounts due and
owing thereunder (at the contractual non-default rate) and all unpaid fees and
expenses related thereto.

     

    “Order” means any order, injunction,
judgment, decree, ruling, writ, assessment or arbitration award of a
Governmental Authority.

     

    “Owned Real Property” has the meaning
set forth in Section 3.19(a).

     

    “Pass-Through Acquired Company” means
any Acquired Company that is a partnership or a disregarded entity under
Treasury Regulations Section 301.7701-3 for federal income tax purposes and all
similar state, local and foreign Tax purposes.

     

    “Permit” has the meaning set forth in
Section 3.26.

     

    “Permitted Liens” means any Lien (i)
with respect to Taxes not yet due and payable or which are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP, (ii) mechanics’, carriers’, workers’,
repairers’, and similar statutory or common law Liens arising or incurred in the
ordinary course of business for amounts which are not yet delinquent and (iii)
Liens reflected in the Financial Statements.

     

    “Person” means an individual,
partnership, corporation, limited liability company, business trust, joint stock
company, estate, trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.

     

    “Petition Date” has the meaning set
forth in the Recitals.

     

    “Petitions” has the meaning set forth
in the Recitals.

     

    “Pre-Closing Periods” has the meaning
set forth in Section 1.5(d).

     

    “Projects” means the facilities listed
on Schedule 3.14(a), the
generators and all related assets.

     

    “Project Documents” means all material
agreements, instruments and documents (and all modifications, amendments,
supplements, extensions and consents relating thereto) now existing or hereafter
entered into relating to the construction, acquisition, installation,
maintenance or operation of, the sale or other disposition of any product
produced or service provided by, the supply of fuel or any other material
product or service to, or the removal of any waste product from, a Project to
which the Company or any of its Subsidiaries is a party.

     

    
      
        
        

      

      
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    “Projections” has the meaning set forth
in Section 3.12.

     

    “Project Land” means with respect to
the Projects, the land on which the Project (including any transmission
facilities owned by any Subsidiary) is located.

     

    “Project Owners” means the owners of
the Projects set forth on Schedule
3.14(a).

     

    “Prudent Engineering and Operating
Practices” means, with respect to each Project, the practices, methods
and acts engaged in or approved by the landfill gas industry or the electric
utility industry, as applicable, that, at a particular time for electrical
generating facilities or landfill gas gathering and production facilities, as
applicable, of similar design and construction as the Project, in the exercise
of reasonable judgment at the time a decision was made, would have been expected
to accomplish the desired result in a timely manner consistent with law,
regulation, reliability, safety, environmental protection and
economy.

     

    “Purchaser” has the meaning set forth
in the Preamble.

     

    “Purchaser Release” has the meaning set
forth in Section 2.2(b)(v).

     

    “Purchaser Termination Notice” has the
meaning set forth in Section 10.1(d).

     

    “Purchaser Transaction Fees“ means all
legal, accounting, tax, consulting and financial advisory and other fees and
expenses (other than Transfer Taxes) incurred, paid, or payable by Purchaser in
connection with the transactions contemplated hereby.

     

    “Qualified Bidder” shall have the
meaning ascribed to it in the Bidding Procedures.

     

    “Real Property” has the meaning set
forth in Section 3.19(a).

     

    “Rejection Costs” has the meaning set
forth in Section 1.2(d).

     

    “Release Consideration” has the meaning
set forth in Section 1.7.

     

    “Remediation Agreement” has the meaning
set forth in the ISRA regulations.

     

    “Sale Hearing” means the hearing
conducted by the Bankruptcy Court to approve the transactions contemplated by
this Agreement.

     

    
      
        
        

      

      
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    “Sale Motion” means the motion, in form
and substance reasonably acceptable to Seller and Purchaser, filed by Sellers
pursuant to, inter alia, sections 363 and 365 of the Bankruptcy Code to obtain
the Sale Order.

     

    “Sale Order” means an Order of the
Bankruptcy Court in substantially the form attached hereto as Exhibit C, pursuant to, inter alia,
sections 363 and 365 of the Bankruptcy Code authorizing and approving, inter
alia, the sale of the Acquired Assets to Purchaser on the terms and conditions
set forth herein.

     

    “SEC” means the Securities and Exchange
Commission.

     

    “Seller” and “Sellers” have the meanings set forth
in the Preamble.

     

    “Sellers’ Knowledge” means the
knowledge of Richard J. Augustine and Steve Laliberty after due
inquiry.

     

    “Seller Release” has the meaning set
forth in Section 2.2(a)(ii).

     

    “Seller Tax Group” has the meaning set
forth in Section 3.24(i).

     

    “Seller Termination Notice” has the
meaning set forth in Section 10.1(e).

     

    “Seller Transaction Fees” means all
legal, accounting, tax, consulting and financial advisory and other fees and
expenses (other than Transfer Taxes) incurred by the Sellers in connection with
the transactions contemplated hereby.

     

    “Selling Sub” and “Selling Subs” have the meanings set
forth in the Preamble.

     

    “Straddle Period” has the meaning set
forth in Section 1.5(d).

     

    “Subsidiary” means, with respect to any
Person, any corporation, partnership, limited liability company, association,
joint venture or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
the Person or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the direction
of the management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof; provided, in determining the percentage
of ownership interests of any Person controlled by another Person, no ownership
interest in the nature of a “qualifying share” of the former Person shall be
deemed to be outstanding.

     

    “Successful Bidder” has the meaning
specified in the Bidding Procedures.

     

    “Supplier Contracts” has the meaning
set forth in Section 1.1(b)(ix)(3).

     

    
      
        
        

      

      
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    “Taxes” means all taxes, assessments,
duties, fees, levies, imposts or other similar charges, including all federal,
state, or foreign income, environmental, franchise, transfer, sales, gross
receipt, use, ad valorem, property, excise, severance, stamp, payroll, social
security, employment, unemployment, withholding, and estimated taxes, and all
additions to tax, penalties, and interest related thereto.

     

    “Tax Group Member” means the Company,
its Subsidiaries, and any other member of a consolidated, combined, unitary or
similar group of corporations for Tax purposes in which the Company or any of
its Subsidiaries is also a member.

     

    “Tax Return” means any tax return,
filing or information statement required to be filed in connection with or with
respect to any Tax.

     

    “Tax Sharing Agreement” has the meaning
set forth in Section 3.24(h).

     

    “Transfer Taxes” has the meaning set
forth in Section 6.9(e).

     

    “Transferred Employees” has the meaning
set forth in Section 6.13(a).

     

    “Transferred Sub” and “Transferred Subs” have the meanings
set forth in the recitals to this Agreement.

     

    “Undisclosed Contract” has the meaning
set forth in Section 1.2(b).

     

    “USEB Administrative Expenses” shall
have the meaning set forth in Section 1.4(h).

     

    “USEB Credit Documents” means that
certain Credit and Guaranty Agreement, dated as of May 31, 2007, by and among
the Company, certain Subsidiaries of the Company, various lenders party thereto,
and Purchaser, as Administrative Agent, Collateral Agent and Lead Arranger, and
all other certificates, documents, instruments or agreements executed and
delivered pursuant thereto.

     

    “USEB Indebtedness” means all of the
Indebtedness outstanding under the USEB Credit Documents, including all interest
due and owing thereunder (at the contractual non-default rate) and all unpaid
fees and expenses related thereto, in each case at the time of
Closing.

     

    “USEO Credit Agreement” has the meaning
set forth in the Recitals.

     

    “USEO Indebtedness” means all of the
Indebtedness outstanding under the USEO Credit Agreement, including all pre- and
post-petition interest due and owing thereunder (at the contractual default
rate) and all unpaid fees and expenses related thereto, in each case at the time
of Closing.

     

    “USEO Lenders” means the financial
institutions from time to time party to the USEO Credit Agreement, together with
their successors and assigns permitted by the USEO Credit
Agreement.

     

    
      
        
        

      

      
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    “USEY” has the meaning set forth in the
recitals to this Agreement.

     

    “USEY Administrative Expenses” shall
have the meaning set forth in Section 1.4(h).

     

    “WARN Act” means the Worker Adjustment
and Retraining Notification Act and any similar foreign, state or local law
relating to plant closings and layoffs.

     

    9.2         Other Definitional
Provisions.

     

    (a)         All
terms defined in this Agreement shall have the defined meanings when used in any
certificates, reports or other documents made or delivered pursuant hereto or
thereto, unless the context otherwise requires.

     

    (b)         Terms
defined in the singular shall have a comparable meaning when used in the plural,
and vice versa.

     

    (c)         All
matters of an accounting nature in connection with this Agreement and the
transactions contemplated hereby shall be determined in accordance with GAAP
applied on a basis consistent with prior periods, where applicable.

     

    (d)         As
used herein, the neuter gender shall also denote the masculine and feminine, and
the masculine gender shall also denote the neuter and feminine, where the
context so permits.

     

    ARTICLE
X

     

    TERMINATION,
AMENDMENT AND WAIVER

     

    10.1       Termination Events.  Anything
contained in this Agreement to the contrary notwithstanding, this Agreement may
be terminated at any time prior to the Closing Date:

     

    (a)         by
mutual written consent of Sellers and Purchaser;

     

    (b)         by
Purchaser if (i) Sellers shall not have initiated the New Bankruptcy Cases
within two days of the Effective Date or any New Bankruptcy Case so initiated
shall have been dismissed, and as of the time of such termination the New
Bankruptcy Cases have not been initiated or any New Bankruptcy Case has been
dismissed, (ii) the Sellers have not filed the Sale Motion within five days of
the Effective Date, (iii) the Bankruptcy Court has not entered the Bidding
Procedures Order within nine days of the Effective Date, (iv) the Auction is not
concluded on or before March 12, 2009, (v) the Bankruptcy Court has not entered
the Sale Order by March 13, 2009, or (vi) the Closing Date has not occurred on
or before June 30, 2009 (unless the failure to consummate is due to a material
breach by Purchaser);

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

     

    (c)         by
Purchaser or Sellers if a Governmental Authority issues a ruling or Order
prohibiting the transactions contemplated hereby, which ruling or Order is final
and non-appealable;

     

    (d)         by
Purchaser in the event of (i) Sellers failure to comply in all material respects
with their respective agreements or covenants contained herein or in the Bidding
Procedures Order or the Sale Order, or (ii) any breach by Sellers of any of
their respective representations or warranties contained herein or in the
Bidding Procedures Order or the Sale Order that does, or would reasonably be
expected to, have a Material Adverse Effect, and, in either case, the failure of
Sellers to cure such breach within fourteen (14) days after receipt of the
Purchaser Termination Notice; provided, however, that Purchaser (x) is not
itself in material breach of any of its representations, warranties or covenants
contained herein or in the Bidding Procedures Order or the Sale Order, (y)
notifies Sellers in writing (the “Purchaser Termination Notice”) of its
intention to exercise its rights under this Agreement as a result of the breach,
and (z) specifies in such Purchaser Termination Notice the representation,
warranty or covenant contained herein or in the Bidding Procedures Order or the
Sale Order of which Sellers are allegedly in breach;

     

    (e)         by
Sellers in the event of (i) any material breach by Purchaser of any of
Purchaser’s agreements contained herein or in the Bidding Procedures Order or
the Sale Order, or (ii) any breach by Purchaser of any of its representations or
warranties contained herein or in the Bidding Procedures Order or the Sale Order
that does, or would reasonably be expected to, have a material adverse effect on
Purchaser’s ability to consummate the transactions contemplated hereby, and, in
either case, the failure of the Purchaser to cure such breach within fourteen
(14) days after receipt of a Seller Termination Notice; provided, however, that the Sellers (x) are not
themselves in material breach of any of their respective representations,
warranties or covenants contained herein or in the Bidding Procedures Order or
the Sale Order, (y) notify Purchaser in writing (the “Seller Termination Notice”) of their
intention to exercise its rights under this Agreement as a result of the breach,
and (z) specify in such Seller Termination Notice the representation, warranty
or covenant contained herein or in the Bidding Procedures Order or the Sale
Order of which Purchaser is allegedly in breach;

     

    (f)         by
Purchaser, if the Sellers consummate another transaction or series of
transactions in which (i) any capital stock or rights, options, warrants,
convertible securities, subscription rights, conversion rights, exchange rights
or other agreements or commitments of any kind that could require the Sellers to
issue or sell any shares of their capital stock (or securities convertible into
or exchangeable for shares of their capital stock) is issued, sold, transferred
or otherwise disposed of or otherwise transferred or (ii) a material portion of
the Sellers’ assets is sold, transferred or otherwise disposed of;
or

     

    (g)         by
Purchaser, if the Sellers withdraw or seek authority to withdraw the motion
seeking approval of the transactions contemplated by this Agreement and the
Bidding Procedures, or announce any stand alone plan of reorganization or
liquidation (or supports any such plan filed by any other party that is
inconsistent with the transaction contemplated by this Agreement and the Bidding
Procedures).

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

    10.2       Effect of Termination.

     

    (a)         In
the event of termination of this Agreement by either party, except as otherwise
provided in this Section 10.2,
all rights and obligations of the parties under this Agreement shall terminate
without any liability of any party to any other party; provided, however, that nothing herein shall
relieve any party from liability for fraud or the intentional breach of this
Agreement prior to such termination or abandonment of the transactions
contemplated by this Agreement. The provisions of Sections 6.6, 10.2, 11.8 and 11.10 shall expressly survive the
expiration or termination of this Agreement.

     

    (b)         Notwithstanding
Section 10.2(a), from and after
the entry of the Bidding Procedures Order, if this Agreement is terminated
pursuant to Sections 10.1(f) or
10.1(g), then Sellers shall pay
to Purchaser the Break-Up Fee in full and complete satisfaction of all of
Sellers’ obligations hereunder.  The payment of the Break-Up Fee shall
be made by wire transfer of immediately available funds promptly (but in any
event within two (2) Business Days) following the occurrence of one of the
termination events set forth in this paragraph, and will be granted super
priority administrative expense status in Sellers’ bankruptcy
cases.

     

    ARTICLE
XI

     

    GENERAL
PROVISIONS

     

    11.1       Notices.  All
notices, requests, demands, claims, and other communications hereunder shall be
in writing and shall be deemed given if delivered by guaranteed overnight
delivery or facsimile transmission if such transmission is confirmed by
delivery, by guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which any party
shall designate in writing to the other parties):

     

     (a)         if
to Purchaser, or to the Company after Closing, to:

     

    Silver
Point Finance, LLC

    2
Greenwich Plaza, 1st
Floor

    Greenwich,
Connecticut 06830

    Attn:
Darren Fredette

    Facsimile:  (203)
542-4358

    

    with a
copy (which shall not constitute notice to Purchaser or to the Company),
to:

     

    Skadden,
Arps, Slate, Meagher & Flom LLP

    333 West
Wacker Drive

    Suite
2100

    Chicago,
Illinois 60606

    Attn: L.
Byron Vance III, Esq.

    Facsimile:  (312)
407-0411

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    if to
Sellers, to:

     

    U.S.
Energy Systems, Inc.

    40 Tower
Lane, 1st
Floor

    Avon,
Connecticut 06001

    Attn:
Richard J. Augustine

    Facsimile:  860-677-6054

     

    with a
copy (which shall not constitute notice to Sellers), to:

     

    Hunton
& Williams LLP

    200 Park
Avenue

    New York,
NY 10166

    Attn:  Peter
S. Partee, Esq.

    Facsimile:  (212)
309-1100

     

    11.2       Entire Agreement.  This
Agreement (including the Schedules and Exhibits attached hereto) and other
documents delivered at the Closing pursuant hereto, contains the entire
understanding of the parties in respect of its subject matters and supersedes
all prior agreements and understanding (oral or written) between or among the
parties with respect to such subject matter.  The Schedules and
Exhibits constitute a part hereof as though set forth in full
above.

     

    11.3       Expenses.  Sellers
shall pay the Seller Transaction Fees.  The Purchaser Transaction Fees
shall increase the balance due to Purchaser under the USEB Credit Documents, and
shall constitute an increase in the Assumed Liabilities hereunder.

     

    11.4       Amendment; Waiver.  This
Agreement may not be modified, amended, supplemented, canceled, or discharged,
except by written instrument executed by all parties.  No failure to
exercise, and no delay in exercising, any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the exercise of any other
right, power or privilege.  No waiver of any breach of any provision
shall be deemed to be a waiver of any preceding or succeeding breach of the same
or any other provision, nor shall any waiver be implied from any course of
dealing between the parties.  No extension of time for performance of
any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.

     

    11.5       Binding Effect; Assignment.  The
rights and obligations of this Agreement shall bind and inure to the benefit of
the parties and their respective successors and assigns.  Nothing
expressed or implied herein shall be construed to give any other person any
legal or equitable rights hereunder. The rights and obligations of this
Agreement may not be assigned or delegated by Sellers without the prior written
consent of Purchaser.  Purchaser may assign its rights and obligations
hereunder to one or more Affiliates of Purchaser and to any financing source for
collateral security purposes.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    11.6       Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument.

     

    11.7       Interpretation.  When
a reference is made in this Agreement to an article, section, paragraph, clause,
schedule or exhibit, such reference shall be deemed to be to this Agreement
unless otherwise indicated.  The headings contained herein and on the
schedules are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement or the
schedules.  Whenever, the words “include,” “includes” or “including”
are used in this Agreement they shall be deemed to be followed by the words
“without limitation.” Time shall be of the essence in this
Agreement.

     

    11.8       Governing Law;
Interpretation.  This
Agreement shall be construed in accordance with and governed for all purposes by
the internal laws of the State of New York, without regard to choice of law
rules (other than Section 5-1401 of the New York General Obligations
Law).

     

    11.9       Severability.  Any
term or provision of this Agreement that is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.  If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to alter the term or provision, to delete
specific words or phrases, or to replace any invalid, void or unenforceable term
or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.

     

    11.10     Jurisdiction.

     

    (a)         The
parties to this Agreement agree that any suit, action or proceeding arising out
of, or with respect to, this Agreement or any judgment entered by any court in
respect thereof shall be brought in the courts of the State of New York or in
the U.S. District Courts located in the State of New York and Purchaser and the
Sellers hereby irrevocably accept the exclusive personal jurisdiction of those
courts for the purpose of any suit, action or proceeding.

     

    (b)         In
addition, Purchaser and Sellers each hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it or he may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any judgment entered by any court in respect
thereof brought in the State of New York or the U.S. District Courts located in
the State of New York, and hereby further irrevocably waives any claim that any
suit, action or proceedings brought in any such court has been brought in an
inconvenient forum.

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    11.11     Arm’s-Length Negotiations.  Each
party herein expressly represents and warrants to all other parties hereto that
(a) before executing this Agreement, said party has fully informed itself of the
terms, contents, conditions, and effects of this Agreement, (b) said party has
relied solely and completely upon its own judgment in executing this Agreement,
(c) said party has had the opportunity to seek and has obtained the advise of
counsel before executing this Agreement, (d) said party has acted voluntarily
and of its own free will in executing this Agreement, (e) said party is not
acting under duress, whether economic or physical, in executing this Agreement,
and (f) this Agreement is the result of arm’s-length negotiations conducted by
and among the parties and their respective counsel.

     

    11.12     Survival of Obligations.  Except
as expressly provided in Section 10.2(a), all representations and warranties
herein and in any documents or certificates delivered in connection with this
Agreement shall not survive the Closing and shall terminate upon the occurrence
thereof.

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    The
parties hereto have caused this Agreement to be duly executed and delivered as
of the day and year first above written.

    

    
      
        
          
            
              
                
                  	
                          U.S. Energy Biogas Corp.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard
      J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  
                    	
                            BIOGAS
      FINANCIAL CORPORATION

                          
	 
      	 
      
	 
      	 
      
	
                            By:

                          	 
      
	
                            Name:  Richard
      J. Augustine

                          
	
                            Title:  President

                          

                  

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  	
                          POWER
      GENERATION (SUFFOLK), INC.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard
      J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  	
                          RESOURCES
      GENERATING SYSTEMS, INC.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard
      J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  	
                          ZFC
      ENERGY, INC.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard
      J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  	
                          ZMG
      INC.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard
      J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  	
                          OCEANSIDE
      ENERGY, INC.

                        
	 
      	 
      
	 
      	 
      
	
                          By:

                        	 
      
	
                          Name:  Richard J. Augustine

                        
	
                          Title:  President

                        

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

     

    
      	
              SUFFOLK
      BIOGAS, INC.

            
	 
      	 
      
	
              By:

            	 
      
	
              Name:  Richard
      J. Augustine

            
	
              Title:  President

            

    

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  USEB
      ASSIGNEE, LLC

                
	 
      	 
      
	
                  By:

                	 
      
	
                  Name:  Richard
      J. Augustine

                
	
                  Title:  President

                

        

      

    

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    SILVER
      POINT FINANCE LLC

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name:

                  
	
                    Title:

                  

          

        

      

    

    
      
         

      

      
        76

        
          

        

      

      
         

      

    

    Exhibit
B-1

    RELEASE AND
WAIVER

     

    KNOW ALL PERSONS THAT U.S. Energy
Systems, Inc., a Delaware corporation (the “Parent”) and U.S.
Energy Biogas, Inc., a Delaware corporation (the “Company”), on behalf
of themselves individually and on behalf of their successors, assigns, heirs,
legatees and entities over which they, directly or indirectly, exercise control
(collectively, the “Releasing Parties”),
in consideration of the consummation of the transactions contemplated by that
certain Asset Purchase Agreement, dated as of January 23, 2009 (the “Agreement”), by and
among Silver Point Finance, LLC (the “Purchaser”), Seller
and the other parties thereto, the receipt of the Release Consideration (as
defined in the Agreement), and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does hereby forever
release and discharge Purchaser and the Acquired Companies (as defined in the
Agreement), and their respective shareholders, parent companies, subsidiaries,
directors, officers, legal representatives, successors and assigns, of and from
any and all debts, demands, actions, causes of action, suits, proceedings,
agreements, contracts, judgments, damages, accounts, reckonings, executions,
claims and liabilities whatsoever of every name and nature, whether known or
unknown, whether or not well founded in fact or in law, and whether in law or in
equity or otherwise, whether direct or consequential, compensatory, exemplary,
liquidated or unliquidated (collectively, “Claims”), which any
of the Releasing Parties ever had, now has, or which their respective legal
representatives, successors, assigns, heirs, executors or administrators can,
shall or may have for or by reason of any matter, cause or anything whatsoever,
from the beginning of the world to the date of this Release and Waiver.
Notwithstanding the generality of the foregoing, nothing contained herein shall
release any party from any Claim relating to the breach by such party of its
obligations set forth in the Agreement.

     

    Each of the Releasing Parties hereby
declares that the terms of this Release and Waiver have been read and fully
understood by such Releasing Parties and that this is a full and final release
and waiver of all claims of every nature and kind whatsoever, including any or
all unknown or unanticipated injuries, damages or losses from the beginning of
time to the date hereof, except as otherwise expressly provided
above.  Each of the Releasing Parties hereby warrants and represents
that it is the sole owner of any and all claims, demands, causes of action,
obligations, rights and/or liabilities released herein, and that no other party
has any right, title, or interest whatsoever in such claims, demands,
obligations, rights and/or liabilities as released herein.  None of
the Releasing Parties has relied upon any representation of the parties released
hereby or their respective attorneys, agents or other representatives concerning
the nature or extent of the obligations and liabilities, if any,
released.  Each of the Releasing Parties has had the advice of counsel
in connection with the matters referred to herein, and has executed and
delivered this Release and Waiver freely and knowingly after having received and
duly considered such advice and counsel.

    
      
         

      

      
        77

        
          

        

      

      
         

      

    

     

    Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in the
Agreement.

     

    [Signature page
follows]

    
      
         

      

      
        78

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the undersigned
hereunto sets his hand this ___ day of ___________, 2009.

     

    
      
        
          
            
              	
                      U.S.
      ENERGY SYSTEMS, INC.

                    
	 
      
	 
      
	
                      By:

                    
	
                      Its:

                    
	 
      
	
                      U.S.
      ENERGY BIOGAS, INC.

                    
	 
      
	 
      
	
                      By:

                    
	
                      Its:

                    

            

          

        

      

    

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

    Exhibit
B-2

     

    RELEASE AND
WAIVER

     

    KNOW ALL PERSONS THAT Silver Point
Finance, LLC, a Delaware limited liability company (the “Purchaser”), on
behalf of itself individually and on behalf of the undersigned’s successors,
assigns, heirs, legatees and entities over which it directly or indirectly,
exercises control (collectively, the “Releasing Parties”),
in consideration of the consummation of the transactions contemplated by that
certain Asset Purchase Agreement, dated as of January 23, 2009 (the “Agreement”), by and
among the Purchaser, U.S. Energy Biogas, Inc., a Delaware corporation (the
“Company”), and the other parties thereto, the receipt of the Acquired Assets,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, does hereby forever release and discharge the
Company and its shareholders, parent companies, subsidiaries, directors,
officers, legal representatives, successors and assigns, of and from any and all
debts, demands, actions, causes of action, suits, proceedings, agreements,
contracts, judgments, damages, accounts, reckonings, executions, claims and
liabilities whatsoever of every name and nature relating to (A) the NPI
Indebtedness, (B) the USEB Credit Documents, and (C) the USEO Credit Agreement,
whether known or unknown, whether or not well founded in fact or in law, and
whether in law or in equity or otherwise, whether direct or consequential,
compensatory, exemplary, liquidated or unliquidated (collectively, “Claims”), which any
of the Releasing Parties ever had, now has, or which their respective legal
representatives, successors, assigns, heirs, executors or administrators can,
shall or may have for or by reason of any matter, cause or anything whatsoever,
from the beginning of the world to the date of this Release and Waiver.
Notwithstanding the generality of the foregoing, nothing contained herein shall
release any party from (i) any Claim relating to the breach by such party of its
obligations set forth in the Agreement,  (ii) the obligations of the
Company and its subsidiaries under the Agreement to be performed after the date
hereof and (iii) any Claim relating to any other indebtedness or similar
obligation (other than as expressly set forth in clauses (A), (B) or (C)
above).

     

    Each of the Releasing Parties hereby
declares that the terms of this Release and Waiver have been read and fully
understood by such Releasing Parties and that this is a full and final release
and waiver of all claims of every nature and kind whatsoever, including any or
all unknown or unanticipated injuries, damages or losses from the beginning of
time to the date hereof, except as otherwise expressly provided above. Each of
the Releasing Parties hereby warrants and represents that it is the sole owner
of any and all claims, demands, causes of action, obligations, rights and/or
liabilities released herein, and that no other party has any right, title, or
interest whatsoever in such claims, demands, obligations, rights and/or
liabilities as released herein. None of the Releasing Parties has relied upon
any representation of the parties released hereby or their respective attorneys,
agents or other representatives concerning the nature or extent of the
obligations and liabilities, if any, released.  Each of the Releasing
Parties has had the advice of counsel in connection with the matters referred to
herein, and has executed and delivered this Release and Waiver freely and
knowingly after having received and duly considered such advice and
counsel.

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

     

    Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in the
Agreement.

     

    [Signature page
follows]

    
      
         

      

      
        81

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the undersigned
hereunto sets his hand this ___ day of ___________, 2009.

     

    
      
        
          	
                  SILVER
      POINT FINANCE, LLC

                
	 
      
	 
      
	
                  By:

                
	
                  Its:

                

        

      

    

    
      
         

      

      
        82

        
          

        

      

      
         

      

    

    

    Exhibit
E

    

    ASSIGNMENT AND ASSUMPTION OF
LEASE AGREEMENT

    

    

    This
ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT (this “Assignment”) is made as of the
[___] day of [_________], 2009 by and between _____________________, a [Delaware corporation]
(“Assignor”) and [SILVER
POINT FINANCE, LLC], a Delaware limited liability company (“Assignee”).

     

    RECITALS

    

    WHEREAS,
[Assignor, certain subsidiaries of Assignor] and Assignee have entered into that
certain Asset Purchase Agreement, dated as of January 23, 2009 (together with
the exhibits and schedules thereto, the “Purchase Agreement”);
capitalized terms used but not defined herein shall have the meanings assigned
to them in the Purchase Agreement;

     

    WHEREAS,
pursuant to the Purchase Agreement, Assignor has agreed to sell, transfer,
convey, assign and deliver, to Assignee, and Assignee has agreed to purchase,
acquire, accept and take assignment of, all of the right, title and interest of
Assignor in and to the lease agreements listed on Schedule 1 attached
hereto (the “Leases”);

     

    WHEREAS,
pursuant to the Purchase Agreement, and to the extent permitted by law, Assignee
has agreed to assume, and thereafter pay, perform and discharge when due, those
obligations of Assignor arising out of the Leases after the Closing;
and

     

    WHEREAS,
this Assignment as duly executed by Assignor and Assignee is being delivered as
of the date hereof by each party hereto to the other party.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth in the Purchase Agreement and hereinafter set forth, the
receipt and sufficiency of which is hereby acknowledged, the Assignor and
Assignee, intending to be legally bound, hereby agree as follows:

     

    AGREEMENT

     

    1.           Assignment and Assumption of
Lease.  Effective as of the Closing, for value received on and
subject to the terms and conditions of the Purchase Agreement, (a) Assignor
hereby sells, transfers, conveys, assigns and delivers to Assignee, and Assignee
hereby purchases, acquires, accepts and takes assignment of, all of Assignor’s
right, title and interest in and to the Lease; and (b) Assignee hereby assumes
and agrees, from and after the Closing, to pay, perform and discharge when due
all of the obligations of Assignor arising under the Lease.

    
      
         

      

      
        83

        
          

        

      

      
         

      

    

    2.           No Liabilities
Assumed.  Assignee does not pursuant to this Assignment assume,
agree to pay, perform or discharge when due any (a) obligation, covenant or
undertaking of Assignor arising out of, relating to, or in any way resulting
from the Lease prior to Closing, or (b) other obligation or liability of
Assignor, whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, or whether due or to become due, other than the obligations of
Assignor arising under the Lease after the Closing.

     

    3.           Entire
Agreement.  This Assignment is executed and delivered pursuant
to the Purchase Agreement.  The Purchase Agreement and this Assignment
set forth the entire agreement and understanding of the parties with respect to
the matters contemplated by the Purchase Agreement and this
Assignment.  Nothing in this Assignment shall, or shall be deemed to,
defeat, limit, alter, impair, enhance or enlarge any representation, warranty,
right, obligation, claim or remedy created by the Purchase
Agreement.  In the event of any conflict between this Assignment and
the Purchase Agreement, the Purchase Agreement shall control.

     

    4.           Parties
Bound.  This Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee and their respective successors and permitted
assigns.

     

    5.           Further
Assurances.  At the request and the sole expense of the
requesting party, Assignor or Assignee, as applicable, shall execute and
deliver, or cause to be executed and delivered, such documents as Assignor or
Assignee, as applicable, or their respective counsel, may reasonably request to
further effectuate or evidence the transactions set forth in this
Assignment.

     

    6.           Applicable
Law.  This Assignment shall be construed, performed and
enforced in accordance with, and governed by, the laws of the State of Delaware
(without giving effect to the principles of conflicts of laws thereof), except
to the extent that the laws of such State are superseded by applicable federal
law.

     

    7.           Counterparts.  This
Assignment may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together will constitute a single
instrument.

     

    [SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
        84

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have caused this Assignment to be duly executed and delivered as of the date
first above written.

    

    
      
        
          
            
              
                
                  
                    	
                            ASSIGNOR:

                          
	 
      
	
                            [___________________________]

                          
	 
      	 
      
	
                            By:

                          	 
      
	 
      	
                            Name:

                          
	 
      	
                            Title:

                          
	 
      	 
      
	
                            ASSIGNEE:

                          
	 
      	 
      
	
                            [SILVER
      POINT FINANCE, LLC]

                          
	 
      	 
      
	
                            By:

                          	 
      
	 
      	
                            Name:

                          
	 
      	
                            Title:

                          

                  

                

              

            

          

        

      

    

    
      
         

      

      
        85

        
          

        

      

      
         

      

    

    Exhibit
H

     

    ASSUMPTION
AGREEMENT

     

    THIS
ASSUMPTION AGREEMENT made as of __________, 2009 by [applicable designee of
Silver Point Finance, LLC] (“Obligor”), in favor
of [Applicable USEB Seller] (a “Seller”).  Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
such terms in the Agreement.

     

    WITNESSETH:

     

    WHEREAS,
Obligor and the Seller are parties to an Asset Purchase Agreement, dated as of
January 23, 2009 (the “Agreement”), relating
to the sale of certain assets by the Sellers to Obligor.  The Obligor
has agreed to assume from the Sellers the Assumed Liabilities as set forth in
the Agreement; and

     

    WHEREAS,
the parties desire to carry out the intent and purpose of the Agreement by
Obligor’s execution and delivery to the Sellers of this instrument evidencing
the assumption of certain liabilities and obligations of the
Sellers.

     

    NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     

    Section
1.  As of the date hereof, Obligor, pursuant to Section 1.4 of the
Agreement, hereby assumes and agrees to pay, perform or otherwise discharge the
Assumed Liabilities, in accordance with their terms, as set forth in Section 1.4 of the
Acquisition Agreement.

     

    Section
2.  Obligor hereby covenants that from time to time after
delivery of this Assumption Agreement at the request of the Sellers and without
further cost or expense to the Sellers, unless otherwise provided in the
Agreement, Obligor will execute and deliver such other instruments which the
Sellers may reasonably request in order to more effectively consummate the
assumption of the Assumed Liabilities contemplated by the
Agreement.

     

    Section
3.  Nothing in this instrument, express or implied, is intended
or shall be construed to confer upon, or give to, any person, firm or
corporation, other than the Sellers and their successors and assigns, any remedy
or claim under or by reason of this instrument or any terms, covenants or
condition hereof, and all the terms, covenants and conditions, promises and
agreements in this instrument shall be for the sole and exclusive benefit of the
Sellers and their successors and assigns.

     

    Section
4.  Notwithstanding anything to the contrary contained herein
or in the Agreement, the assumption by Obligor of the Assumed Liabilities as set
forth above shall not be construed to defeat, impair or limit in any way (i) any
rights or remedies of Obligor against third parties to contest or dispute the
validity or amount of any of such Assumed Liabilities or (ii) any other rights
or remedies of the Obligor under the Agreement.

    
      
         

      

      
        86

        
          

        

      

      
         

      

    

     

    Section
5.  Nothing contained herein shall release the Company or the
Purchaser from any of their respective duties or obligations under the Agreement
or in any way diminish, limit or modify any of the representations, warranties,
indemnities, covenants or agreements of such parties set forth in the
Agreement.

     

    Section
6.  This Assumption Agreement shall be construed in accordance
with and governed for all purposes by the internal laws of the State of New
York, without regard to choice of law rules (other than Section 5-1401 of the
New York General Obligations Law).  The Obligor and the Sellers
irrevocably and unconditionally consent to submit to the jurisdiction of the
Bankruptcy Court for any litigation arising out of or relating to this
Assumption Agreement and the transactions contemplated hereby (and agree not to
commence any litigation relating thereto except in the Bankruptcy Court),
without giving effect to the conflicts-of-laws provisions thereof.

     

    Section
7.  This Assumption Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.

     

    Section
8.  This Assumption Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same original.

     

    [Signature page
follows]

    
      
         

      

      
        87

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Assumption Agreement has been duly executed and delivered
by the duly respective authorized officers of each of Obligor and the Sellers as
of the date first above written.

    

    
      
        
          
            	
                    [DESIGNEE
      OF PURCHASER]

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name:

                  
	
                    Title:

                  
	 
      	 
      
	
                    [APPLICABLE
      SELLER]

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name:

                  
	
                    Title:

                  

          

        

      

    

    
      
         

      

      
        88

        
          

        

      

      
         

      

    

    Exhibit
K

     

    BILL OF SALE AND ASSIGNMENT
AGREEMENT

     

    THIS BILL
OF SALE AND ASSIGNMENT AGREEMENT, made, executed and delivered this ___ day of
____________, 2009, by U.S. Energy Biogas Corp., a Delaware corporation (the
“Company”), and
[Applicable USEB Seller], a subsidiary of the Company (the “Selling Sub” and
together with the Company, the “Sellers”) to [Silver
Point Finance, LLC], a Delaware limited liability company (the “Purchaser”).  Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
such terms in the Agreement.

     

    WITNESSETH:

     

    WHEREAS,
the Company, the Selling Sub, other subsidiaries of the Company and the
Purchaser have entered into an Asset Purchase Agreement, dated as of January 23,
2009 (the “Agreement”), pursuant
to which the Company has agreed to sell, assign, transfer, convey and deliver,
or to cause to be sold, assigned, conveyed or delivered, and the Purchaser has
agreed to purchase and accept, the Acquired Assets; and

     

    WHEREAS,
the parties desire to carry out the intent and purpose of the Agreement by the
Sellers’ execution and delivery to the Purchaser of this instrument evidencing
the vesting in the Purchaser of the Acquired Assets owned by the
Sellers.

     

    NOW,
THEREFORE, in consideration of the premises and of other valuable consideration
to the Company paid by the Purchaser, at or before the execution and delivery
hereof, the receipt and sufficiency of which by the Company is hereby
acknowledged, the Sellers, by this Bill of Sale and Assignment Agreement, do
convey, grant, bargain, sell, transfer, set over, assign, alien, remise,
release, deliver and confirm unto the Purchaser, its successors and assigns
forever, all of the Sellers’ right, titles and interests in and to the Acquired
Assets (which do not include the Excluded Assets).

     

    TO HAVE
AND HOLD all of the Acquired Assets unto the Purchaser, its successors and
assigns to its and their own use and behoof forever, subject to the provisions
of the Agreement.

     

    Section
1.  Each of the Sellers hereby constitutes and appoints the
Purchaser, its successors and assigns, as such true and lawful attorney, with
full power of substitution, in such Seller’s name and stead, but on behalf and
for the benefit of the Purchaser, its successors and assigns, to demand and
receive any and all of the Acquired Assets, and to give receipts and releases
for and in respect of the same, and any part thereof, and from time to time to
institute and prosecute in such Seller’s name, or otherwise, for the benefit of
the Purchaser, its successors and assigns, any and all proceedings at law, in
equity or otherwise, which the Purchaser, its successors or assigns, may deem
proper for the collection or reduction to possession of any of the Acquired
Assets or for the collection and enforcement of any claim or right of any kind
hereby sold, conveyed, transferred or  assigned, or intended so to be,
and to do all acts and things in relation to the Acquired Assets which the
Purchaser, its successors or assigns shall deem desirable, each of the Sellers
hereby declaring that the foregoing powers are coupled with an interest and are
and shall be irrevocable by such Seller or by its dissolution or in any other
manner or for any reason whatsoever.

    
      
         

      

      
        89

        
          

        

      

      
         

      

    

     

    Section
2.  Each of the Sellers hereby covenants that, from time to
time after the delivery of this instrument, at the Purchaser’s request and
without further consideration, the Sellers will do, execute, acknowledge, and
deliver, or will cause to be done, executed, acknowledged and delivered, all and
every such further acts, deeds, conveyances, transfers, assignments, powers of
attorney and assurances as reasonably may be required more effectively to
convey, transfer to and vest in the Purchaser any of the Acquired
Assets

     

    Section
3.  Nothing in this instrument, express or implied, is intended
or shall be construed to confer upon, or give to, any Person other than the
Purchaser and its successors and assigns, any remedy or claim under or by reason
of this instrument or any terms, covenants or condition hereof, and all the
terms, covenants and conditions, promises and agreements contained in this
instrument shall be for the sole and exclusive benefit of the Purchaser and its
successors and assigns.

     

    Section
4.  This instrument shall be binding upon the Sellers and the
Purchaser, their respective successors and assigns, effective immediately upon
its delivery to Purchaser.

     

    Section
5.  Nothing contained in this Bill of Sale and Assignment
Agreement shall in any way supersede, modify, replace, amend, change rescind,
expand, exceed or enlarge or in any way affect the provisions, including the
warranties, covenants, agreements, conditions, or in general, any rights and
remedies, and any of the obligations of the Company or the Purchaser set forth
in the Agreement.

     

    Section
6.  This Bill of Sale and Assignment Agreement shall be
construed in accordance with and governed for all purposes by the internal laws
of the State of New York, without regard to choice of law rules (other than
Section 5-1401 of the New York General Obligations Law). The Sellers and the
Purchaser irrevocably and unconditionally consent to submit to the jurisdiction
of the Bankruptcy Court for any litigation arising out of or relating to this
Bill of Sale and Assignment Agreement and the transactions contemplated hereby
(and agree not to commence any litigation relating thereto except in the
Bankruptcy Court).

     

    Section
7.  No amendment or modification of this Bill of Sale and
Assignment Agreement shall be effective unless it is set forth in writing and
signed by each of the parties hereto.

     

    Section
8.  This Bill of Sale and Assignment Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same original.

     

    [Signature
page follows]

    
      
         

      

      
        90

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, each of the Sellers and the Purchaser have caused this Bill of
Sale and Assignment Agreement to be signed by their respective duly authorized
officer as of the date set forth above.

    

    
      
        
          
            
              	
                      U.S.
      ENERGY BIOGAS CORP.

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    
	
                      Title:

                    
	 
      	 
      
	
                      [APPLICABLE
      USEB SUBSIDIARY]

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    
	
                      Title:

                    
	 
      	 
      
	
                      [SILVER
      POINT FINANCE, LLC]

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    
	
                      Title:

                    

            

          

        

      

    

    
      
         

      

      
        91EXECUTION
COPY

    

    NOTE PURCHASE
AGREEMENT

    

    This Note
Purchase Agreement (this “Agreement”)
made as of January 27, 2009 by and between Plastinum Polymer Technologies
Corp., a Delaware corporation (the “Company”),
and Richard von
Tscharner, a natural person (the “Investor”).

    

    In
consideration of the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:

    

    1.    Purchase and Sale of
Securities.

     

    1.1 Sale and
Issuance of Note; Closing.  Subject to the
terms and conditions of this Agreement and in reliance on the representations
and warranties set forth or referred to herein, the Company hereby agrees to
sell and issue to the Investor, and the Investor hereby agrees to purchase from
the Company, at the Closing (as hereinafter defined), (i) a Convertible
Promissory Note in the principal amount of $1,000,000 (the “Purchase
Price”), such Convertible Promissory Note to be in the form attached
hereto as Exhibit A
with a maturity date of January __, 2012 (the "Note").  The
Note, including accrued but unpaid interest thereon, will be convertible into
shares of Common Stock of the Company, par value $.01 per share (“Common
Stock”; the “Shares”),
at an initial conversion price of $0.22 per Share, subject to
adjustment as provided therein.

     

    1.2 Closing.  The closing of
the purchase, sale and issuance of the Note shall take place at the offices of
Westerman Ball Ederer Miller & Sharfstein, LLP (“WBEMS”),
170 Old Country Road, Fourth Floor, Mineola, New York 11501, simultaneous with
the execution hereof (the "Closing").  At
the Closing, the Company shall deliver to the Investor the duly executed Note
against delivery by the Investor to the Company of the Purchase Price by wire
transfer of the amount thereof to the Company’s account or by such other method
agreed to between the Investor and the Company.

     

    1.3 Defined
Terms Used in this Agreement.  In addition to
the terms defined elsewhere in this Agreement, the following terms used in this
Agreement shall be construed to have the meanings set forth below.

     

    “Approvals”
means, collectively, all actions, approvals, consents, waivers, exemptions,
Orders, authorizations, registrations, declarations, filings and
recordings.

    

    “Business
or Condition” of the Company means the business, operations, assets,
properties, earnings, prospects or condition (financial or other) of the
Company.

    

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Governmental
Body” means any federal, state, municipal, local or other governmental
department, commission, board, bureau, agency, instrumentality, political
subdivision or taxing authority, of any country.

    

    “Material
Adverse Change; Material Adverse Effect; Materially Adverse” in, on or
with respect to, the Company, shall mean a material adverse change in the
Company’s Business or Condition, a material adverse effect on the Company’s
Business or Condition or an event which is materially adverse to the Company's
Business or Condition.

    

    “Order”
means any order, writ, injunction, decree, judgment, award, determination,
direction or demand by a Governmental Body, arbitrator or court.

    

    “Person”
means any individual, corporation, association, partnership, joint venture,
limited liability company, trust or estate, organization, business, government
or agency or political subdivision thereof, or any other entity.

    

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

     

    2.    Representations
and Warranties of the Company.  The Company
hereby represents and warrants to the Investor that:

     

    2.1 Organization,
Good Standing and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as presently conducted or proposed to be
conducted.  The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a Material Adverse Effect.

     

    2.2 Authorization.  All company
action on the part of the Company necessary for the authorization, execution and
delivery of this Agreement and the authorization, issuance and delivery of the
Note has been taken and this Agreement, when executed and delivered by the
Company and assuming due execution and delivery by the Investor, shall
constitute the valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally, and as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.

     

    2.3 Valid
Issuance of Note.  The Note when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under applicable state and federal securities laws.

     

    2.4           Consents
and Approvals.  No Approval by,
from or with and no other action in respect of, any Governmental Body or any
other Person (including any trustee or holder of any indebtedness, securities or
other obligations of the Company) is required (a) for or in
connection with the valid execution and/or delivery by the Company of
or the performance by the Company of its obligations under this Agreement
or the consummation by the Company of the transactions contemplated hereby,
including the offer, issuance, sale and delivery by the Company of the Note, or
(b) as a
condition to the legality, validity or enforceability as against the Company of
this Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.    Representations
and Warranties of the Investor.  The Investor
hereby represents and warrants to the Company that:

     

    3.1 Authorization.  The Investor has
full power and authority to enter into this Agreement.  This
Agreement, when executed and delivered by the Investor, assuming due execution
and delivery by the other parties hereto, will constitute a valid and legally
binding obligation of the Investor, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and any other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of a specific performance, injunctive relief, or
other equitable remedies.

     

    3.2 Restricted
Security.  The Investor
understands that the Note is a “restricted security” under applicable U.S.
federal and state securities laws and that, pursuant to these laws, the Investor
must hold the Note indefinitely unless it is registered with the Securities and
Exchange Commission (“SEC”)
and qualified by state authorities, or an exemption from such registration and
qualification requirements is available.

     

    3.3 Foreign
Investor.  If the Investor
is not a United States person (as defined by Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended), the Investor hereby represents that
he has satisfied himself as to the full observance of the laws of his
jurisdiction in connection with this Agreement and the purchase of the Note and
such purchase will not violate any applicable securities or other laws of the
Investor’s jurisdiction.

     

    4.    Registration. The Company shall
prepare and file with the SEC a Form S-1 registration statement under the
Securities Act covering the resale of the number of shares of Common Stock
issuable upon conversion of the Note on or prior to April 30, 2009 and
shall use commercially reasonable efforts to cause the registration statement to
be declared effective under the Securities Act as promptly as possible after the
filing thereof.  In addition, the Company shall prepare and file with
the SEC another registration statement under the Securities Act covering
the resale of any additional shares of Common Stock which may be issuable under
the Note; provided, however, that the
Company shall not be required to file such additional registration statement if
such additional shares of Common Stock could otherwise be sold freely under Rule
144 under the Securities Act upon issuance.  

     

    5.    Miscellaneous.

     

    5.1           Use of
Proceeds.  The parties agree
that the net proceeds from the issuance of the Notes will be used as set forth
on Schedule
5.1.

    

    5.2           Successors
and Assigns.  This Agreement
may not be assigned by the Company without the prior written consent of the
Investor.  The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    5.3           Governing
Law; Forum.  This Agreement
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of law.  Each of the parties hereto submits to the personal
jurisdiction of and each agrees that all proceedings relating hereto shall be
brought in federal or state courts located within the State of New
York.

     

    5.4           Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.

     

    5.5           Titles
and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

     

    5.6           Notices.  Any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by fax (upon customary confirmation of receipt) addressed to the party to
be notified at such party’s address as set forth on the signature page hereto,
or as subsequently modified by written notice, and if to the Company, with a
copy to Westerman Ball Ederer Miller and Sharfstein, LLP, 170 Old Country
Road, Suite 400, Mineola, New York 11501, Attn: Alan C. Ederer,
Esq.

     

    5.7           Confidentiality.  This Agreement is
confidential, and none of its provisions or terms shall be disclosed to anyone
who is not an Investor or an officer or director of the Company or their agents,
advisers or legal counsel, unless required by law.

     

    5.8           Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof, and any and all other written or oral agreements relating
to the subject matter hereof existing between the parties hereto are expressly
canceled.  This Agreement may be modified or amended only with the
written consent of all of the parties hereto.

     

    

    [Remainder of Page
Intentionally Left Blank]

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    IN
WITNESS WHEREOF, the parties have duly executed this Note Purchase Agreement as
of the date first written above.

     

     

    
      	 	PLASTINUM
      POLYMER TECHNOLOGIES CORP.
	 	 
	 	

              By: 
      /s/ Jacques
      Mot                           
      

              Name: 
      J. Mot

              Title:   
      CEO

            
	 	 
	 	

              Address:

              10100
      Santa Monica Blvd., Suite 300

              Los
      Angeles, CA 90067

            
	 	 
	 	

              /s/ Richard von
      Tscharner                

              Richard
      von Tscharner

            
	 	 
	 	

              Address:

              87
      Route de Suisse

              Coppet
      1296

              Switzerland

            
	 	 

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE
5.1

    

    USE OF
PROCEEDS

    

    The net
proceeds from the issuance of the Note will be used for general working capital
purposes.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

    

    FORM OF CONVERTIBLE
NOTE

    

    NEITHER
THIS NOTE NOR ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE. NEITHER THIS NOTE NOR ANY SECURITIES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THIS NOTE OR SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE UNDER SUCH ACT
UNLESS SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM
UNDER THE ACT.

    

    

    PLASTINUM
POLYMER TECHNOLOGIES CORP.

    

    Convertible
Promissory Note

     

    
      
        
          	$1,000,000.00	
                  January 27, 2009

                

        

      

    

     

    

    FOR VALUE
RECEIVED, the undersigned Plastinum Polymer Technologies
Corp., a Delaware corporation (referred to herein as "Borrower"
or the "Company"),
promises to pay to the order of Richard von Tscharner, his
successors or permitted assigns (the "Lender"),
the principal sum of One Million Dollars ($1,000,000.00) (the "Principal
Amount") on January 27, 2012 (the "Maturity
Date"), together with interest on the unpaid Principal Amount of this
Note at a rate equal to ten percent (10%) per annum calculated on the basis of a
360 day year (the "Interest
Rate").  Interest accrued hereunder shall be due and payable
annually on the first and second anniversaries of the date hereof and on the
Maturity Date.

    

               Principal
and interest payments due hereunder are payable in lawful money of the United
States of America to the Lender at the address set forth in that certain Note
Purchase Agreement between the Borrower and the Investor identified therein of
even date herewith, as amended from time to time (the "Note
Purchase Agreement") and pursuant to which this Note is
issued.  The terms and conditions of the Note Purchase Agreement and
all other loan documents executed in connection therewith ("Loan
Documents") are incorporated by reference herein and made a part
hereof.  All capitalized terms used but not otherwise defined herein
shall have the respective meanings as set forth in the Note Purchase
Agreement.

    

               Section
1.  Conversion.

    

    (a)           At
any time from the original issue date hereof through the date that this Note is
paid in full, Lender shall have the right, in its sole discretion, to convert
the then outstanding Principal Amount of this Note (the “Convertible
Principal Balance”) plus accrued but unpaid interest under this Note, in
whole or in part, into Shares at an initial conversion price equal to $0.22 per Share, subject to
adjustment as provided in Section 2 herein (the “Conversion
Price”).  Any accrued but unpaid interest on any portion of the
Note that is converted into Shares wherein such interest is not converted into
Shares shall be paid by the Company at the time of such Conversion.

    

    
      
        
        

      

      
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    (b)           Lender
may convert this Note at the then applicable Conversion Price by the surrender
of this Note (properly endorsed) to the Company at the principal office of the
Borrower, together with the form of Notice of Conversion attached hereto as
Annex
A (a “Notice of
Conversion”) duly completed, dated and executed, specifying therein the
principal amount of this Note and/or outstanding interest to be
converted.  The “Conversion Date” shall be the date that such Notice
of Conversion and this Note is duly provided to Borrower hereunder (or, at
Lender's option, the next interest payment date with respect to Lender's
conversion of any scheduled interest payment).  In the event that the
Lender shall specify a name or names other than that of the Lender to receive
any of the Shares issuable upon such exercise of the conversion option, the
Notice of Conversion also shall be accompanied by payment of all transfer taxes
payable upon the issuance of the Shares to such specified
person(s).

    

    (c)           On
the date of receipt by the Company of the duly completed, dated and executed
Notice of Conversion, this Note and applicable transfer taxes, if any, all in
accordance with Section 1(b) with respect to a conversion of any portion of this
Note, the Lender (and any person(s) receiving Shares in lieu of the Lender)
shall be deemed to have become the holder of record for all purposes of the
Shares to which such valid conversion relates.

    

    (d)           As
soon as practicable, but not in excess of five business days, after the valid
conversion of any portion of this Note, the Company, at the Company’s expense
(including the payment by the Company of any applicable issuance and similar
taxes, but excluding the transfer taxes referred to in Section 1(b)), will cause
to be issued in the name of and delivered to the Lender (and/or such other
person(s) identified in the Notice of Conversion with respect to such
conversion), certificates evidencing the number of duly authorized, validly
issued, fully paid and non-assessable Shares to which the Lender (and/or such
other person(s) identified in such Notice of Conversion), shall be entitled to
receive upon the conversion, as adjusted to reflect the effects, if any, of the
anti-dilution provisions of Section 2, such certificates to be in such
reasonable denominations as Lender may request when delivering the Notice of
Conversion.

    

    (e)           If
less than the entire Convertible Principal Balance of this Note is being
converted, the Company shall execute and deliver to the Lender a new replacement
Note (dated as of the date hereof) evidencing a principal amount which is the
percentage of the original Principal Amount equal to the portion of the
Convertible Principal Balance that has not been so converted.

    

    Section 2.  Conversion Price
Adjustment.

    

    The
initial Conversion Price as stated above shall be subject to adjustment from
time to time and such Conversion Price as adjusted shall likewise be subject to
further adjustment, all as hereinafter set forth.

    

    
      
        
        

      

      
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    (a)           If
the Company shall effect a subdivision of the Common Stock, the Conversion Price
then in effect immediately before such subdivision shall be proportionately
decreased.  If the Company shall combine the outstanding Common Stock,
the Conversion Price then in effect immediately before the combination shall be
proportionately increased.  If the Company shall make or issue a
dividend or other distribution payable in securities, then and in each such
event provision shall be made so that the holder of this Note shall receive upon
conversion hereof, in addition to the number of Shares receivable thereupon, the
amount of securities that the holder of this Note would have received had this
Note been converted into Shares on the date of such event and had such holder
thereafter during the period from the date of such event to and including the
date of conversion of this Note retained such securities receivable by such
holder as aforesaid during such period, giving effect to all adjustments called
for during such period under this paragraph.  If the Company shall
reclassify its Common Stock (including any reclassification in connection with a
consolidation or merger in which the Company is the surviving entity), then and
in each such event provision shall be made so that such holder shall receive
upon conversion hereof the amount of such reclassified shares of Common Stock
that such holder would have received had this Note been converted into Shares
immediately prior to such reclassification and had such holder thereafter,
during the period from the date of such event to and including the date of
conversion of this Note, retained such reclassified shares of Common Stock,
giving effect to all adjustments called for during such period under this
paragraph with respect to the rights of the holder of this Note.  The
form of this Note need not be changed because of any adjustment in the number of
Shares subject to this Note pursuant to this Section.

    

    (c)           Whenever
the Conversion Price shall be adjusted as provided in this Section 2, the
Company shall reasonably promptly provide notice of such adjustment to the
Lender together with a written statement from an authorized officer of the
Company, showing in reasonable detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such
adjustment.  Notwithstanding the foregoing, no adjustment in the
Conversion Price shall be required unless such adjustment would require a change
of at least 1% in such Conversion Price; provided, however, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment.

    

    (d)           In
case of any consolidation or merger of the Company with or into another entity
or the conveyance of all or substantially all of the assets of the Company to
another entity (collectively, an “Organic Change”),
this Note shall thereafter be convertible (to the extent such conversion is
permitted hereunder) into the number of shares of common stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Company deliverable upon conversion of this Note would have been entitled
had this Note been converted immediately prior to such Organic Change and held
until after the closing of such Organic Change; and, in any such case,
appropriate adjustment shall be made in the application of the provisions herein
set forth with respect to the rights and interest thereafter of the holder of
this Note, to the end that the provisions set forth herein shall be thereafter
applicable, as nearly as reasonably may be, in relation to any shares of Common
Stock or other property thereafter deliverable upon the conversion of this
Note.

    

    
      
        
        

      

      
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    Section
3.  Reservation of Common
Stock.  The Borrower covenants that it will at all times
reserve and keep available solely for the purpose of issuance upon conversion of
this Note as herein provided, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Lender, not less than such
number of shares of Common Stock as shall be issuable upon the conversion of the
outstanding Principal Amount of this Note and accrued and unpaid interest
hereunder and, from time to time, will take all steps necessary to provide
sufficient reserves of Shares issuable upon conversion of this
Note.  The Borrower covenants that all Shares that may be issuable
upon conversion of this Note shall, upon issue, be duly and validly authorized,
issued and fully paid and nonassessable.  No consent of any other
party and no consent, license, approval or authorization of, or registration or
declaration with, any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance by the Borrower, or the
validity or enforceability of this Note other than such as have been met or
obtained. The execution, delivery and performance of this Note and all other
agreements and instruments executed and delivered or to be executed and
delivered pursuant hereto or thereto or the securities issuable upon conversion
of this will not violate any provision of any existing law or regulation or any
order or decree of any court, regulatory body or administrative agency or the
Certificate of Incorporation or Bylaws of the Borrower or any mortgage,
indenture, contract or other agreement to which the Borrower is a party or by
which the Borrower or any property or assets of the Borrower may be
bound.

    

    Section
4.  Voluntary
Prepayments.  The Principal Amount of this Note may be
voluntarily prepaid by the Company, either in full or in part, at any time prior
to the Maturity Date; provided, however, that the
Company shall give the Lender two (2) months’ prior notice of any such
prepayment and the Lender shall remain permitted to convert all or any portion
of this Note as permitted herein prior to the prepayment.

    

    Section
5.  Transferability.  This
Note and any of the rights granted hereunder are freely transferable by the
Lender, in its sole discretion, subject to federal and state securities law
restrictions, if any.

    

    Section
6.  Event of
Default.

    

    (a)           An
"Event of Default", wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body), and solely with respect to the events described in clauses (ii) and (iv)
such events having not been cured after 10 days notice thereof:

    

    (i)           Any
default in the payment of the principal of, interest on or other charges in
respect of this Note as and when the same shall become due and payable (whether
the Maturity Date or by acceleration or otherwise);

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (ii)           The
Borrower or any subsidiary shall fail to observe or perform any other material
covenant, agreement or warranty contained in, or otherwise commit any breach or
default of any provision of this Note or any Loan Document to which it is a
party;

    

    (iii)           The
Borrower or any subsidiary shall commence, or there shall be commenced against
the Borrower or any subsidiary, a proceeding under any applicable bankruptcy or
insolvency laws as now or hereafter in effect or any successor thereto, or the
Borrower or any subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or subsidiary or there is commenced
against the Borrower or subsidiary any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 90 days; or the Borrower or
subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower or
subsidiary suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 90 days; or the Borrower or
subsidiary makes a general assignment for the benefit of creditors; or the
Borrower or subsidiary shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Borrower or subsidiary shall by any act or failure to act expressly indicate its
consent to, approval of or acquiescence in any of the foregoing; or any
corporate or other action is taken by the Borrower or subsidiary for the purpose
of effecting any of the foregoing; or

    

               (iv)           The
Borrower or any subsidiary shall default in any of its obligations under any
other note or any mortgage, credit agreement or other facility, indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any leasing or factoring arrangement of the
Borrower, whether such indebtedness now exists or shall hereafter be created and
such default shall result in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and
payable.

    

    (b)           Following
an uncured Event of Default, the Interest Rate shall increase to fifteen percent
(15%) per annum immediately following such Event of Default; provided, that the
Interest Rate shall thereafter revert back to the prior Interest Rate upon all
Events of Default being cured. Upon
the occurrence of an Event of Default hereunder, the entire Principal Amount of
this Note together with any accrued but unpaid interest shall automatically
become due and payable.  The failure of the Lender to exercise any of
its rights hereunder in any particular instance shall not constitute a waiver of
the same or of any other right in that or any subsequent instance with respect
to the Lender or any subsequent holder.  The Lender need not provide
and the Borrower hereby waives any presentment, demand, protest or other notice
of any kind, and the Lender may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other
remedies available to it under applicable law.

    

    
      
        
        

      

      
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    Section
7.  Notices.  Any
and all notices, requests, documents or other communications or deliveries
required or permitted to be given or delivered hereunder shall be delivered in
accordance with the notice provisions of the Note Purchase
Agreement.

     

    Section
8.  Usury.  It
is expressly agreed and provided that the total liability of the Company under
the Loan Documents for payments in the nature of interest shall not exceed the
maximum lawful rate authorized under applicable law (the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the Loan
Documents exceed such Maximum Rate.  It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Loan Documents is
increased or decreased by statute or any official governmental action subsequent
to the date hereof, the new maximum contract rate of interest allowed by law
will be the Maximum Rate applicable to the Loan Documents from the effective
date forward, unless such application is precluded by applicable
law.  If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to Lender with respect to indebtedness
evidenced by the Loan Documents, such excess shall be applied by Lender to the
unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at Lender’s election.

     

    Section
9.  Governing Law;
Forum.  This Note and the provisions hereof are to be construed
according to and are governed by the laws of the State of New York, without
regard to principles of conflicts of laws thereof.  The Company
submits to the personal jurisdiction of and agrees that all proceedings relating
hereto shall be brought in federal or state courts located within the State of
New York.

    

    Section 10.  Successors and
Assigns.  Subject to applicable securities laws, this Note and
the rights and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Lender.

    

    Section 11.  Amendment.  This
Note may be modified or amended or the provisions hereof waived only with the
written consent of the Lender and the Company.

    

    Section 12.  Severability.  Wherever
possible, each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Note.

    

    [Remainder
of Page Intentionally Left Blank; Signature Page Follows]

    

     

    
      
        
        

      

      
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    IN
WITNESS WHEREOF, the Borrower has caused this Convertible Promissory Note to be
duly executed by a duly authorized officer as of the date first above
indicated.

     

    
       

      
        	 	PLASTINUM
      POLYMER TECHNOLOGIES CORP.
	 	 
	 	  

                By: 
      _________________________________

                Name:

                Title:

              

      

    

     

     

     

    
      
        
        

      

      
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    ANNEX
A

    

    NOTICE OF
CONVERSION

    To Be
Executed by the Lender

    in Order
to Convert Promissory Note

    

               The
undersigned Lender hereby elects to convert $__________ principal and $_____
interest currently outstanding and owed under the Convertible Promissory Note
issued to Richard von
Tscharner at a Conversion Price of $___ (the “Note”)
and to purchase ___________ shares of Common Stock of Plastinum Polymer Technologies Corp.
issuable upon conversion of such Note, and requests that certificates for
such securities shall be issued in the name of:

    

    

    ___________________________________________________________

    (please
print or type name and address)

    

    ___________________________________________________________

    (please
insert social security or other identifying number)

    

    and be
delivered as follows:

    

    

    ___________________________________________________________

    please
print or type name and address)

    

    ___________________________________________________________

    (please
insert social security or other identifying number)

    

    

    Lender
Name:_______________________________________________

    

    By:________________________________________________________

          Name:

          Title:

    

    Conversion
Date:___________________________________________

    
 

    
      
        
        

      

      
        14

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