[EXECUTION VERSION]
AMENDMENT TO INDENTURE OF TRUST AND SECURITY AGREEMENT
Dated as of April 8, 2004
among
U.S. ENERGY BIOGAS CORP. (as successor to Xxxxxx Alternative Power Corporation)
AVON ENERGY PARTNERS, L.L.C.
BARRE ENERGY PARTNERS, L.P.
BRICKYARD ENERGY PARTNERS, LLC
BURLINGTON ENERGY, INC.
CAPE MAY ENERGY ASSOCIATES, L.P.
DEVONSHIRE POWER PARTNERS, L.L.C.
XXXXX/XXX ENERGY PARTNERS, LLC
DUNBARTON ENERGY PARTNERS, LIMITED PARTNERSHIP
ILLINOIS ELECTRICAL GENERATION PARTNERS, L.P.
ILLINOIS ELECTRICAL GENERATION PARTNERS II, L.P.
LAFAYETTE ENERGY PARTNERS, L.P.
OCEANSIDE ENERGY INC.
ONONDAGA ENERGY PARTNERS, L.P.
POWER GENERATION (SUFFOLK), INC.
RESOURCES GENERATING SYSTEMS, INC.
RIVERSIDE RESOURCE RECOVERY, L.L.C.
XXXXXXX RESOURCE RECOVERY, L.L.C.
STREATOR ENERGY PARTNERS, LLC
SUFFOLK ENERGY PARTNERS, L.P.
SUFFOLK TRANSMISSION PARTNERS, X.X.
XXXXXX ENERGY PARTNERS, L.P.
TUCSON ENERGY PARTNERS, L.P.
UPPER ROCK ENERGY PARTNERS, LLC
BIOGAS FINANCIAL CORPORATION (formerly Xxxxxx Financial Corporation)
ZAPCO ENERGY TACTICS CORPORATION
ZAPCO ILLINOIS ENERGY, INC.
ZFC ENERGY, INC.,
as Grantors
COUNTRYSIDE CANADA POWER INC.,
as Secured Party and as Trustee
AMENDMENT TO INDENTURE OF TRUST AND SECURITY AGREEMENT
This AMENDMENT, dated April 8, 2004 (this "Amendment"), among (i)
U.S. ENERGY BIOGAS CORP. (as successor to Xxxxxx Alternative Power Corporation),
a Delaware corporation (the "Issuer"), (ii) AVON ENERGY PARTNERS, L.L.C., an
Illinois limited liability company, BARRE ENERGY PARTNERS, L.P., a Delaware
limited partnership, BRICKYARD ENERGY PARTNERS, LLC, a Delaware limited
liability company, BURLINGTON ENERGY, INC., a Vermont corporation, CAPE MAY
ENERGY ASSOCIATES, L.P., a Delaware limited partnership, DEVONSHIRE POWER
PARTNERS, L.L.C., an Illinois limited liability company, XXXXX/XXX ENERGY
PARTNERS, LLC, a Delaware limited liability company, DUNBARTON ENERGY
PARTNERS, LIMITED PARTNERSHIP, a New Hampshire limited partnership,
ILLINOIS ELECTRICAL GENERATION PARTNERS, L.P., a Delaware limited
partnership, ILLINOIS ELECTRICAL GENERATION PARTNERS II, L.P., a Delaware
limited partnership, LAFAYETTE ENERGY PARTNERS, L.P., a New Jersey limited
partnership, OCEANSIDE ENERGY INC., a New York corporation, ONONDAGA ENERGY
PARTNERS, L.P., a New York limited partnership, POWER GENERATION (SUFFOLK),
INC., a Delaware Corporation, RESOURCES GENERATING SYSTEMS, INC., a New York
corporation ("Resources"), RIVERSIDE RESOURCE RECOVERY, L.L.C., an Illinois
limited liability company, XXXXXXX RESOURCE RECOVERY, L.L.C., an Illinois
limited liability company, STREATOR ENERGY PARTNERS, LLC, a Delaware limited
liability company, SUFFOLK ENERGY PARTNERS, L.P., a Virginia limited partnership
, SUFFOLK TRANSMISSION PARTNERS, L.P., a Delaware limited partnership, XXXXXX
ENERGY PARTNERS, L.P., a Pennsylvania limited partnership, TUCSON ENERGY
PARTNERS, L.P., a Delaware limited partnership, UPPER ROCK ENERGY PARTNERS, LLC,
a Delaware limited liability company, BIOGAS FINANCIAL CORPORATION (formerly
known as Xxxxxx Financial Corporation), a Connecticut corporation, ZAPCO ENERGY
TACTICS CORPORATION, a Delaware corporation, ZAPCO ILLINOIS ENERGY, INC., a
Delaware corporation, ZFC ENERGY, INC., a Delaware corporation (the parties
listed in this clause (ii) being, collectively, the "Guarantors"), and (iii)
COUNTRYSIDE CANADA POWER INC., as secured party (the "Secured Party") and as
Trustee (the "Trustee"), is made to that certain Indenture of Trust and
Security Agreement, dated as of November 30, 1999 (as amended up to but not
including the date hereof, the "Original Security Agreement"), among the
Grantors, Garland Energy Development, LLC, Oyster Bay Energy Partners, L.P.,
Springfield Energy Associated LTD. Partnership, Zapco Power Marketers, Inc.,
Smithtown Energy Partners, L.P., Zapco Development Corporation, Zapco
Equipment Corp. and Zapco Readville Cogeneration, Inc. (collectively, the
"Former Xxxxxxx Issuers") and Countryside Canada Power Inc. (as successor to The
Chase Manhattan Bank), not in its individual capacity but solely as trustee.
SECTION 1. AMENDMENT.
(a) The Schedules and Exhibits to the Original Security Agreement are
hereby amended in their entirety and replaced with the Schedules and Exhibits to
this Amendment, each of which Schedules and Exhibits shall be considered a
Schedule or Exhibit, as applicable, to the Security Agreement, as amended by
this Amendment.
(b) The Original Security Agreement shall be amended in its entirety to
read as follows:
TABLE OF CONTENTS
Section Page
Article I DEFINITIONS.............................................................................................6
Section 1.01. Terms Defined..............................................................................6
Article II GRANT OF SECURITY.....................................................................................10
Section 2.01. Grant of Security.........................................................................10
Section 2.02. Security for Secured Obligations..........................................................13
Article III REPRESENTATIONS AND WARRANTIES OF THE GRANTORS.......................................................13
Section 3.01. Organization; Power; Authorization........................................................13
Section 3.02. Name, Location, etc.......................................................................14
Section 3.03. Collateral; Source of Revenues............................................................14
Section 3.04. Control over Collateral...................................................................14
Section 3.05. Pledged Interests.........................................................................14
Section 3.06. Pledged Debt..............................................................................15
Section 3.07. No Other Deposit or Securities Accounts...................................................15
Section 3.08. Protection of Lien and Security Interest..................................................15
Article IV ACCOUNTS..............................................................................................16
Section 4.01. Creation of Accounts......................................................................16
Section 4.02. Funding of Accounts.......................................................................17
Section 4.03. Investment of Account Monies..............................................................20
Article V COVENANTS OF THE GRANTORS..............................................................................21
Section 5.01. Defense of Title..........................................................................21
Section 5.02. Further Assurances........................................................................21
Section 5.03. Recordings and Filings....................................................................22
Section 5.04. Payment of Fees, Costs and Expenses.......................................................22
Section 5.05. Notification of Litigation................................................................23
Section 5.06. Insurance, Condemnation...................................................................23
Section 5.07. Maintenance of Security Property..........................................................27
Section 5.08. Compliance with Note Purchase Agreement...................................................28
Section 5.09. Taxes.....................................................................................28
Section 5.10. Project Documents.........................................................................28
Section 5.11. Applicable Permits........................................................................30
Section 5.12. Delivery of Security Property.............................................................30
Section 5.13. No Secured Party Liability................................................................31
Article VI REMEDIES..............................................................................................32
Section 6.01. Remedies on Default.......................................................................32
Article VII CONCERNING THE SECURED PARTY........................................................................34
Section 7.01. Duties; Conduct; Protections..............................................................34
Section 7.02. Special Rights............................................................................36
Section 7.03. Release of Certain Security Property......................................................37
Article VIII CONSENTS TO ASSIGNMENT AND PLEDGE...................................................................37
Section 8.01. Consent to Pledge and Assignment..........................................................37
Section 8.02. Representations and Warranties of Grantors................................................37
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Section 8.03. Agreements of Grantors....................................................................38
Section 8.04. Rejection of Project Documents............................................................39
Section 8.05. Performance by Secured Party..............................................................39
Section 8.06. Waivers...................................................................................39
Section 8.07. Unconditional Nature of Secured Obligations...............................................40
Article IX GENERAL...............................................................................................41
Section 9.01. Submission to Jurisdiction................................................................41
Section 9.02. Authority of the Issuer...................................................................41
Section 9.03. Excluded Assets...........................................................................41
Section 9.04. Amendments, Consents and Waivers..........................................................41
Section 9.05. Notices...................................................................................42
Section 9.06. Successors and Assigns....................................................................42
Section 9.07. Security Agreement........................................................................42
Section 9.08. Partial Invalidity........................................................................42
Section 9.09. Release...................................................................................42
Section 9.10. Counterparts..............................................................................42
Section 9.11. Headings..................................................................................43
SCHEDULES AND EXHIBITS
SCHEDULE 2.01(c)..-........Non-Assigned Material Agreements
SCHEDULE 3.02.....-........Grantor Information
SCHEDULE 3.07.....-........Deposit Accounts
SCHEDULE 4.03(a)..-........Illinois Permitted Investments
SCHEDULE 4.03(b)..-........Other Permitted Investments
EXHIBIT A.........-........Landfill Owners
EXHIBIT B.........-........Operating and Maintenance Agreements
EXHIBIT C.........-........Equity Interests
EXHIBIT D.........-........Indebtedness of Gascos to Grantors
EXHIBIT E.........-........Form of Insurance Withdrawal Certificate
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Security Agreement"), dated as of April 8,
2004, by and among (i) U.S. ENERGY BIOGAS CORP., a Delaware corporation (the
"Issuer"), (ii) AVON ENERGY PARTNERS, L.L.C., an Illinois limited liability
company ("Avon"), BARRE ENERGY PARTNERS, L.P., a Delaware limited partnership
("Barre"), BRICKYARD ENERGY PARTNERS, LLC, a Delaware limited liability company
("Brickyard"), BURLINGTON ENERGY, INC., a Vermont corporation ("Burlington"),
CAPE MAY ENERGY ASSOCIATES, L.P., a Delaware limited partnership ("Cape May"),
DEVONSHIRE POWER PARTNERS, L.L.C., an Illinois limited liability company
("Devonshire"), XXXXX/XXX ENERGY PARTNERS, LLC, a Delaware limited liability
company ("Xxxxx"), DUNBARTON ENERGY PARTNERS, LIMITED PARTNERSHIP, a New
Hampshire limited partnership ("Dunbarton"), ILLINOIS ELECTRICAL GENERATION
PARTNERS, L.P., a Delaware limited partnership ("IEGP"), ILLINOIS ELECTRICAL
GENERATION PARTNERS II, L.P. ("IEGP II"), a Delaware limited partnership,
LAFAYETTE ENERGY PARTNERS, L.P., a New Jersey limited partnership ("Lafayette"),
OCEANSIDE ENERGY INC., a New York corporation ("Oceanside"), ONONDAGA ENERGY
PARTNERS, L.P., a New York limited partnership ("Onondaga"), POWER GENERATION
(SUFFOLK), INC., a Delaware Corporation ("Power (Suffolk)"), RESOURCES
GENERATING SYSTEMS, INC., a New York corporation ("Resources"), RIVERSIDE
RESOURCE RECOVERY, L.L.C., an Illinois limited liability company ("Riverside"),
XXXXXXX RESOURCE RECOVERY, L.L.C., an Illinois limited liability company
("Xxxxxxx"), STREATOR ENERGY PARTNERS, LLC, a Delaware limited liability company
("Streator"), SUFFOLK ENERGY PARTNERS, L.P., a Virginia limited partnership
("Suffolk"), SUFFOLK TRANSMISSION PARTNERS, L.P., a Delaware limited partnership
("Suffolk Transmission"), XXXXXX ENERGY PARTNERS, L.P., a Pennsylvania limited
partnership ("Xxxxxx"), TUCSON ENERGY PARTNERS, L.P., a Delaware limited
partnership ("Tucson"), UPPER ROCK ENERGY PARTNERS, LLC, a Delaware limited
liability company ("Upper Rock"), BIOGAS FINANCIAL CORPORATION (formerly known
as Xxxxxx Financial Corporation), a Connecticut corporation ("ZFC"), ZAPCO
ENERGY TACTICS CORPORATION, a Delaware corporation ("Tactics"), ZAPCO ILLINOIS
ENERGY, INC., a Delaware corporation ("ZIE"), and, collectively with Avon,
Barre, Brickyard, Burlington, Cape May, Devonshire, Dixon, Dunbarton, Lafayette,
Oceanside, Onondaga, Riverside, Xxxxxxx, Streator, Suffolk, Suffolk
Transmission, Xxxxxx, Tucson and Upper Rock, the "Project Owner Guarantors"),
and ZFC ENERGY, INC., a Delaware corporation ("ZFC Energy" and, collectively
with Tactics, ZFC, Resources, Power (Suffolk), IEGP II, IEGP and the Project
Owner Guarantors, the "Guarantors" and, together with the Issuer, the
"Grantors") and (iii) COUNTRYSIDE CANADA POWER INC., a federal Canadian
corporation (the "Secured Party").
R E C I T A L S
A. The Issuer is a company principally involved in the development, management
and ownership of facilities that either use landfill gas as a fuel for the
generation of electricity, transmit landfill gas for sale to others, treat
landfill gas in order to convert it into a more refined and saleable fuel, such
as liquefied natural gas, or utilize landfill gas to treat landfill leachate,
and, as a general and/or limited partner or member owning, either directly or
through an Affiliate, 100% of the equity interests in each Guarantor (except to
the extent that AJG Financial Services, Inc. owns an indirect interest therein).
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X. Xxxxxxx Energy Development, LLC, Oyster Bay Energy Partners, L.P.,
Springfield Energy Associated LTD. Partnership, Zapco Power Marketers, Inc.,
Smithtown Energy Partners, L.P., Zapco Development Corporation, Zapco Equipment
Corp. and Zapco Readville Cogeneration, Inc. (collectively, the "Former Xxxxxxx
Issuers") and the Grantors previously entered into the Original Note Purchase
Agreement (such term and all other capitalized terms used in these Recitals
without definition are used as defined in Section 1.01), which provided for the
issuance of the Existing Notes by the Former Xxxxxxx Issuers and the Grantors.
The Former Xxxxxxx Issuers and the Grantors previously entered into the Original
Security Agreement, which secured the obligations of the Grantors and the Former
Xxxxxxx Issuers with respect to the Existing Notes.
C. The Secured Party has entered into that certain Assignment Agreement, dated
the date hereof, with Xxxx Xxxxxxx Life Insurance Company, Xxxx Xxxxxxx Variable
Life Insurance Company and Investors Partner Life Insurance Company
(collectively, the "Xxxxxxx Purchasers"), pursuant to which the Xxxxxxx
Purchasers have sold to the Secured Party all of their interest in and under the
Original Note Purchase Agreement and the Existing Notes.
D. Concurrently with the amendment of this Security Agreement, BMC Energy LLC,
Brookhaven Energy Partners, LLC, Countryside Genco, L.L.C., Xxxxxx Xxxxx, L.L.C.
(the "BMC Parties"), together with the parties hereto, will enter into the
Amendment to Note Purchase Agreement, dated as of the date hereof, pursuant to
which (i) the Issuer will (A) authorize the issuance of its 11.00% Amended
Senior Secured Notes Series A Due April 30, 2019 (the "Series A Notes") and
execute, issue and deliver to the Secured Party the Series A Notes and (B)
authorize the issuance of its 11.00% Amended Senior Secured Notes Series B Due
April 30, 2019 (the "Series B Notes") and execute, issue and deliver to the
Secured Party the Series B Notes, and (iii) the Secured Party will surrender to
the Issuer the Existing Notes and make a cash advance to the Issuer in an
aggregate principal amount of Canadian $31,330,028.00 (the "Advance").
E. Each Grantor (other than the Issuer) is an affiliate of the Issuer and each
such Grantor has a business relationship with the Issuer, such that each such
Grantor will receive benefits generally from the purchase of the Existing Notes,
exchange and issuance of the Notes, the Advance and the other transactions
contemplated by the Loan Documents, which benefits are hereby acknowledged by
each such Grantor to be sufficient consideration for the liability of such
Grantor with respect to the Secured Obligations and the pledge and granting of a
security interest hereunder as security for each such Grantor's Secured
Obligations;
F. To induce the Secured Party to exchange the Existing Notes for, and purchase,
the Notes, each Grantor has agreed to amend its obligations under the Original
Security Agreement on the terms set forth herein in order to grant to the
Secured Party a first priority perfected security interest in the property
described herein, subject to the terms and conditions hereof.
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties herein set forth and in order to secure the full and
punctual performance and payment of each Grantor's Secured Obligations, the
parties hereto agree as follows:
Article I
DEFINITIONS
Section 1.01. ....Terms Defined.
Unless otherwise defined herein, all capitalized terms used in this
Security Agreement have the meanings given them in the Amended Note Purchase
Agreement. The following capitalized terms used in this Security Agreement shall
have the meanings set forth below:
"Accounts" shall mean the Debt Service Reserve Account, the Other ICC
Account and the Construction Reserve Account.
"Amended Note Purchase Agreement" shall mean the Original Note Purchase
Agreement as amended, supplemented or otherwise modified from time to time
(including pursuant to that certain Amendment to Note Purchase Agreement, dated
as of the date hereof, among the Grantors, the BMC Parties and the Secured
Party).
"Available Debt Service Funds" shall mean, on any Quarterly Payment
Date, operating cash flow of the USEB Operating Assets received by the Issuer
during the Fiscal Quarter most recently ended, minus the amount of (i) payments
made during such Fiscal Quarter with respect to (A) Operating Expenses of the
Issuer, (B) interest and Principal Debt of the Notes and (C) the Illinois
Reimbursement Minimum Amount.
"BMC" shall mean BMC Energy LLC.
"BMC Parties" shall mean, collectively, BMC Energy LLC, Brookhaven
Energy Partners, LLC, Countryside Genco, L.L.C. and Xxxxxx Xxxxx, L.L.C.
"Brookhaven" shall mean Brookhaven Energy Partners, LLC.
"Collateral" shall mean, collectively, the Security Property and the
other property and assets subject to the lien of the BMC Group Security
Agreement, the Amended Mortgages or the Amended AJG Security Agreement.
"Construction Reserve Account" is defined in Section 4.01(c).
"Control Agreements" shall mean (i) the control agreement, dated the
date hereof, among the Secured Party, Xxxxxxx Xxxxx & Co. and the Issuer,
granting to the Secured Party control over the Debt Service Reserve Account,
(ii) the control agreement, dated the date hereof, among the Secured Party,
Xxxxxxx Xxxxx & Co., the Illinois Guarantors and the Illinois Investment
Advisor, granting to the Secured Party control over the Other ICC Account for
collateral security purposes, and (iii) the control agreement, dated the date
hereof, among the Secured Party, Xxxxxxx Xxxxx & Co. and the Issuer, granting to
the Secured Party control over the Construction Reserve Account.
6
"Countryside" shall mean Countryside Genco, L.L.C.
"Event of Default" shall have the meaning given such term in the
Amended Note Purchase Agreement.
"Event of Loss" has the meaning specified in Section 5.06(b).
"Excluded Assets" of any Grantor shall mean (i) such Grantor's interest
in any Future Projects, (ii) proceeds to such Grantor from any Future Projects,
(iii) any indemnification payments made to such Grantor from former shareholders
of Xxxxxx Alternative Power Corporation in connection with the merger
transaction consummated on May 11, 2001 by U.S. Energy Systems, Inc., USE
Acquisition Corp. and Xxxxxx Alternative Power Corporation and (iv) any vehicles
owned or leased by such Grantor (the "Excluded Vehicles"). Notwithstanding
anything to the contrary in any Loan Document, "Excluded Assets" shall include,
with respect to any Grantor, any interest that any Grantor may at any time have
in Xxxxxxx Road Associates LLC, Oyster Bay Energy Partners LP, Smithtown Energy
Partners, L.P., Springfield Energy Associates Ltd. Partnership, Zapco
Development Corp., Zapco Equipment Corp., Zapco Readville Cogeneration, Inc. or
ZFC Equipment Corp.
"Former Xxxxxxx Issuers" means Garland Energy Development, LLC,
Oyster Bay Energy Partners, L.P., Springfield Energy Associated LTD. Partnership
, Zapco Power Marketers, Inc., Smithtown Energy Partners, L.P., Zapco
Development Corporation, Zapco Equipment Corp. and Zapco Readville
Cogeneration, Inc.
"Future Projects" shall mean (i) Xxxxx County Energy Associates LLC and
any Project owned by it, (ii) Garland Energy Development LLC and any Project
owned by it and (iii) any Project that is not owned by the Grantors and
operating on the date hereof.
"Grantors" is defined in the Preamble.
"Growth Capital Expenditures" shall mean capital expenditures made to
expand, or to increase production by, any Project.
"Guarantor" is defined in the Preamble.
"ICC" shall mean the Illinois Commerce Commission.
"ICC Accounts" shall mean the Avon ICC Account, the Brickyard ICC
Account, the Devonshire ICC Account, the Xxxxx ICC Account, the Riverside ICC
Account, the Xxxxxxx ICC Account, the Streator ICC Account and the Upper Rock
ICC Account (each as defined in Section 4.01(a)).
"ICC Order" shall mean, with respect to any Illinois Guarantor, the
order or orders of the ICC addressed to such Illinois Guarantor verifying, among
other things, the status of such Illinois Guarantor's Pledged Illinois Project
as a qualified solid waste energy facility and setting forth certain of such
Pledged Illinois Project's rights and obligations as such.
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"Illinois Guarantor" shall mean each of Avon Energy Partners, L.L.C.,
Brickyard Energy Partners, LLC, Devonshire Power Partners, L.L.C., Xxxxx/Xxx
Energy Partners, LLC, Riverside Resource Recovery, L.L.C., Xxxxxxx Resource
Recovery, L.L.C., Streator Energy Partners, LLC and Upper Rock Energy Partners,
LLC.
"Illinois Investment Advisor" shall mean a professional independent
third party investor appointed by the Grantors and responsible for managing
investments in the Other ICC Account.
"Illinois Rate Incentive" shall mean the program that is part of the
system established by the State of Illinois pursuant to the Illinois Public
Utility Act to govern the sale of electricity by qualified solid waste energy
facilities under the Illinois Local Solid Waste Disposal Act and the Illinois
Public Utility Act.
"Illinois Reimbursement Minimum Amount" shall mean, for any Illinois
Guarantor as of any Monthly Payment Date, (A) .50 multiplied by (B) the
incentive amount received by such Illinois Guarantor with respect to its Pledged
Illinois Project as a result of the Illinois Rate Incentive during the calendar
month most recently ended.
"Insurance and Condemnation Proceeds Account" has the meaning set forth
in Section 5.06(b).
"Insurance Withdrawal Certificate" has the meaning set forth in Section
5.06(d)(i).
"Issuer" is defined in the Preamble.
"Landfill Owners" shall mean the owners (other than any Loan Party) of
any Project Land, including without limitation the Landfill Owners identified as
such in Exhibit A.
"Loan Parties" shall mean, collectively, each Grantor and each BMC
Party.
"Xxxxxx" shall mean Xxxxxx Xxxxx, L.L.C.
"Obligor" is defined in Section 8.01.
"Operating Expenses" shall mean, with respect to any Grantor or Pledged
Project for any period, without duplication, the aggregate amount of all
operating and maintenance expenses incurred by such Pledged Project or such
Grantor, as the case may be, for such period, including without limitation (i)
insurance premiums payable by such Grantor or with respect to such Pledged
Project, (ii) franchise, licensing, property, income and other taxes payable by
such Grantor or with respect to such Pledged Project, (iii) labor costs payable
by such Grantor or with respect to such Pledged Project, (iv) costs incurred by
such Grantor or with respect to such Pledged Project under any Project Document,
(v) expenses related to utilities, supplies and other services required for the
ownership, operation and maintenance of such Pledged Project, (vi) general and
administrative and management costs with regard to such Grantor or Pledged
Project, (vii) maintenance, repair and replacement expenditures with respect to
such Pledged Project other than Growth Capital Expenditures, (viii) any payments
made by such Grantor or with respect to such Pledged Project under any third
8
party operations and maintenance agreement and (ix) agency, consulting,
professional and other fees payable by such Grantor or with respect to such
Pledged Project, including, without limitation, the fees and expenses of the
Secured Party, the Independent Engineer, the insurance consultant and special
counsel to the Secured Party; provided that all amounts payable or scheduled to
be paid pursuant to the operation and maintenance agreements to which any
Project Owner Guarantor is a party, as in effect on the date hereof, which are
identified on Exhibit B, are deemed to be reasonable in amount for purposes of
determining Operating Expenses if computed in a manner consistent with the Pro
Forma Projections. In computing Operating Expenses for any period, an
appropriate proration shall be made for items such as insurance premiums and
taxes, which would be prorated if the computation were made in accordance with
GAAP.
"Original Note Purchase Agreement" shall mean that certain Note
Purchase Agreement, dated as of November 30, 1999, as amended, among the
Guarantors, the Former Xxxxxxx Issuers, Xxxx Xxxxxxx Life Insurance Company,
Xxxx Xxxxxxx Variable Life Insurance Company and Investors Partner Life
Insurance Company.
"Original Security Agreement" shall mean that certain Indenture of
Trust and Security Agreement, dated as of November 30, 1999, as amended
immediately prior to the date hereof, among the Guarantors, the Former Xxxxxxx
Issuers and Countryside Canada Power Inc. (as successor to The Chase Manhattan
Bank), acting thereunder not in its individual capacity but solely as security
trustee.
"Other ICC Account" has the meaning specified in Section 4.01(a).
"Pledged Debt" has the meaning specified in Section 2.01(g).
"Pledged Illinois Project" shall mean each Illinois Project owned by a
Guarantor.
"Pledged Interests" has the meaning specified in Section 2.01(f).
"Pledged LLC Interests" has the meaning specified in Section 2.01(f).
"Pledged Partnership Interests" has the meaning specified in Section
2.01(f).
"Pledged Project" shall mean any Project owned by a Grantor.
"Pledged Stock" has the meaning specified in Section 2.01(f).
"Projected Minimum Reserve Amount" shall mean, on each Quarterly
Payment Date for each Fiscal Quarter occurring during 2004, $250,000, and on
each Quarterly Payment Date for each Fiscal Quarter occurring in any year after
2004, the Projected Minimum Reserve Amount for the last Quarterly Payment Date
occurring during the preceding year multiplied by 102.5%.
"Quarterly Payment Date" shall mean the first Business Day succeeding
the last day of any Fiscal Quarter.
"Project Owner Guarantor" is defined in the Preamble.
9
"Required Reserve Balance" shall mean, with respect to the Debt Service
Reserve Account on each Quarterly Payment Date, an amount equal to the sum of
(i) the amount required to be deposited in the Debt Service Reserve Account on
the Closing Date pursuant to Section 4.02(b)(i), (ii) the Projected Minimum
Reserve Amount for such Quarterly Payment Date and (iii) the aggregate amount of
all Projected Minimum Reserve Amounts for all prior Quarterly Payment Dates that
have elapsed since the Closing Date, measured at such Quarterly Payment Date and
pro rated for the partial Fiscal Quarter that occurred immediately following the
Closing Date.
"Secured Obligations" of any Grantor shall mean such Grantor's
obligations, if any, to the Secured Party under the Amended Note Purchase
Agreement, the Series A Notes, the Series B Notes, this Security Agreement and
the Amended Mortgages, however evidenced and whether now existing or hereafter
incurred, and whether direct or indirect, matured or unmatured, absolute or
contingent, now due or hereafter to become due (including, without limitation,
any and all costs, reasonable attorneys' fees and expenses that the Secured
Party or any other holder of the Security Property may incur in the collection
or enforcement of such obligations, whether by suit or by any other means, and
any extension or renewal of any of the foregoing, as such may become due), and
any extension or renewal of any of the foregoing, as such may become due.
"Security Agreement" has the meaning given such term in the Preamble.
"Security Property" has the meaning specified in Section 2.01.
"Termination Event" is defined in Section 8.02(b).
Article II
GRANT OF SECURITY
Section 2.01. ....Grant of Security.
Each Grantor hereby grants a security interest in and hypothecates unto
the Secured Party, its successors and assigns all right, title and interest of
such Grantor in, under and to all property of such Grantor, wherever located,
whether now owned or hereafter acquired, including, without limitation, the
following (collectively, the "Security Property"):
(a) any and all accounts, chattel paper, checks, commercial tort claims,
contracts for sale, cooperative interests, cooperative units, deposit accounts,
documents, encumbrances, financial assets, general intangibles, goods,
instruments, investment property, lease contracts, leasehold interests, lessor's
residual interests, letters of credit, letter of credit rights, mortgages,
proceeds, proceeds of a letter of credit, records and supporting obligations;
(b) Each Pledged Project, and all equipment (including equipment on order),
drawings, technical specifications and work in progress in connection therewith;
(c) All agreements (other than those listed on Schedule 2.01(c), for so long as
the consents required for the pledge of such agreements have not been obtained)
entered into or to be entered into by such Grantor, or contract rights of such
Grantor, relating to the Security Property, and/or with one or more of the
Grantors, the Gascos, counterparties to any Power Purchase Agreement, the
Landfill Owners and the other parties to the Project Documents each as amended,
supplemented, modified or restated from time to time;
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(d) All of the issued and outstanding stock (common or preferred) of each
corporation identified in Part 1 of Exhibit C held by such Grantor, and all
shares and other securities and all warrants, rights and options and all money
and other property received or receivable by or distributed or distributable to
such Grantor from such corporation in exchange or substitution for or otherwise
in respect of any or all of such stock or other securities of such corporation
(the "Pledged Stock");
(e) The partnership interests, now owned or hereafter acquired, by such Grantor
in each of the partnerships identified in Part 2 of Exhibit C, including without
limitation (A) all rights of such Grantor as a partner in such partnership to
receive distributions, cash, instruments and other property from time to time
receivable or otherwise distributable in respect of such interest, (B) all
rights of such Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to such interest, (C) the right of such Grantor to
perform and exercise consensual or voting rights under the partnership agreement
or analogous document with respect to such partnership, and (D) all other rights
of such Grantor as a partner in such partnership to all property and assets of
such partnership (whether real property, inventory, equipment, contract rights,
accounts receivable, general intangibles, securities, uncertificated securities,
ownership interests, instruments, chattel paper, documents, choses in action or
otherwise) (the "Pledged Partnership Interests");
(f) The membership interests, now owned or hereafter acquired, by such Grantor
in each of the limited liability companies identified in Part 3 of Exhibit C,
including without limitation (i) all rights of such Grantor as a member and/or
manager in such limited liability company to receive distributions, cash,
instruments and other property from time to time receivable or otherwise
distributable in respect of such interest, (ii) all rights of such Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to such interest, (iii) the right of such Grantor to perform and exercise
consensual or voting rights under the operating agreement or analogous document
with respect to such limited liability company, and (iv) all other rights of
such Grantor as a member and/or manager in such limited liability company to all
property and assets of such limited liability company (whether real property,
inventory, equipment, contract rights, accounts receivable, general intangibles,
securities, uncertificated securities, ownership interests, instruments, chattel
paper, documents, choses in action or otherwise) (the "Pledged LLC Interests",
and together with the Pledged Stock and the Pledged Partnership Interests, the
"Pledged Interests");
(g) Its interest in the AJG IEGP Loan Transaction and the Indebtedness of any of
the Gascos to such Grantor from time to time, as identified in Exhibit D,
together with the instruments evidencing such Indebtedness, all rights of such
Grantor to any and all collateral securing such Indebtedness and all interest,
cash, instruments and property from time to time receivable or otherwise
distributable in respect of such Indebtedness (the "Pledged Debt").
(h) All insurance and condemnation proceeds with respect to the Pledged
Projects;
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(i) All of such Grantor's right, title and interest in and to each of the
Accounts, all funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing amounts in any of the Accounts;
(j) All other deposit accounts, operating accounts, and other accounts of such
Grantor, all funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing such accounts;
(k) All monies and other securities from time to time deposited with the Secured
Party pursuant to any provision of this Security Agreement or required by this
Security Agreement to be held by the Secured Party as security for the Secured
Obligations;
(l) All warranties, performance bonds and letters of credit of contractors and
sub- contractors for the benefit of such Grantor;
(m) All Applicable Permits granted to such Grantor or for its Pledged Project,
as amended or supplemented from time to time, to the extent permitted by law;
(n) All documents of title, policies and certificates of insurance, securities,
permits, orders, other documents or instruments evidencing or pertaining to any
and all of the foregoing items (b) through (m);
(o) All guaranties, liens on real or personal property, leases, and other
agreements and property that in any way secure or relate to any of the foregoing
Items (b) through (n), or are acquired for the purpose of securing and enforcing
any item thereof;
(p) All books, records, ledger cards, files, correspondence, computer programs,
tapes, disks and related data processing software (owned by such Grantor or in
which it has an interest) which at any time evidence or contain information
relating to any of the foregoing items (b) through (n) or are otherwise
necessary or helpful in the collection thereof or realization thereupon; and
(q) All products and proceeds of, sums due and to become due under, replacements
or substitutes for, and additions or accessions of, any of the foregoing
Security Property in whatever form, including but not limited to, all claims to
items of the foregoing Security Property and all claims of such Grantor against
third parties for (i) loss, destruction or infringement of, or damage to, any or
all of such items, and (ii) payments due or to become due under licenses,
leases, rentals and hires of, or agreements, arrangements or contracts with
respect to, any or all of such items and (iii) proceeds payable under or
unearned premiums with respect to policies of insurance.
Notwithstanding the foregoing, the Security Property shall not include
(i) any Excluded Assets, (ii) any property subject to any Amended Mortgage or
(iii) any funds held in the account established by the Issuer at The
Toronto-Dominion Bank at its address at [_________________], for so long as such
funds secure the obligations of the Issuer under the hedging arrangement
required by Section 7.17 of the Amended Note Purchase Agreement.
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Section 2.02. Security for Secured Obligations.
This Security Agreement secures the Secured Obligations.
Article III
REPRESENTATIONS AND WARRANTIES OF THE GRANTORS
Each Grantor represents and warrants as follows:
Section 3.01. Organization; Power; Authorization.
(a) Such Grantor has good title to the Security Property purported to be pledged
by such Grantor hereby and owns its interest in such Security Property free and
clear of all Liens whatsoever except for Permitted Liens, and, subject to
Permitted Liens, has the right to mortgage, give, grant, bargain, sell,
alienate, convey, confirm, pledge, assign and hypothecate the same and to grant
a security interest therein. Such Grantor, if a Project Owner Guarantor, has
title to, or possesses easements, subeasements, leases and/or licenses covering
the use of, the related Project Land sufficient to permit the construction,
ownership, maintenance and operation of the Project it purports to own and owns
the improvements related thereto. No effective financing statement or other
statement similar in effect covering all or any part of the Security Property
(other than in connection with Permitted Liens and Liens being released prior to
the issuance of the Notes) is on file in any recording office, except as may
have been filed in favor of the Secured Party relating to this Security
Agreement.
(b) The execution, delivery and performance of this Security Agreement, and the
granting of the Lien on and security interest in the Security Property as
contemplated hereby, have been duly authorized by all requisite action on the
part of such Grantor and do not and will not (with the passage of time or giving
of notice, or both) constitute a violation or breach of or default or event of
default under any provision of such Grantor's certificate of formation,
incorporation or partnership, as the case may be, any partnership or operating
agreement of such Grantor or any other corporation, partnership or limited
liability company document of any Grantor or any agreement, indenture or
instrument to which such Grantor is a party or by which it or its Property is or
may be bound, or violate any writ, order, judgment or decree applicable to it or
any law, statute or regulation applicable to it. The execution, delivery and
performance of each other Security Document to which it is a party and the
granting of the Liens on and security interest in the Security Property as
contemplated thereby have been duly authorized by all requisite action on the
part of such Grantor and do not and will not (with the passage of time, giving
of notice, or both) constitute a violation or breach of or default or event of
default under any provision of such Grantor's certificate of formation,
incorporation or partnership, as the case may be, any partnership or operating
agreement of such Grantor or any other corporation, partnership, or limited
liability company document of such Grantor or any agreement, indenture or
instrument to which such Grantor is a party or by which it or its property is or
may be bound, or violate any writ, order, judgment or decree applicable to it or
any law, statute or regulation applicable to it. This Security Agreement
constitutes the legal, valid and binding obligations of such Grantor,
enforceable against it in accordance with its terms, and each other Security
Document to which such Grantor is a party constitutes the legal, valid and
binding obligations of such Grantor, enforceable against it 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.
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Section 3.02. Name, Location, etc.
The jurisdiction in which such Grantor is located for purposes of
Sections 8-110(d), 9-301 and 9-307 of the UCC is the jurisdiction set forth next
to such Grantor's name on Part 1 of Schedule 3.02. Part 2 of Schedule 3.02 lists
each county of each State in which was located, prior to July 1, 2001 (or
October 1, 2001 if the location is Connecticut and January 1, 2002 if the
location is Alabama, Florida or Mississippi), any equipment or inventory owned
by such Grantor. Such Grantor has no trade names. During the four months
preceding the date hereof, such Grantor has not been known by any legal name
different from the one set forth on its signature page hereto, nor has such
Grantor been the subject of any merger or other corporate reorganization. The
name set forth on its signature page is the true and correct legal name of such
Grantor. Such Grantor's federal taxpayer identification number is (and, during
the four months preceding the date hereof, such Grantor has not had a federal
taxpayer identification number different from), and such Grantor's
organizational identification number is, the number identified as such and set
forth next to the name of such Grantor on Part 3 of Schedule 3.02. The Security
Property does not include any inventory (as such term is defined in the UCC)
located in the State of California. Such Grantor is not a party to any federal,
state or local government contract. Such Grantor does not have an interest in
any equity interests in any Person other than the Pledged Interests and Excluded
Assets. Such Grantor does not have any interest in any Intellectual Property
collateral the loss, impairment or infringement of which would reasonably be
expected to have a Material Adverse Effect.
Section 3.03. Collateral; Source of Revenues.
Such Grantor's Collateral is the source of Materially all of such
Grantor's revenues (except revenues derived from its Excluded Assets and
Emissions Credit Proceeds), which, as so excepted, constitute all of the
revenues of such Grantor that are Material to such Grantor. Such Grantor's
Collateral constitutes (i) Materially all of the assets of such Grantor, except
for its Excluded Assets, and (ii) sufficient property for such Grantor to
operate its businesses as now conducted and as presently proposed to be
conducted.
Section 3.04. Control over Collateral.
Subject to the rights of other parties to the Project Documents and
subject to Permitted Liens, such Grantor has exclusive possession and control of
the Security Property purported to be pledged by it hereunder. None of the
Security Property of such Grantor is subject to any restriction on its sale or
transfer except as set forth in the Project Documents, the Security Documents
and the Amended Note Purchase Agreement. Each item of equipment and inventory
that is part of the Security Property of such Grantor is located at its Pledged
Project.
Section 3.05. Pledged Interests.
(a) The Pledged Interests that constitute stock, membership interests or
partnership interests in such Grantor have been duly authorized and validly
issued and are fully paid and nonassessable.
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(b) Except with respect to the Issuer, the Pledged Interests that constitute
stock, membership interests or partnership interests in such Grantor constitute,
as applicable, all of the issued and outstanding (i) shares of stock of such
Grantor, (ii) membership interests of such Grantor or (iii) partnership
interests of such Grantor.
(c) The security interest of the Secured Party in uncertificated Pledged
Interests of such Grantor, and in the Pledged Debt of such Grantor, has been
registered in the name of the Secured Party by the applicable issuer thereof in
the register maintained for such purpose by such issuer. All certificates or
instruments representing or evidencing certificated Pledged Interests of such
Grantor have been delivered to the Secured Party together with the appropriate
blank instruments of transfer. The security interest in such Pledged Interests
is a valid, continuing security interest in favor of the Secured Party and is a
perfected first-priority security interest under the Uniform Commercial Code in
effect in the jurisdiction listed next to such Grantor's name on Part 1 of
Schedule 3.02 and, as so perfected, is a first-priority security interest.
Section 3.06. Pledged Debt.
The Pledged Debt of such Grantor constitutes all of the outstanding
Indebtedness owed to such Grantor. All notes, certificates or instruments
evidencing the Pledged Debt of such Grantor have been delivered to the Secured
Party together with appropriate blank instruments of transfer.
Section 3.07. No Other Deposit or Securities Accounts.
Such Grantor has no interest in any "deposit account" or any
"securities account" (as each such term is defined in the UCC) other than the
Accounts and the deposit accounts listed in Schedule 3.07.
Section 3.08. Protection of Lien and Security Interest.
Upon the execution and delivery hereof, no filing or recording with any
Governmental Authority (except for the filing of Uniform Commercial Code
financing statements on form UCC-3 in the offices and locations specified for
such Grantor in Schedule 3.11 of the Amended Note Purchase Agreement) will be
necessary to establish and perfect the right, title or interest of the Secured
Party created hereunder in the Security Property of such Grantor or any other
Person in any jurisdiction. Upon the (i) execution and delivery of this Security
Agreement, (ii) delivery to the Secured Party of possession, with endorsements
in blank, of the notes, certificates and instruments evidencing such Grantor's
Pledged Debt, (iii) delivery to the Secured Party of possession of the notes,
certificates and instruments evidencing such Grantor's Pledged Interests with
blank stock powers, (iv) completion of such filings and recordings and (v) in
the case of Security Property constituting Accounts, upon the execution and
delivery of the Control Agreements, the Secured Party will have a valid and
first priority perfected Lien on, and security interest in, such Security
Property. Except (A) for the approval of the ICC necessary for the Secured Party
to take possession of any Pledged Project located in Illinois and (B) with
respect to the exercise of any right or remedy relating to the lien on the
Applicable Permits, no filing or registration with, or consent or approval of,
any Governmental Authority is required for the exercise of any right or remedy
hereunder or under any other Loan Document.
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Article IV
ACCOUNTS
Section 4.01. Creation of Accounts.
(a) Other ICC Account. The Illinois Guarantors have established, in
accordance with their respective ICC Orders, at Xxxxxxx Xxxxx & Co. at
its office at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, an account entitled
("USEB Other ICC Account", account number 852-07127 (the "Other ICC
Account"). The Other ICC Account will contain the following
sub-accounts:
(i) a sub-account established in accordance with the ICC Order of Avon
Energy Partners, L.L.C. (the "Avon ICC Account");
(ii) a sub-account established in accordance with the ICC Order of Brickyard
Energy Partners, LLC (the "Brickyard ICC Account");
(iii) a sub-account established in accordance with the ICC Order of
Devonshire Power Partners, L.L.C. (the "Devonshire ICC Account");
(iv) a sub-account established in accordance with the ICC Order of Xxxxx/Xxx
Energy Partners, LLC (the "Xxxxx ICC Account");
(v) a sub-account established in accordance with the ICC Order of Riverside
Resource Recovery, L.L.C. (the "Riverside ICC Account");
(vi) a sub-account established in accordance with the ICC Order of Xxxxxxx
Resource Recovery, L.L.C. (the "Xxxxxxx ICC Account");
(vii) a sub-account established in accordance with the ICC Order of Streator
Energy Partners, LLC (the "Streator ICC Account") and
(viii) a sub-account established in accordance with the ICC Order of Upper
Rock Energy Partners, LLC (the "Upper Rock ICC Account").
(b) Debt Service Reserve Account. The Issuer has established, at Xxxxxxx
Xxxxx & Co. at its office at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, an
account entitled "USEB Debt Service Reserve Account", account number
852-07130 (the "Debt Services Reserve Account").
(c) Construction Reserve Account. The Issuer has established, at Xxxxxxx
Xxxxx & Co. at its office at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, an
account entitled "USEB Construction Reserve Account", account number
852-07126 (the "Construction Reserve Account").
(d) Except as provided in Section 4.02(a), each ICC Account shall remain in
the exclusive possession, and under the sole dominion and control, of
the Secured Party and shall be maintained at all times in accordance
with the terms of the Loan Documents and the applicable ICC Order until
the date on which all of the Secured Obligations have been satisfied in
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full (except as provided in this Security Agreement), at which time all
amounts on deposit therein shall be paid over to the applicable
Illinois Guarantor or other Person legally entitled thereto; provided,
however, that any payments or releases (whether in the form of cash or
otherwise) properly made by the Secured Party from any ICC Account
pursuant to Section 4.02(a)(iii), as long as such payment or release is
made in accordance with the Loan Documents, shall be released from the
lien and security interest granted hereunder and shall no longer be
part of the Security Property upon the making of such payment or
release. In connection with any release of Security Property under this
subsection, the Secured Party shall, at the expense of the Issuer,
execute and deliver to the Issuer all documents that the Issuer shall
reasonably request to evidence such release. Except as provided in this
Security Agreement and any related Control Agreement, the Other ICC
Account shall be subject to debit or withdrawal solely by the Secured
Party as provided in this Security Agreement, and no Person shall have
any control over or right of withdrawal from any ICC Account. No
payments shall be made out of the Other ICC Account except for the
purposes and on the terms provided in this Security Agreement, the
Amended Note Purchase Agreement and the ICC Orders. Each Illinois
Guarantor hereby irrevocably authorizes and empowers the Secured Party,
as its attorney-in-fact, coupled with an interest, for such Illinois
Guarantor, to endorse any check or any other instrument or security
deposited or held in the ICC Account related to such Illinois
Guarantor.
(e) Except as provided in Section 4.02(b), the Debt Service Reserve Account
shall remain in the exclusive possession, and under the sole dominion
and control, of the Secured Party and shall be maintained at all times
in accordance with the terms of the Loan Documents until the date on
which all of the Secured Obligations have been satisfied in full
(except as provided in this Security Agreement), at which time all
amounts on deposit therein shall be paid over to the Issuer or other
Person legally entitled thereto; provided, however, that any payments
or releases (whether in the form of cash or otherwise) properly made by
the Secured Party from the Debt Service Reserve Account pursuant to
Section 4.02(b)(iv) or from the Construction Reserve Account pursuant
to Section 4.02(c)(ii), as long as such payment or release is made in
accordance with the Loan Documents, shall be released from the lien and
security interest granted hereunder and shall no longer be part of the
Security Property upon the making of such payment or release. In
connection with any release of Security Property under this subsection,
the Secured Party shall, at the expense of the Issuer, execute and
deliver to the Issuer all documents that the Issuer shall reasonably
request to evidence such release. Except as provided in Sections
4.02(b) and (c), the Debt Service Reserve Account and the Construction
Reserve Account shall be subject to debit or withdrawal solely by the
Secured Party as provided in this Security Agreement, and no Person
shall have any control over or right of withdrawal from either such
Account, except as provided in this Security Agreement. No payments
shall be made out of the Debt Service Reserve Account or the
Construction Reserve Account except for the purposes and on the terms
provided in this Security Agreement and in the Amended Note Purchase
Agreement. The Issuer hereby irrevocably authorizes and empowers the
Secured Party, as its attorney-in-fact, coupled with an interest, for
the Issuer, to endorse any check or any other instrument or security
deposited or held in the Accounts related to the Issuer.
Section 4.02. Funding of Accounts.
(a) ICC Accounts.
(i) On the Closing Date, the Illinois Guarantors shall deposit into the
Other ICC Account cash in an amount equal to $12,389,241.
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(ii) On each Monthly Payment Date after the Closing Date, each Illinois
Guarantor shall deposit or cause to be deposited into its ICC Account
its Illinois Reimbursement Minimum Amount, to the extent of available
funds from the operating cash flow received by its Pledged Illinois
Project during the calendar month most recently ended, minus the amount
of payments made by such Illinois Guarantor during such calendar month
with respect to (A) Operating Expenses of such Pledged Illinois Project
and (B) interest and Principal Debt due on the Notes.
(iii) Sums in any Illinois Guarantor's ICC Account shall be used to satisfy
such Illinois Guarantor's obligations under its ICC Order, in
accordance with applicable laws and such Illinois Guarantor's ICC
Order. If no Event of Default has occurred and is continuing, each
Illinois Guarantor may submit to the ICC a reimbursement order (a
"Proposed Order") with respect to such Illinois Guarantor's repayment
obligations under its ICC Order, in accordance with (and not in
acceleration of) the repayment schedule contemplated by such ICC
Order. Such Illinois Guarantor must obtain the Secured Party's
written consent (which may not be unreasonably withheld or delayed)
to such Proposed Order prior to its submission to the ICC. Upon
approval of the Proposed Order by the ICC (in the form in which such
Proposed Order was submitted to the ICC or as revised by the ICC,
notice of which revision will be provided to the Secured Party by the
applicable Illinois Guarantor), the Secured Party will release from
the applicable ICC Account any funds required to comply with such
Proposed Order.
(iv) The Other ICC Account shall be managed by the Illinois Investment
Advisor subject to the Secured Party's rights hereunder. Funds in any
Illinois Guarantor's ICC Account may be applied by such Illinois
Guarantor in its discretion on any date (A) if all obligations of such
Illinois Guarantor under its ICC Order have been fully satisfied or (B)
to the extent that the sum of (x) funds in such ICC Account and (y) the
expected earnings thereon (as reasonably agreed upon by such Illinois
Guarantor and the Secured Party in a written instrument signed by both
such parties) exceed the amount contemplated to be payable pursuant to
such Illinois Guarantor's ICC Order with respect to the Illinois Rate
Incentive already received by such Illinois Guarantor as of such date.
(b) Debt Service Reserve Account.
(i) On the Closing Date, the Issuer will deposit or cause to be deposited
in the Debt Service Reserve Account $2,000,000.
(ii) If, on the Closing Date, after taking into account the hedging
arrangement required pursuant to Section 7.17 of the Amended Note
Purchase Agreement, the annual Debt Service (translated into U.S.
Dollars) for the first three years exceeds $10,200,000 (the "Debt
Service Ceiling"), the Issuer shall deposit into the Debt Service
Reserve Account an amount equal to three times the amount of such
excess.
(iii) On each Quarterly Payment Date after the Closing Date, the Issuer shall
deposit or cause to be deposited in the Debt Service Reserve Account,
from Available Debt Service Funds, an amount sufficient to cause the
funds held in the Debt Service Reserve Account to be at least equal to
the Required Reserve Balance.
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(iv) If, on any date 2 Business Days prior to any date on which any payment
is due with respect to the Series A Notes or the Series B Notes, the
amount of Net Revenues held by the Issuer is insufficient to make such
payment in full, the Issuer may deliver to the Secured Party a
certificate stating such deficit, and the Secured Party shall, to
the extent funds are available in the Debt Service Reserve Account,
withdraw from the Debt Service Reserve Account the amount required to
make up the deficit and shall apply the amount so withdrawn to effect
payment of the amounts due on the Notes, and, if the amount available
to be withdrawn from the Debt Service Reserve Account is not sufficient
to effect payment of all amounts due on the Notes, the Secured Party
shall apply the amount available and so withdrawn to effect payment of
such amounts due to each series of notes ratably in accordance with the
aggregate amount of the payments due on each series of Notes.
(v) If, on the third Anniversary Date, (A) projected Debt Service for the
next 12 months ("Projected Debt Service") exceeds the Debt Service
Ceiling, (B) the pro forma Fixed Charge Coverage Ratio, adjusted for
the Projected Debt Service, is less than 1.5:1.0 and (C) the aggregate
amount of funds held in the Accounts and in the BMC ICC Account (as
defined in the BMC Group Security Agreement) do not at least equal
$40,000,000, then the Issuer shall, prior to making any distributions
to any of its shareholders, either (x) deposit into the Debt Service
Reserve Account an amount equal to at least $1,500,000 or (y) prepay
the Notes in an amount equal to at least $1,500,000.
(vi) The Issuer may make any payment with respect to (A) Growth Capital
Expenditures, (B) dividends or (C) the Convertible Royalty Interest
only if, at the time of any such payment:
(A) the Debt Service Reserve Account contains the Required Reserve Balance;
and
(B) the Issuer is in compliance with Section 8.25 of the Amended Note
Purchase Agreement.
(c) Construction Reserve Account.
(i) On the Closing Date, the Issuer will deposit or cause to be deposited
in the Construction Reserve Account $4,000,000.
(ii) The Issuer may, on any date, deliver to the Secured Party a written
request (a "Withdrawal Notice") for release of funds held in the
Construction Reserve Account. The Secured Party shall, to the extent
funds are available in the Construction Reserve Account, withdraw from
such Account the amount of funds requested to be released in the
Withdrawal Notice and shall transfer such funds as directed in such
Withdrawal Notice.
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(d) Notice of Account.
The Grantors shall instruct each party depositing funds with the
Secured Party to identify in writing the amount of such funds, the source of
such funds and the proper Account into which such funds are to be deposited.
Section 4.03. Investment of Account Monies.
(a) So long as no Event of Default has occurred and is continuing and subject to
the last sentence of this subsection (a), the Illinois Investment Manager shall
invest any moneys held in the ICC Accounts in "Illinois Permitted Investments"
(as described in Schedule 4.03(a), which may be modified upon the Secured
Party's receipt of notice from any Illinois Guarantor that such modification is
required pursuant to a final and non-appealable rule, directive or order of the
ICC ("Illinois Permitted Investments")) at the sole risk of the applicable
Illinois Guarantor; provided, however, that no Illinois Investment Advisor shall
be authorized to take any action with respect to the Other ICC Account unless
the Secured Party has (i) received notice from the Illinois Guarantors of the
appointment of such Illinois Investment Advisor and (ii) consented to such
appointment. If the Secured Party receives inconsistent written instructions
from the Illinois Investment Advisor and any Illinois Guarantor regarding the
ICC Account of such Illinois Guarantor, the Secured Party shall follow the
written instructions of such Illinois Guarantor. If an Event of Default has
occurred and is continuing, the Secured Party may, in its sole discretion,
invest any moneys held in any ICC Account in "Illinois Permitted Investments" at
the sole risk of the applicable Illinois Guarantor. If (i) the Illinois
Investment Advisor is no longer in good standing with the Securities Exchange
Commission, Standard & Poor's Ratings Group, Morningstar or brokerage firms that
monitor the Illinois Investment Advisor or (ii) investments in the Other ICC
Account are not achieving or expected to achieve an average annual return of at
least 7.00% (based on the reasonable calculations of the Secured Party) then (a)
the Illinois Guarantors must, upon request of the Secured Party but no more
frequently than once per year, appoint a new Illinois Investment Advisor and (b)
the Secured Party may invest monies in the Other ICC Account in investments
other than Illinois Permitted Investments.
(b) So long as no Event of Default has occurred and is continuing, any moneys
held in the Debt Service Reserve Account shall, upon receipt by the Secured
Party of a written direction executed by a Responsible Officer of the Issuer, be
invested in "Other Permitted Investments" (as described in Schedule 4.03(b)) at
the sole risk of the Issuer. If an Event of Default has occurred and is
continuing, the Secured Party may, in its sole discretion, invest any moneys
held in the Debt Service Account in "Other Permitted Investments" at the sole
risk of the Issuer. Any interest or investment income realized as a result of
such investments shall be applied, FIRST, to the payment of all principal,
interest or premium then due and owing with respect to the Notes, SECOND, to the
payment of any unpaid Illinois Reimbursement Minimum Amount of any Illinois
Guarantor, THIRD, to the payment of any unpaid Required Reserve Balance and,
FOURTH, to the Issuer.
(c) So long as no Event of Default has occurred and is continuing, any moneys
held in the Construction Reserve Account shall, upon receipt by the Secured
Party of a written direction executed by a Responsible Officer of the Issuer, be
invested in "Other Permitted Investments" (as described in Schedule 4.03(b)) at
the sole risk of the Issuer. If an Event of Default has occurred and is
continuing, the Secured Party may, in its sole discretion, invest any moneys
held in the Construction Reserve Account in "Other Permitted Investments" at the
sole risk of the Issuer.
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(d) The Secured Party shall have no obligation to invest and reinvest any cash
held in the Accounts in the absence of timely and specific written investment
direction from a Responsible Officer of any Grantor or an officer of the
Illinois Investment Advisor. In no event shall the Secured Party be liable for
the selection of investments or for investment losses incurred thereon by reason
of investment performance, liquidation prior to stated maturity or otherwise,
except if the Secured Party failed to comply with the written direction from a
Responsible Officer of such Grantor or an officer of the Illinois Investment
Advisor described in this Section. The Secured Party shall have no liability in
respect of losses incurred as a result of the liquidation of any investment
prior to its stated maturity or the failure of a Responsible Officer of any
Grantor or an officer of the Illinois Investment Advisor to provide timely
written investment direction.
(e) On a quarterly basis, (i) the Illinois Guarantors shall provide to the
Secured Party performance reports with respect to the investments in the Other
ICC Account and (ii) the Issuer shall provide to the Secured Party performance
reports with respect to the investments in the Debt Service Reserve Account.
Article V
COVENANTS OF THE GRANTORS
Each Grantor covenants that, on and after the date of this Security
Agreement and until the Notes are paid in full and all of the Secured
Obligations are discharged:
Section 5.01. Defense of Title.
Each Grantor shall warrant, defend and preserve its right, title and
interest in and to the Security Property and the validity and priority of the
Lien of this Security Agreement and shall forever warrant and defend the same
against the claims of all persons whomsoever, and no Grantor shall sell or
otherwise alienate any of its interests in the Security Property except as
otherwise permitted under this Security Agreement. Devonshire shall maintain
good and marketable fee simple title to the Dolton (Devonshire) Project
(excluding the real property on which its flare facility is located) and good
and valid rights and title to all of its other real property, and each other
Grantor (and Devonshire, with respect to the real property on which its flare
facility is located) shall maintain good and valid rights and title to its real
property, including, in each case, to the extent applicable, the land, leasehold
estates, license rights and easements constituting the Project Land, and all of
its other property, free and clear of all Liens except Permitted Liens and as
otherwise provided under this Security Agreement.
Section 5.02. Further Assurances.
Each Grantor shall execute and deliver any further writing, instrument
or document, in form and substance reasonably satisfactory to the Secured Party,
and take any further action as may be reasonably requested from time to time by
the Secured Party, and make all recordings and filings and take all such other
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action as may be necessary or desirable under any applicable law to evidence,
effectuate, preserve the priority of, protect and perfect the Lien on and
security interest in the Security Property, and, in addition and in furtherance
of, but not in limitation of, the foregoing, use its best efforts to comply with
any request of the Secured Party to obtain, execute, deliver or file
nondisturbance agreements, mortgagee's waivers, and such other instruments and
notices, amendments and renewals thereof, as the Secured Party shall deem
appropriate fully to preserve and protect the Lien on and security interest in
the Security Property; provided, however, that nothing contained in this Section
shall require any Grantor to pay or suffer forbearance of any material amounts,
or waive or otherwise terminate the effectiveness of any material term or other
provision, in connection with any such nondisturbance agreement, mortgagee's
waiver or other instrument.
Section 5.03. Recordings and Filings.
(a) Each Grantor, forthwith upon the execution of this Security Agreement and
thereafter from time to time, shall cause this Security Agreement and any other
documents evidencing the Lien hereof to be filed or recorded in such manner and
in such places as may be required by law in order to publish notice of and fully
to protect the Lien on and security interest in the Security Property of such
Grantor created hereby.
(b) Each Grantor shall execute supplements to this Security Agreement and
financing statements, continuation statements and any other instruments or
documents reasonably deemed necessary or desirable by the Secured Party to
perfect or preserve the Lien on and security interest in the Security Property
of such Grantor created hereby. To the extent permitted by law, the Secured
Party is authorized to record and file supplements to this Security Agreement
and financing or continuation statements to perfect, maintain or maintain the
perfection of the Secured Party's Lien on and security interest in the Security
Property of such Grantor created hereby. Each Grantor further agrees that a
carbon, photographic, photostatic or other reproduction of this Security
Agreement is sufficient as a financing statement where permitted by law.
(c) The Issuer shall pay all filing, registration or recording fees, and all
reasonable expenses incident to the preparation, execution and acknowledgement
of this Security Agreement, any instrument supplemental hereto, any security
instrument with respect to the Security Property and any instrument of further
assurance, and all federal, state, county and municipal stamp taxes and other
taxes, duties, impositions, assessments and charges arising out of or in
connection with the execution and delivery of this Security Agreement, any
instrument supplemental hereto, any security instrument with respect to the
Security Property or any instrument of further assurance.
Section 5.04. Payment of Fees, Costs and Expenses.
The Issuer shall pay promptly the fees and the reasonable costs and
expenses of the Secured Party incurred from time to time hereunder (including,
without limitation, any and all costs, reasonable attorneys' fees and expenses
that the Secured Party may incur in the collection or enforcement of the Secured
Obligations), and shall indemnify and reimburse the Secured Party and its
officers, directors, employees, representatives and agents for all amounts
22
required to be paid by it or them, including any and all claims, expenses,
obligations, liabilities, losses, damages, injuries (to person, property or
natural resources), penalties, stamp or other similar taxes, actions, suits,
judgments, reasonable costs and expenses (including reasonable attorneys' and
agents' fees and expenses) of whatever kind or nature regardless of their merit,
demanded, asserted or claimed against the Secured Party directly or indirectly
relating to, or arising from, claims against the Secured Party by reason of its
participation in the transactions contemplated hereby, including without
limitation all reasonable costs required to be associated with claims for
damages to persons or property, and reasonable attorneys' and consultants' fees
and expenses and court costs, except to the extent caused by the Secured Party's
gross negligence or willful misconduct. The Issuer hereby agrees to indemnify
and hold harmless the Secured Party and its directors, officers, agents and
employees from and against any and all claims, demands, losses, penalties,
liabilities, costs, damages, injuries, and expenses, including, without
limitation, reasonable attorneys' fees and expenses, suffered or sustained by
the Secured Party, either directly or indirectly, relating to or arising out of
any Environmental Law, including, without limitation, any judgment, award,
settlement, reasonable attorneys' fees and expenses and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim. The provisions of this Section shall survive the
termination of this Security Agreement or the earlier resignation or removal of
the Secured Party.
Section 5.05. Notification of Litigation.
Each Grantor shall from time to time keep the Secured Party informed of
material developments in any material action or proceeding involving it. The
Secured Party shall have the right to appear in and defend any such action or
proceeding, in the name and on behalf of such Grantor, if the Secured Party
reasonably believes the failure of such Grantor to defend such action or
proceeding could reasonably be expected to materially adversely effect the value
of the Security Property or the Lien of this Security Agreement. The Secured
Party shall also have the right to institute any action or proceeding that the
Secured Party, in its reasonable judgment, believes should be brought to protect
the value of the Security Property or the Lien of this Security Agreement. The
Issuer shall (i) indemnify, defend and hold the Secured Party harmless against
any loss or liability arising out of or related to or incurred in connection
with any action or proceeding (A) commenced by the Secured Party as provided
above, (B) to which the Secured Party is made a party or (C) in which, in the
reasonable opinion of the Secured Party, it becomes necessary to defend or
uphold the Lien of this Security Agreement or to protect the value of the
Security Property and (ii) on demand, promptly reimburse the Secured Party for
all judgments paid and expenses (including, without limitation, reasonable
attorneys' fees and appellate attorneys' fees) incurred by the Secured Party in
such action or proceeding, any such reimbursement to be an additional Secured
Obligation secured by the Security Property.
Section 5.06. Insurance, Condemnation.
(a) Each Grantor will furnish satisfactory evidence to the Secured Party of the
renewal of each policy of insurance required by Section 7.4 of the Amended Note
Purchase Agreement, if such policy relates to the Security Property pledged by
such Grantor, at least 30 days prior to its expiration date, and will not adjust
or settle any individual claim under such insurance (except for any individual
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claim for $100,000 or less) without the Secured Party's consent, which shall not
be unreasonably withheld or delayed. Each Grantor agrees that if an Event of
Default or a Default shall have occurred and be continuing and the Secured Party
believes that the value of the Security Property is endangered, the Secured
Party may act as attorney-in-fact for such Grantor in obtaining, adjusting,
settling and canceling such insurance and receiving and endorsing any drafts
with respect to any such policy. If any Grantor shall fail to provide and pay
for any such policy at least 15 days prior to the date any such payment is due,
the Secured Party may (but shall not be required to), upon ten days' prior
written notice to such Grantor, provide or pay for the same, at such Grantor's
expense, with the amount of any such payment by the Secured Party to be
repayable by such Grantor on demand, with interest thereon due at the Default
Rate. Such amounts shall be additional Secured Obligations secured by the
Security Property.
(b)In the event of any damage, destruction, condemnation, taking or taking for
use with respect to any portion of any Pledged Project (any such event being an
"Event of Loss") in excess of $100,000 (singly or in the aggregate), the
applicable Project Owner Guarantor shall notify, in writing, the Secured Party
of such Event of Loss, in accordance with Section 5.1(e) of the Amended Note
Purchase Agreement. Each Project Owner Guarantor agrees that, upon the
occurrence of an Event of Loss, it will promptly pay any and all proceeds
(including, without limitation, condemnation or insurance proceeds) received by
it in respect of such Event of Loss, up to an amount equal to the then
outstanding principal amount of the Notes, plus accrued interest thereon, to the
Secured Party to be held by the Secured Party (together with all income thereon)
pursuant to this Security Agreement as part of the Security Property. The
Secured Party shall deposit all such payments received from any such Grantor or
directly from any insurer or condemning authority in a separate deposit account
(the "Insurance and Condemnation Proceeds Account"). Except as otherwise
provided in Section 5.06(f), each Project Owner Guarantor shall be obligated to
repair, replace or reconstruct any Pledged Project owned by it that suffers an
Event of Loss to a condition substantially equivalent to its condition
immediately prior to such Event of Loss or to a condition of at least equivalent
value, to the extent that the insurance proceeds covering such damage or
destruction, or the amount of the award or compensation for damages recovered on
account of such taking or condemnation, shall be sufficient to pay the cost
thereof. The repair, replacement or reconstruction of such Pledged Project shall
be completed within a period of 360 days after the Event of Loss.
(c) For the purposes of this Section, a Pledged Project shall be deemed to be in
a condition substantially equivalent to its condition or value immediately prior
to an Event of Loss affecting it if, subject to gas availability, such Pledged
Project can be used effectively for substantially the same quantity and quality
of electrical generation, generation and refinement of landfill gas for
commercial sale or, as applicable, for which it was used immediately prior to
such Event of Loss, as certified in a report of the Independent Engineer
regarding the condition of such Pledged Project, in form, scope and substance
reasonably satisfactory to the Secured Party.
(d)(i) If, from time to time on or before the date that is 180 days immediately
succeeding the occurrence of an Event of Loss (or such longer period as may be
authorized by the Secured Party in its sole discretion), the Project Owner
Guarantor subject to an Event of Loss shall deliver to the Secured Party a
certificate in substantially the form of Exhibit E (an "Insurance Withdrawal
Certificate"), signed by a Senior Financial Officer of such Project Owner
Guarantor, certifying as to:
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(A)the amount requested to be withdrawn from the Insurance and Condemnation
Proceeds Account for such Pledged Project for the next month as reimbursement
for expenses previously incurred, presently due and payable, or to become due
and payable within one month in connection with the restoration of such Pledged
Project to a condition substantially equivalent to its condition or value
immediately prior to such Event of Loss (the "Restoration Costs");
(B)attached copies of bills or other written evidence of individual costs
describing the items purchased and/or the services rendered and all other
pertinent schedules, statements, invoices, change orders or other information;
and
(C) a reconciliation of all Restoration Costs disbursed through the date
of such Insurance Withdrawal Certificate to the projected total costs of
restoring such Pledged Project to a condition substantially equivalent to its
condition or value immediately prior to such Event of Loss (the "Projected Total
Restoration Costs"), demonstrating that, after giving effect to the proposed
withdrawal, the amounts remaining on deposit in the Insurance and Condemnation
Proceeds Account with respect to such Event of Loss are sufficient to pay the
Projected Total Restoration Costs of such Pledged Project (taking into account
any additional amounts not otherwise subject to the lien of this Security
Agreement deposited by such Project Owner Guarantor with the Secured Party for
the purpose of effecting such restoration);
and further certifying in such certificate that (1) all the amounts of
Restoration Costs set forth in such certificate have been paid, are presently
due and payable or will be due and payable within one month, (2) none of such
amounts has been the subject of any prior payment request approved by the
Secured Party, and (3) the entire amount of the withdrawal requested in clause
(A) above will be used to pay, or to reimburse such Grantor for payment of, the
Restoration Costs set forth in the certificate, then, the Secured Party shall,
within three Business Days, transfer funds on deposit in the Insurance and
Condemnation Proceeds Account as directed by such Grantor (a written request
shall include a wire transfer instruction and all amounts disbursed hereunder
shall be wired by the Secured Party directly to the entity due such amounts).
Each Grantor hereby agrees that all funds received by it pursuant to this
Section shall be applied exclusively to the payment of, or reimbursement for,
Restoration Costs that have been properly identified in an Insurance Withdrawal
Certificate. No more than one Insurance Withdrawal Certificate shall be
delivered to the Secured Party in any single calendar month for any single
Pledged Project.
(ii) If on the date that is 180 days immediately succeeding the occurrence of an
Event of Loss, the Pledged Project subject thereto has not been restored to a
condition substantially equivalent to its condition or value immediately prior
to such Event of Loss, then the applicable Project Owner Guarantor will give
written notice thereof to the Secured Party and the Issuer, and either (A) such
Project Owner Guarantor will deposit with the Secured Party, out of funds of
such Project Owner Guarantor not held in the Accounts within thirty (30) days
of the date of such notice, an amount determined by the Independent Engineer
to be sufficient, when combined with the amounts on deposit in the Insurance and
25
Condemnation Proceeds Account attributable to such Event of Loss, to complete
the restoration of the Pledged Project affected by such Event of Loss to a
condition substantially equivalent to its condition or value immediately prior
to such Event of Loss, or (B) the Issuer shall prepay, in accordance with the
provisions of Section 6.2 of the Amended Note Purchase Agreement, a principal
amount of the Notes equal to the sum of the amount of insurance proceeds held
by the Secured Party in the Insurance and Condemnation Proceeds Account with
respect to such Event of Loss, together with interest accrued to the date of
prepayment on the principal amount being prepaid, but without a prepayment
premium; provided, however, that the Secured Party may, in its sole discretion,
extend such restoration period beyond 180 days. In the event that the Project
Owner Guarantor elects, pursuant to clause (A) above, to restore the Pledged
Project affected by such Event of Loss to a condition substantially equivalent
to its condition or value immediately prior to such Event of Loss and, on the
date that is 180 days immediately succeeding the date of the notice provided
under this paragraph (ii), such Pledged Project has not been restored to a
condition substantially equivalent to its condition or value immediately prior
to such Event of Loss, then the Issuer shall prepay, in accordance with the
provisions of Section 6.2 of the Amended Note Purchase Agreement (but without
any Make Whole Amount or any other prepayment premium), a principal amount of
the Notes equal to the sum of (x) the amount of the insurance proceeds held by
the Secured Party in the Insurance and Condemnation Proceeds Account with
respect to such Event of Loss and (y) the amount of such insurance proceeds
previously disbursed from the Insurance and Condemnation Proceeds Account with
respect to such Event of Loss that have not been expended for restoration.
(e)Each Grantor, immediately upon obtaining knowledge of the institution of any
proceedings for the condemnation or other taking of its Security Property or any
portion thereof in excess of $100,000 (singly or in the aggregate), or the use
thereof, shall, in accordance with Section 5.1(h) of the Amended Note Purchase
Agreement, notify, in writing, the Secured Party of the pendency of such
proceedings. The Secured Party may, but shall not be obligated to, participate
in such proceedings (including, without limitation, the making of any compromise
or settlement in connection with such proceedings), if such participation
is deemed desirable by the Secured Party, and each Grantor agrees to deliver to
the Secured Party all instruments requested by them from time to time to permit
such participation. The Secured Party is hereby irrevocably appointed as each
Grantor's attorney-in-fact, coupled with an interest, with exclusive power to
make, during the continuance of any Event of Default, any compromise or
settlement in connection with such proceedings.
(f) In the event all or substantially all of any Pledged Project is damaged,
destroyed, condemned or otherwise taken, the Issuer may, in lieu of restoring
such Pledged Project, either prepay the Notes, in accordance with Section 6.2 of
the Amended Note Purchase Agreement, or invest the proceeds from such Event of
Loss in accordance with the terms and conditions of Section 6.2(b)(iv) of the
Amended Note Purchase Agreement. In the event any portion of any Pledged Project
is subject to an Event of Loss, but less than substantially all of such Pledged
Project is affected by such Event of Loss, the applicable Project Owner
Guarantor shall not be obligated to repair, replace or reconstruct any such
portion if, on or prior to the date 180 days immediately succeeding such Event
of Loss, such Project Owner Guarantor, in its good faith judgment, determines
that it would be uneconomic to repair, replace or reconstruct such portion, or
if the applicable Landfill Owner exercises any right it has under any Project
Document to terminate such Project Document upon such an Event of Loss. If the
applicable Project Owner Guarantor makes such determination and so certifies to
26
the Secured Party on or prior to the date 180 days immediately succeeding such
Event of Loss or if the Landfill Owner so terminates the Project Document, the
Issuer shall either (i), upon the earliest of (x) the expiration of such 180 day
period, (y) the termination by the Landfill Owner of such Project Document or
(z) the receipt of proceeds, if any, of insurance, condemnation or taking with
respect to such Event of Loss, promptly make the prepayment described above in
this Section or (ii) within such 180 day period, reinvest such proceeds in
accordance with the terms and conditions of Section 6.2(b)(iv) of the Amended
Note Purchase Agreement.
(g)Each Grantor, upon request by the Secured Party, shall make, execute and
deliver any and all instruments reasonably requested for the purposes of
confirming the assignment of the aforesaid insurance proceeds, awards and
compensation to the Secured Party, free and clear of any Liens of any kind or
nature whatsoever.
Section 5.07. Maintenance of Security Property.
Each Grantor at its own expense shall, subject to the existence of
Permitted Liens, at all times take all steps reasonably necessary and desirable
to protect its interest in the Security Property, including, without limitation,
the following:
(a) keep and maintain separate books and records relating to its interest in the
Security Property at its chief executive office in a form reasonably
satisfactory to the Secured Party;
(b) if an Event of Default has occurred and is continuing, deliver to the
Secured Party, promptly upon its request therefor, all schedules, lists,
invoices, bills of lading, documents of title, purchase orders, receipts,
chattel paper, instruments and other items relating to its interest in the
Security Property;
(c) when necessary or desirable for the perfection or maintenance of the Secured
Party's Lien on, and security interest in, the Security Property, or when
requested to do so by the Secured Party, make, stamp or record such entries or
legends on any of such Grantor's books and records relating to such Security
Property as the Secured Party shall reasonably request from time to time;
(d) defend its interest in the Security Property and defend and indemnify the
Secured Party and its officers, directors and employees against all claims,
Liens, security interests, demands and other encumbrances of third parties at
any time claiming an interest in such Security Property;
(e) keep its interest in the Security Property free of all Liens except the Lien
and security interest granted under the Security Documents and Permitted Liens;
(f) pay, promptly when due, all expenses incurred in the delivery, storage or
other handling of its interest in the Security Property; and
(g) promptly notify, in writing, the Secured Party of any Lien (other than
Permitted Liens) arising out of, or with respect to, its interest in the
Security Property.
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Section 5.08. Compliance with Note Purchase Agreement.
Each Grantor shall comply with each of the covenants and other
requirements of the Amended Note Purchase Agreement applicable to such Grantor.
Section 5.09. Taxes.
(a) If any law is enacted or adopted after the date of this Security Agreement
that deducts the principal amount of the Notes from the value of the Security
Property for the purpose of taxation or that changes the laws now in force for
the taxation of deeds of trust, security instruments or debts secured thereby or
the manner of the operation of any such taxes or that otherwise imposes a tax,
either directly or indirectly, on the Notes or this Security Agreement, the
Issuer will pay such tax, with interest and penalties thereon, if any, provided,
however, that in no instance shall the Issuer be obligated to pay any state,
local or federal income taxes owed by the Secured Party except as specifically
provided in the Amended Note Purchase Agreement.
(b) No Grantor will claim or demand or be entitled to any credit or credits on
account of the Notes for any part of the taxes against the Security Property or
any part thereof and no deduction shall otherwise be made or claimed from the
taxable value of the Security Property, or any part thereof, by reason of this
Security Agreement or the Notes.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Notes or this Security Agreement, or impose any other tax or
charge on the same, the Issuer will pay for the same, with interest and
penalties thereon, if any, provided, however, that in no instance shall the
Issuer be obligated to pay any local, state, provincial or federal income taxes
of the Secured Party.
Section 5.10. Project Documents.
(a) Each Grantor will, within the applicable grace periods, at all times keep,
observe and perform or cause to be kept, observed or performed all the material
terms, covenants and agreements of the Project Documents to which it is a party
and, without limiting the generality of the foregoing, will pay all amounts
payable by it under such Project Documents subject to standards of commercial
reasonableness. Each Grantor will take any and all such actions as may be
necessary promptly to enforce its rights and to collect any and all sums due it
under the Project Documents to which it is a party. Each Grantor will do or
cause to be done all things reasonably necessary to preserve and keep unimpaired
its rights under the Project Documents to which it is a party and to prevent any
termination, surrender, cancellation, forfeiture or impairment of any thereof
and to prevent any material default under any of such Project Documents for
terminations of the Project Documents by the counterparties thereto as of right.
Each Grantor will, promptly upon the receipt thereof, deliver to the Secured
Party copies of all Material notices, demands or declarations at any time
received by such Grantor from counterparties to any of the Project Documents to
which it is a party.
(b) Should any Grantor fail punctually to keep, observe and perform any of the
material terms, covenants and agreements of this Security Agreement or the
Project Documents to which it is a party, the Secured Party may, but shall not
28
be obligated, upon ten days' written notice to such Grantor, to effect such
performance on behalf of such Grantor and the Grantors shall, on demand,
reimburse the Secured Party for any amounts expended by it to effect such
performance, with interest thereon at the Default Rate, such amounts to be
additional Secured Obligations secured by the Security Property.
(c) At the written request of the Secured Party, each Grantor shall exercise its
right, if any, to cure any default of any Gasco under any agreement between such
Gasco and any Landfill Owner that grants to such Gasco the right to recover,
refine, process, transmit and otherwise deal with landfill gas and constituent
products from the landfill that is the subject of any Project Document,
including, without limitation, the payment of any amounts payable by such Gasco
under such agreement and not paid when due. Should any Grantor fail to cure such
default within ten (10) days after written request therefor by the Secured
Party, the Secured Party may, but shall not be obligated to, effect such cure on
behalf of such Grantor and such Grantor shall, on demand, reimburse the Secured
Party for any amounts expended by it to effect such performance, with interest
thereon at the Default Rate, such reimbursement to be additional Secured
Obligations secured by the Security Property.
(d) No Grantor will receive or collect any payments under the Project Documents
to which it is a party in advance of the time when the same become due and
payable thereunder without the prior written consent of the Secured Party (which
may not unreasonably be withheld or delayed).
(e) No Grantor will cancel or terminate any of the Project Documents to which it
is a party or permit any cancellation or termination of any thereof (except for
terminations in the sole discretion of such Grantor's counterparty to any such
Project Document) or amend, compromise or modify any of the material terms or
provisions of any such Project Document or waive any term or provision of any
thereof (except for waivers not material to the security for the Secured
Obligations given in the day-to-day administration of such Project Documents) or
enter into any Material agreement or commitment provided for in such Project
Documents without the prior written consent of the Secured Party, which shall
not be unreasonably withheld or delayed.
(f) No Grantor shall make any election or give any consent or approval under any
of the Project Documents to which it is a party, if such consent or approval is
material to the preservation of the Security Property pledged by it hereunder,
without the prior written consent of the Secured Party, which shall not be
unreasonably withheld or delayed.
(g) Each Grantor shall, in accordance with Section 5.1(g) of the Amended Note
Purchase Agreement, give the Secured Party written notice immediately upon any
party to a Project Document requesting an arbitration proceeding under and
pursuant to the provisions of such Project Document, which arbitration
proceeding affects any Grantor, any of its Pledged Projects or any Security
Property pledged by it hereunder, the value of which exceeds $250,000 (singly or
in the aggregate). The Secured Party shall have the right, but not the
obligation, to intervene and participate in any such proceeding, and each
Grantor agrees to confer with the Secured Party, to the extent the Secured Party
shall deem necessary. No Grantor shall compromise any such arbitration
proceeding without the prior written consent of the Secured Party (which may not
unreasonably be withheld or delayed) and if, at the time any such proceeding
shall be commenced, an Event of Default has occurred and is continuing, the
Secured Party shall have the exclusive right to appoint the arbitrator on behalf
of such Grantor and to control the conduct of the proceeding.
29
(h) Each Grantor shall execute and deliver, upon the request of the Secured
Party, such instruments as the Secured Party may reasonably deem useful or
required to permit the Secured Party to cure any default under any Project
Document to which such Grantor is a party or permit the Secured Party to take
such actions as the Secured Party may deem necessary to remedy the matter in
default and preserve the interest of the Secured Party in such Project Document.
(i) No Grantor will enter into any agreement, other than the Power Purchase
Agreements, covering the sale of electricity or refined landfill gas from any of
its Pledged Projects without the prior written consent of the Secured Party
(which may not unreasonably be withheld or delayed). Each Grantor shall take
such action as may be required effectively to subject its interest in any such
agreement to the Lien and security interest of this Security Agreement.
Section 5.11. Applicable Permits.
Each Project Owner Guarantor will duly obtain when needed, and
thereafter maintain in effect as long as legally required, all Applicable
Permits, except where the failure to obtain or maintain an Applicable Permit
could not reasonably be expected to have a Material Adverse Effect.
Section 5.12. Delivery of Security Property.
Each Grantor shall deliver all certificates or instruments representing
or evidencing Security Property pledged by it hereunder to, and all such
certificates or instruments shall be held by or on behalf of, the Secured Party,
and all such certificates or instruments shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Secured
Party, and each Grantor and its subsidiaries will maintain at all times a
register at its chief executive office in which shall be evidenced the security
interest of the Secured Party in all of the Security Property pledged by such
Grantor hereunder and not evidenced by physical certificates issued by or its
subsidiaries. For the better perfection of the Secured Party's rights in and to
the Security Property, each Grantor shall forthwith, upon the occurrence and
continuation of a Event of Default and upon the request of the Secured Party,
cause such Security Property pledged by it hereunder to be registered in the
name of the Secured Party or such of its nominees as the Secured Party shall
direct, provided, however, that,
(a) so long as no Event of Default has occurred and is continuing,
(i) each Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Property pledged by it hereunder or
any part thereof for any purpose not inconsistent with the terms of this
Security Agreement or the other Loan Documents; provided, however, that such
Grantor shall not exercise or refrain from exercising any such right if such
action would have a Material Adverse Effect,
30
(ii) each Grantor shall be entitled to receive and retain any and all dividends,
partnership draws, other distributions and interest paid in respect of the
Security Property pledged by it hereunder (which, upon receipt by any Grantor
shall no longer constitute Security Property), subject to the terms of Section
8.6 of the Amended Note Purchase Agreement,
(iii) the Secured Party shall execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, partnership draws, other
distributions and interest that it is authorized to receive and retain pursuant
to paragraph (ii) above,
(b) upon the occurrence and during the continuance of an Event of Default,
(i) All rights of each Grantor (A) to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 5.12(a)(i) shall, upon notice to such Grantor by
the Secured Party, cease and (B) to receive the dividends, partnership draws,
other distributions, and interest payments that it would otherwise be authorized
to receive and retain pursuant to Section 5.12(a)(ii) shall automatically cease,
and all such rights shall thereupon become vested in the Secured Party, which
shall thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights and to receive and hold as Security Property
such dividends, partnership draws, other distributions and interest payments.
(ii) All dividends, partnership draws, other distributions and interest payments
that are received by any Grantor contrary to the provisions of paragraph (i)
above shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Secured Party as Security Property in the same form as so received (with any
necessary endorsement).
(c) Each Grantor shall (i) cause each issuer of the Pledged Interests and the
Pledged Debt not to issue any stock, other securities or interests or other
evidence of Indebtedness in addition to or in substitution for the Pledged
Interests and Pledged Debt issued by such issuer, except as permitted under the
Amended Note Purchase Agreement, and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock, other securities or interests or other evidence of indebtedness.
(d) To the extent that any of the Security Property not evidenced by physical
certificates constitutes uncertificated securities under Article 8 of the UCC
and is issued by any Grantor, each Grantor that has issued such Security
Property agrees to comply with instructions originated by the Secured Party with
respect to such Security Property without further consent by the registered
owners of such Security Property.
Section 5.13. No Secured Party Liability.
Each Grantor acknowledges that the Secured Party shall not have any
liability, obligation or responsibility whatsoever to such Grantor with respect
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to the operation of any of its Pledged Projects, unless the Secured Party shall
take possession of any such Pledged Project, in which case the Secured Party
shall have no liability, obligation or responsibility whatsoever to any Grantor
in connection with the operation of such Pledged Project, except for any
liability arising from the breach of the Loan Documents or any applicable law,
negligence, willful misconduct or bad faith of the Secured Party. Moreover, each
Grantor acknowledges that the Secured Party shall not be obligated to inspect
any Pledged Project, nor be liable for any failure to protect or insure any
Pledged Project pledged hereunder, or for the payment of costs of labor,
materials or services supplied for the operation of any such Pledged Project, or
for the performance of any obligation of any Grantor whatsoever, except for any
liability arising from the breach of the Loan Documents, negligence, willful
misconduct or bad faith of the Secured Party.
Article VI
REMEDIES
Section 6.01. Remedies on Default.
(a) If an Event of Default shall have occurred and be continuing, the
Secured Party may, in addition to any other rights or remedies it may
have as a Secured Party under the laws of the State of New York, the
UCC or other applicable law, and in addition to the rights and remedies
provided in Section 10.02 of the Amended Note Purchase Agreement, take
any one or more of the following remedial steps, subject to the
provisions of applicable law:
(i) realize upon and take possession of any Security Property, and, if and
to the extent any of the Security Property shall not be in the
possession or under the control of the Secured Party, the Secured Party
may require the Grantors to assemble or package the Security Property
and make it available to the Secured Party at a place to be designated
by the Secured Party; or
(ii) sell, assign, lease or otherwise dispose of the Security Property in
whole or in part at public or private sale upon terms and conditions
established by the Secured Party; or
(iii) notify any and all parties to any of the contracts and agreements that
constitute Security Property that the Secured Party has exercised its
rights hereunder and that (to the extent not already done so) all
payments then or thereafter owing to any Grantor are to be made
directly to the Secured Party.
(b) In addition to the remedies set forth above, the Secured Party may
exercise its rights under the other Loan Documents.
(c) Should the Secured Party elect to cause any of the Security Property to
be disposed of as personal property as permitted by the terms hereof,
it may dispose of any part thereof in any manner now or hereafter
permitted by Article 9 of the UCC or in accordance with any other
remedy provided by law, subject to the provisions of this Security
Agreement. Each Grantor and the Secured Party agree that twenty days'
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notice of any public or private sale or other disposition of personal
property shall be reasonable notice thereof and such sale shall be at
such location as the Secured Party shall designate in such notice. Any
notice given with respect to any such sale shall be given in accordance
with Section 9-611 of the UCC, or any successor provision, as in effect
from time to time. The Secured Party need not give such notice with
respect to Security Property that is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized
market. At any public sale or disposition of the Security Property, the
Secured Party shall have the right to bid and become the purchaser.
Each Grantor hereby waives any right to require the Security Property
to be disposed of seriatim or in any particular order or sequence.
(d) Upon any taking of possession of any Pledged Project pursuant to this
Security Agreement, the Secured Party may, from time to time at the
expense of the applicable Project Owner Guarantor, make all such
repairs, replacements, alterations, additions and improvements to such
Pledged Project as the Secured Party may deem proper. In any such case,
the Secured Party shall have the right to manage and control such
Pledged Project and to carry on the business and to exercise all rights
and powers of such Project Owner Guarantor with respect thereto as the
Secured Party shall deem best, including the right to enter into any
and all such agreements with respect to the leasing and/or operation of
such Pledged Project or any part thereof as the Secured Party may see
fit. The Secured Party shall be entitled to collect and receive all
rents, issues, profits, fees, revenues and other income of the same and
every part thereof. Such rents, issues, profits, fees, revenues and
other income shall be applied to pay the actual incurred expenses of
constructing, holding and operating such Pledged Project, of all
maintenance, repairs, replacements, alterations, additions and
improvements thereto, and of conducting the business of the applicable
Project Owner Guarantor with respect thereto, to make all payments that
the Secured Party may be required to or may elect to make, if any, for
taxes, assessments, insurance and other charges upon such Pledged
Project or any part thereof, and to make all other payments that the
Secured Party may be required or authorized to make under any provision
of this Security Agreement (including reasonable legal costs and
attorneys' fees). The remainder of such rents, issues, profits, fees,
revenues and other income, if any, shall be applied in accordance with
Section 10.03 of the Amended Note Purchase Agreement. Without limiting
the generality of the foregoing, the Secured Party shall have the right
to apply for and have a receiver appointed by a court of competent
jurisdiction in any action taken by the Secured Party to enforce its
rights and remedies hereunder in order to manage, protect and preserve
such Pledged Project and continue the operation of the business of the
applicable Project Owner Guarantor and to collect all revenues and
profits thereof and apply the same to the payment of all actual
incurred expenses and other charges of such receivership including the
compensation as aforesaid until a sale or other disposition of such
Pledged Project shall be finally made and consummated, provided,
however, that in no instance shall such revenues and profits thereof be
applied to pay any local, state, provincial or federal income taxes of
the Secured Party.
(e) In order to facilitate the exercise by the Secured Party of the rights
and remedies set forth in this Article, each Grantor does hereby
irrevocably appoint the Secured Party its true and lawful
attorney-in-fact with full power of substitution, for it and in its
name, place and stead, to ask, demand, collect, receive, receipt for,
xxx for, compound and give acquittance for any and all of the Security
Property pledged by it hereunder with full power to settle, adjust or
compromise any claim hereunder or under such Security Property as fully
as such Grantor could itself do, and to endorse the name of such
Grantor on all commercial paper given in payment or in part payment
thereof, and in its discretion to file any claim or take any other
33
action or commence any other proceedings, either in its own name or in
the name of such Grantor, or otherwise, which the Secured Party may
deem necessary or appropriate to collect any and all sums which may be
or become due or payable hereunder or under such Security Property, or
that may be necessary or appropriate to protect and preserve the right,
title and interest of the Secured Party in and to such sums and the
security intended to be afforded hereby and thereby. In addition, each
Grantor hereby appoints the Secured Party or any of its officers and
agents, or any other person whom the Secured Party may designate, as
attorney-in-fact for such Grantor, at such Grantor's sole cost and
expense, to exercise all or any of the following powers, which, being
coupled with an interest, shall be irrevocable, shall continue until
all Obligations have been paid in full and shall be in addition to any
other rights and remedies that such Grantor may have: (i) to remove
from any premises where they may be located any and all documents,
instruments, files and records relating to the Security Property
pledged by it hereunder and any receptacles and cabinets containing the
same, and at such Grantor's sole cost and expense, to use such of the
personnel, supplies and space of such Grantor at its place of business
as may be necessary properly to administer and control the Security
Property or the collections and realizations thereon; (ii) to take or
bring, in such Grantor's name or in the name of the Secured Party, all
steps, actions, suits or proceedings deemed by the Secured Party
necessary or desirable to effect collection of or to realize upon the
Security Property pledged by it hereunder; and (iii) to endorse the
name of such Grantor or any of such Grantor's officers or agents upon
any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under any policy of insurance upon
any Security Property pledged by it hereunder) that may come into
possession of the Secured Party in full or in part payment of any
amounts owed to the Secured Party.
(f) Notwithstanding any provision to the contrary contained in any Loan
Document, the Secured Party may not take any action against any
Guarantor pursuant to this Section 6.01 unless and until (i) the
Secured Party has provided notice to the Grantors of an Event of
Default and (ii) a period of ten days has elapsed after such notice has
been received by the Grantors (provided, however, that the requirements
of this sentence need not be met if an Event of Default described in
Section 10.01(h) has occurred).
Article VII
CONCERNING THE SECURED PARTY
Section 7.01. Duties; Conduct; Protections.
(a) Except during the continuance of an Event of Default:
(i) the Secured Party undertakes to perform such duties and only such
duties as are specifically set forth in this Security Agreement, and no
implied covenants or obligations shall be read into this Security
Agreement against the Secured Party; and
(ii) in the absence of bad faith on its part, the Secured Party may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, including the accuracy
of all sums and calculations, upon certificates or opinions furnished
to the Secured Party and conforming to the requirements of this
Security Agreement.
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(b) If an Event of Default has occurred and is continuing, the Secured
Party shall exercise such of the rights and powers vested in it by this
Security Agreement, and use the same degree of care and skill in their
exercise, as a prudent individual would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) The Secured Party may perform any of the duties or exercise any of the
powers provided for in this Security Agreement either directly or
through its attorneys, agents, custodians or nominees appointed with
due care and duly authorized in writing.
(d) The Secured Party may consult with counsel, appraisers, engineers,
accountants, and other skilled persons to be selected by it, at the
expense of the Grantors, and the written advice of any thereof shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it under this Security Agreement if
relied upon reasonably and in good faith.
(e) The Secured Party shall not be answerable or accountable under any
circumstances except for its own willful misconduct or negligence. The
negligence or willful misconduct of any taxing authority or any other
Person may not be imputed to the Secured Party. No provision of this
Security Agreement shall be construed to relieve the Secured Party from
liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) above;
(ii) the Secured Party shall not be liable to any Person for any error of
judgment made in good faith unless it shall be proved that the Secured
Party was negligent in ascertaining or in failing to ascertain the
pertinent facts;
(iii) the Secured Party shall be entitled to rely conclusively upon any note,
notice, resolution, request, consent, direction, certificate,
affidavit, letter, telephone communication, telegram, teletype,
message, statement, order or other document reasonably believed by the
Secured Party to be genuine and correct and to have been signed or sent
by a Responsible Officer of any Grantor; and
(iv) no provision of this Security Agreement shall require the Secured Party
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not reasonably
assured to it.
(f) Subject to subsections (a) and (b) above and as required by law, the
Secured Party shall have no duty:
(i) to obtain or request further assurances pursuant to Section 5.02
hereof;
(ii) to file, record or deposit this Security Agreement or any other
document contemplated hereby, or to maintain any such filing, recording
or deposit or to refile, re-record or redeposit any such document;
35
(iii) to obtain or request insurance of any item of Security Property or to
maintain any such insurance or to consent to any adjustment or
settlement;
(iv) to consent to any amendment, termination, waiver or modification of any
Project Document, except that the Secured Party shall not withhold its
consent unreasonably;
(v) to effect any release of any item of the Security Property or to grant
any other remedy to any Grantor or any other Person;
(vi) to maintain or xxxx any item of the Security Property or any part
thereof;
(vii) to pay or discharge any tax, assessment or other governmental charge or
any Lien of any kind owing with respect to or assessed against any item
of the Security Property;
(viii) to confirm, verify, investigate or inquire into the failure to receive
any report or financial statement of any Grantor;
(ix) to inspect any item of the Security Property;
(x) to instruct any Grantor concerning the keeping and maintenance of books
and records;
(xi) to confirm or recalculate any calculation furnished to it; or
(xii) to confirm the accuracy of any disbursement request submitted to it.
(g) The Secured Party shall not be responsible for the correctness of any
recitals or statements in this Security Agreement or in any schedule
attached hereto.
(h) The Secured Party makes no representation as to the value or validity
of the Security Property.
(i) The Secured Party shall be under no obligation with respect to the
application of any moneys paid to it except as may be expressly
provided herein.
Section 7.02. Special Rights.
Notwithstanding anything contained elsewhere in this Security
Agreement, the Secured Party shall have the right, but shall not be required, to
demand the subjection of any after acquired property to the Lien of this
Security Agreement, or any other action whatsoever (other than a withdrawal of
cash) within the purview hereof, any showings, certificates, opinions,
appraisals or other information by or from any Grantor reasonably deemed
necessary or appropriate by it in order to maintain and preserve the security
interest granted hereby.
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Section 7.03. Release of Certain Security Property.
Notwithstanding any provision hereof to the contrary, the Secured Party
shall provide to the Grantors a partial release of the Lien created hereunder
(i) on any of the Brickyard Project, the Xxxxx/Xxx Project, the Upper Rock
Project, the Xxxxxxx Project and the Streator Project if the Landfill Owner for
such Pledged Illinois Project pays to the Secured Party an amount equal to the
then fair market value of such Pledged Illinois Project, such fair market value
to be determined and certified in writing to the Secured Party by the
Independent Engineer, or (ii) on the Barre Project if the Landfill Owner for the
Barre Project exercises its right to buy out the landfill lease for the Barre
Project pursuant to the terms of such landfill lease. The Issuer will apply an
amount equal to such fair market value or buyout amount to prepay the Notes in
accordance with Section 6.2 of the Amended Note Purchase Agreement. Upon payment
as described in clause (i) above to any Illinois Guarantor by the applicable
Landfill Owner, such Illinois Guarantor may apply any funds held in the ICC
Account relating to its Pledged Illinois Project (if the reimbursement
obligation under the Illinois Rate Incentive is not assumed by the purchaser of
such Pledged Illinois Project) to satisfy such Pledged Illinois Project's
reimbursement obligation under the Illinois Rate Incentive in such manner as the
ICC may require in connection with any transaction described in clause (i)
above.
Article VIII
CONSENTS TO ASSIGNMENT AND PLEDGE
Section 8.01. Consent to Pledge and Assignment.
(a) Each Grantor that holds any Pledged Interest in any Person hereby
acknowledges and consents to the pledge and assignment by each other Grantor of
its Pledged Interest in such Person pursuant to this Security Agreement as
collateral security for all the Secured Obligations.
(b) Each Grantor that is a party to a Project Document with one or more other
Loan Parties (each an "Obligor") hereby (i) acknowledges and consents to the
pledge and assignment by each such Obligor to the Secured Party, pursuant to
this Security Agreement, of all right, title and interest of such Obligor in, to
and under (but not its obligations, liabilities or duties with respect to) each
such Project Document as security for the Secured Obligations and (ii) confirms
to the Secured Party that all representations, warranties, indemnities and
agreements of such Grantor under such Project Document shall inure to the
benefit of, and shall be enforceable by, the Secured Party to the same extent as
if originally named in such Project Document.
(c) Each Grantor hereby grants to the Secured Party all consents, waivers and
approvals required from such Grantor under any Project Document, applicable
statute, rule, regulation or ordinance, or otherwise, in order for (i) the
Issuer to issue the Notes and enter into the Loan Documents and (ii) the Secured
Party to exercise any right or remedy under any Loan Document.
Section 8.02. Representations and Warranties of Grantors.
Each Grantor represents and warrants as follows:
37
(a) Such Grantor affirms that it has no notice of any effective assignment
relative to the right, title and interest of any Obligor in, to and under (i)
the Project Documents to which such Grantor is a party and (ii) the Pledged
Interests in Persons in which such Grantor also owns an interest, other than the
pledge and assignment to the Secured Party under this Security Agreement and the
Amended BMC Group Security Agreement.
(b) There is not now, and, after giving effect to the pledge and assignment by
the Grantors to the Secured Party of the Project Documents hereunder, there will
not be, any event or condition (a "Termination Event") which would, either
immediately or with the passage of time or giving of notice, or both, constitute
a default under any Project Document and/or enable any party thereto to
terminate or suspend its obligations under any Project Document, and there are
no claims or rights of set-off pending by any party to any Project Document.
Section 8.03. Agreements of Grantors.
(a) Each Grantor agrees that it will not terminate or suspend its obligations,
or otherwise exercise any remedies, under any Project Document or with respect
to any Pledged Interest resulting from a Termination Event relating to any
Obligor without first giving the Secured Party the notice and opportunity to
cure provided for in subsection (c) below.
(b) Each Grantor agrees that at the time any notice of a Termination Event or
any other notice pursuant to the provisions of any Project Document or with
respect to any Pledged Interest shall be given to any Obligor, such Grantor
shall at the same time give a duplicate of such notice to the Secured Party.
Without limiting the generality of the foregoing, if a Termination Event shall
occur relating to an Obligor, and any corresponding Grantor shall desire to
exercise its remedies under the applicable Project Document as provided in
subsection (a) above with respect to such Termination Event, such Grantor shall
promptly give notice to the Secured Party, at the address set forth below, of
such Termination Event, specifying in such notice all then existing Termination
Events of which it has knowledge, such notice to be delivered to the Secured
Party by hand delivery or by an overnight courier of recognized national
standing and to be confirmed by telephone, if possible with reasonable effort.
The Secured Party may, within 30 days after the receipt by it of such notice
(which shall include such Grantor's address), deliver to such Grantor a written
notice stating that it has elected to cure such Termination Event, together with
a written statement of the Secured Party that it will promptly commence to cure
all Termination Events relating to such Obligor that are susceptible of being
cured by the Secured Party, and that it will, during the cure period provided in
subsection (c) below, diligently attempt in good faith to complete the curing
of, to the reasonable satisfaction of such Grantor, all such Termination Events;
provided, however, that nothing set forth herein shall be deemed to create any
obligation of the Secured Party to cure any Termination Event.
(c) The Secured Party shall have a period of, (i) in the case of Termination
Events relating to an Obligor arising from monetary defaults, 90 days, and (ii)
in the case the case of all other Termination Events relating to an Obligor, 180
days (such period being hereinafter referred to as the "Cure Period") after the
delivery of the notice by the Secured Party referred to in subsection (b) above
in which to cure such Termination Events. In the event any Termination Event
38
described in clause (ii) shall be incurable by the Secured Party within the Cure
Period, the applicable Grantor shall not exercise any remedies under the
applicable Project Document if the Secured Party shall, within the Cure Period,
initiate action to cure such Termination Event and proceed diligently to the
curing thereof. Any curing of any Termination Event under any Project Document
shall not be construed as an assumption by the Secured Party of any obligations,
covenants or agreements of the Obligor under such Project Document. If the
Secured Party is required to obtain the approval of any court or to take any
other action in any bankruptcy or other proceeding before exercising its rights
under this subsection (c), the Cure Period shall be extended by the period
required to obtain such approval or take such other action.
Section 8.04. Rejection of Project Documents.
In the event that any Project Document between two or more Grantors is
rejected under 11 U.S.C. Section 365, or successor legislation, and (i) no
amounts payable thereunder shall be due and payable to any Grantor at the time
of such rejection, (ii) the Secured Party shall have arranged for the curing of
any default under such Project Document susceptible of being corrected by the
Secured Party and (iii) such Project Document shall have been terminated
pursuant to the terms thereof by reason of a rejection by the applicable Obligor
or a trustee in bankruptcy under 11 U.S.C. Section 365, or successor
legislation, then the applicable Grantor shall, if requested by the Secured
Party within thirty (30) days after such rejection, execute and deliver a new
Project Document of like tenor to be in effect for the remainder of the term of
the rejected Project Document, and with substantially the same terms as those
contained therein.
Section 8.05. Performance by Secured Party.
The Secured Party shall not have any obligation or liability to any
Grantor for the performance of any obligations under any Project Document or
with respect to any Pledged Interest unless and until the Secured Party shall
have notified such Grantor in writing that it intends to assume the obligations
imposed upon the Obligor(s) by the Project Document and receive the benefits
thereunder. In the event that the Secured Party succeeds to the interest of an
Obligor under a Project Document by reason of the exercise of the Secured
Party's rights under this Security Agreement, such Grantor agrees that it will
accept performance by the Secured Party or its successors or assigns or
designees of the obligations of the Obligor(s) under and in accordance with such
Project Document notwithstanding any restrictions set forth in such Project
Document on the assignability of each such Obligor's rights. If the Secured
Party assumes the rights and/or obligations of any Obligor under any Project
Document, the Secured Party shall have the right to assign such Project Document
to a party that assumes the obligations of the Obligor(s) thereunder or with
respect thereto (notwithstanding any limitation or restriction thereon set forth
in any Project Document) and upon such assignment or transfer, the Secured Party
shall be released from any liability under such Project Document from and after
the date of such assignment or transfer and thereafter such Project Document
shall remain in full force and effect for the benefit of such assignee. Upon any
such assignment of a Project Document by the Secured Party, such assignee shall
have the right to terminate the Agreement by giving written notice thereof to
the applicable Grantor(s).
Section 8.06. Waivers.
(a) Each Grantor (i) waives presentment, protest, notice of protest, notice of
dishonor, notice of nonpayment, notice of acceptance of this Security Agreement,
39
notice of loans made, credit extended, Security Property received or delivered
or other action taken in reliance hereon and (ii) assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of the Security Property, to the addition or
release of any party or Person primarily or secondarily liable, to the
acceptance of partial payments thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Secured Party may deem advisable. In each of the foregoing instances, the
Secured Party shall be deemed to believe in good faith that the action in
question is commercially reasonable.
(b) Any delay, omission or failure by the Secured Party to insist upon the
strict performance by any Grantor of any of the covenants, conditions and
agreements herein or to exercise any right or remedy available to it upon the
occurrence and continuance of an Event of Default shall not impair any such
right or remedy or be considered or taken as a waiver or relinquishment of the
future right to insist upon and to enforce, by injunction or other appropriate
legal or equitable remedy, strict compliance by each Grantor with all such
covenants, conditions and agreements or of the right to exercise any such rights
or remedies if such default by such Grantor be continued or repeated. Regardless
of consideration and without notice to or consent of any of the holders of any
subordinate Lien on the Security Property, the Secured Party may (i) release any
part of the Security Property, (ii) release the obligations of any Person
primarily or contingently liable for the Secured Obligations, or (iii) extend
the time for payment under, or otherwise modify the terms of, this Security
Agreement, and no such release, extension or modification shall impair or affect
the Lien of this Security Agreement, or the priority of such Liens over any
subordinate Lien. No Grantor shall be relieved of any liability by reason of (A)
any such release, extension or modification, (B) the failure of the Secured
Party to comply with any request of any or all of the Grantors to foreclose this
Security Agreement or exercise any other remedy available under this Security
Agreement, or (C) any agreement or stipulation between any subsequent owner of
the Security Property and the Secured Party extending the time of payment or
modifying the terms of this Security Agreement.
Section 8.07. Unconditional Nature of Secured Obligations.
The obligations and liabilities of the Grantors hereunder are absolute
and unconditional and shall remain in full force and effect until the
satisfaction of all of the Secured Obligations, without regard to any event,
circumstance or condition that might constitute a legal or equitable defense or
discharge of any Grantor or that might in any way limit recourse against any
Grantor, including without limitation: (i) any waiver, consent or indulgence by
the Secured Party or any exercise or non-exercise of any right, power or remedy
against any Grantor; (ii) any limitation or cessation of any Grantor's liability
under any Loan Document, including without limitation any invalidity,
unenforceability or impaired liability resulting from any Grantor's lack of
capacity, power and/or authority to enter into any Loan Document or from the
execution and delivery of any Loan Document by any person acting for any Grantor
without or in excess of authority; (iii) any failure to join any Grantor in an
action to enforce any Loan Document; or (iv) any Grantor's insolvency,
bankruptcy, reorganization, dissolution, liquidation or any similar action with
respect to any Grantor.
40
Article IX
GENERAL
Section 9.01. Submission to Jurisdiction.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF
(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW)).
(b) ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS SECURITY
AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREIN SHALL BE BROUGHT, IF AT ALL, IN
THE COURTS OF EITHER (I) THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK OR (II) THE PROVINCE OF
ONTARIO, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH PARTY
HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE PARTIES HERETO IRREVOCABLY WAIVE ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
SECURITY AGREEMENT. THE PARTIES HERETO WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF THE STATE OF NEW YORK OR THE PROVINCE OF ONTARIO.
Section 9.02. Authority of Resources.
Each Guarantor authorizes Resources to act on its behalf under this
Agreement, including without limitation with respect to giving and receiving
notices and granting consents or waivers.
Section 9.03. Excluded Assets.
None of the representations, warranties, covenants (financial or
other), reporting requirements or calculations in this Security Agreement
includes, makes reference to or in any way contemplates the Excluded Assets. For
purposes of this Security Agreement, the Grantors' connection with the Excluded
Assets is disregarded in its entirety.
Section 9.04. Amendments, Consents and Waivers.
This Security Agreement may be amended, and the observance of any term
of this Security Agreement may be waived or its nonobservance consented to,
with, and only with, the written consent of the Secured Party and the Grantors.
No amendment, consent or waiver hereunder shall be effective unless in writing
and signed by an officer, employee or other Person authorized to execute such
amendment or waiver.
41
Section 9.05. Notices.
All notices, requests, demands and other communications shall be in
writing and shall be given by overnight courier, next business day delivery. Any
notice, request, demand or other communication given hereunder (i) to the
Secured Party shall be addressed to it at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx
X0X 0X0, Xxxxxx, Attention: Vice President Administration, with a copy to
Countryside US Power Inc., c/o U.S. Energy Systems, Inc., Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxx Xxxxxx, XX 00000, Attention: President, (ii) to the Issuer shall
be addressed to it at Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx, 00000
(iii) to any Grantor shall be addressed to it in care of the Issuer at Xxx Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx, 00000 and (iv) shall be deemed to have
been given on the earlier of the date when delivered or one business day after
being sent. Any party, by notice given in accordance with this Section, may
designate a further or different address for future notices.
Section 9.06. Successors and Assigns.
This Security Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
Section 9.07. Security Agreement.
This Security Agreement is a "security agreement" within the meaning of
the UCC. Each Grantor, by executing and delivering this Security Agreement, has
granted to the Secured Party, as security for the Secured Obligations, a
security interest in the Security Property in which it has an interest to the
full extent that a security interest may be granted under applicable law.
Section 9.08. Partial Invalidity.
The unenforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
Section 9.09. Release.
The security interest created under this Security Agreement shall
automatically terminate upon indefeasible payment and performance in full of all
Secured Obligations. The Secured Party shall execute and deliver, at the expense
of the Grantors, such instruments as shall be reasonably requested by the
Grantors to evidence the termination of the security interest created hereby and
the release of the Security Property from the Lien of this Security Agreement.
Section 9.10. Counterparts.
This Security Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
42
Section 9.11. Headings.
The table of contents and any headings or captions preceding the text
of the several Articles and Sections hereof are intended solely for convenience
of reference and shall not constitute a part of this Security Agreement, nor
shall they affect its meaning, construction or effect."
SECTION 2. TRUSTEE.
Upon executing and delivering this Amendment, the Trustee shall have no
further rights or obligations under the Original Security Agreement, as amended
by this Amendment, except any rights under the Original Security Agreement to
indemnification of the Trustee for actions, circumstances or events occurring on
or prior to the date hereof.
SECTION 3. FORMER XXXXXXX ISSUERS.
Upon executing and delivering their consent to this Amendment, the
Former Xxxxxxx Issuers shall no further rights or obligations under the Original
Security Agreement, as amended by this Amendment.
SECTION 4. COUNTERPARTS.
This Amendment may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
SECTION 5. GOVERNING LAW.
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER
THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW)).
ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN SHALL BE BROUGHT, IF AT ALL,
IN THE COURTS OF EITHER (I) THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK OR (II) THE PROVINCE OF
ONTARIO, AND BY EXECUTION AND DELIVERY OF THIS AMENDMENT, EACH PARTY HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
43
GROUNDS OF FORUM NON CONVENIENS, WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AMENDMENT. EACH PARTY HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF
THE STATE OF NEW YORK OR THE PROVINCE OF ONTARIO.
[Signatures to Follow]
44
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first written above.
U.S. ENERGY BIOGAS CORP.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
AVON ENERGY PARTNERS, L.L.C.
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
BARRE ENERGY PARTNERS, L.P.
By Resources Generating Systems, Inc., General
Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
BRICKYARD ENERGY PARTNERS, LLC
By Resources Generating Systems, Inc., Manager
By __________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
BURLINGTON ENERGY, INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
CAPE MAY ENERGY ASSOCIATES, L.P.
By Resources Generating Systems, Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
DEVONSHIRE POWER PARTNERS, L.L.C.
By Resources Generating Systems, Inc., Manager
By __________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
XXXXX/XXX ENERGY PARTNERS, LLC
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
DUNBARTON ENERGY PARTNERS,
LIMITED PARTNERSHIP
By Resources Generating Systems, Inc., General Partner
By __________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
ILLINOIS ELECTRICAL GENERATION PARTNERS, L.P.
By Resources Generating Systems, Inc., General
Partner
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-2
ILLINOIS ELECTRICAL GENERATION
PARTNERS II, L.P.
By Resources Generating Systems, Inc., General
Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
LAFAYETTE ENERGY PARTNERS, L.P.
By ZFC Energy, Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
OCEANSIDE ENERGY INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
ONONDAGA ENERGY PARTNERS, L.P.
By Resources Generating Systems, Inc., General
Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
POWER GENERATION (SUFFOLK), INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
RESOURCES GENERATING SYSTEMS, INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-3
RIVERSIDE RESOURCE RECOVERY, L.L.C.
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
XXXXXXX RESOURCE RECOVERY, L.L.C.
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
STREATOR ENERGY PARTNERS, LLC
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
SUFFOLK ENERGY PARTNERS, L.P.
By Power Generation (Suffolk), Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
SUFFOLK TRANSMISSION PARTNERS, L.P.
By Resources Generating Systems, Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-4
XXXXXX ENERGY PARTNERS, L.P.
By ZFC Energy, Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
TUCSON ENERGY PARTNERS, L.P.
By Resources Generating Systems, Inc., General Partner
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
UPPER ROCK ENERGY PARTNERS, LLC
By Resources Generating Systems, Inc., Manager
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
BIOGAS FINANCIAL CORPORATION (formerly known as Xxxxxx
Financial Corporation)
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
ZAPCO ENERGY TACTICS CORPORATION
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
ZAPCO ILLINOIS ENERGY, INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-5
ZAPCO READVILLE COGENERATION, INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
ZFC ENERGY, INC.
By___________________________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-6
COUNTRYSIDE CANADA POWER INC., as secured party and as
trustee
By___________________________________________________
Name:
Title:
S-8
Consented to by:
GARLAND ENERGY DEVELOPMENT, LLC
By Resources Generating Systems, Inc., Manager
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
OYSTER BAY ENERGY PARTNERS, L.P.
By Resources Generating Systems, Inc., General Partner
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
SMITHTOWN ENERGY PARTNERS, L.P.
By Resources Generating Systems, Inc., General Partner
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
SPRINGFIELD ENERGY ASSOCIATES LTD. PARTNERSHIP
By Resources Generating Systems, Inc., General Partner
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
ZAPCO DEVELOPMENT CORPORATION
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-8
ZAPCO EQUIPMENT CORP.
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
ZAPCO READVILLE COGENERATION, INC.
By _________________________________
Xxxxxxx X. Xxxxxxxxx
President
S-9
Schedule 4.03(a)
Illinois Permitted Investments
Funds in the Other ICC Account may be invested in Cash Equivalents, Fixed Income
Securities and Equities, each as defined below (the foregoing being "Illinois
Permitted Investments"). In no event, however, may the aggregate amount of
Illinois Permitted Investments that are made consist of (i) less than 30% Fixed
Income Securities, (ii) more than 65% Equities or (iii) more than 65% Fixed
Income Securities rated lower than BB by Standard & Poor's Ratings Services (or
any successor thereto) or Ba2 Moody's Investor's Service, Inc. (or any successor
thereto).
"Cash Equivalents" shall mean:
(i) Shares in money market mutual funds;
(ii) United States treasury bills;
(iii) Commercial paper denominated in U.S. dollars rated A-2 or
better by Standard & Poor's Ratings Services (or any successor thereto) or P-2
or better by Moody's Investor's Service, Inc. (or any successor thereto); and
(iv) Certificates of deposit denominated in U.S. dollars issued by any
bank or trust company whose deposits are insured by the Federal Deposit
Insurance Corporation.
"Fixed Income Securities" shall mean:
(i) Direct obligations of the United States of America, or of any agency
thereof, or obligations guaranteed as to principal and interest by the United
States of America, or by any agency thereof (other than United States treasury
bills);
(ii) Notes or bonds or convertible notes or bonds of any corporation,
which notes or bonds are rated BB or better by Standard & Poor's Ratings
Services (or any successor thereto) or Ba2 or better Moody's Investor's Service,
Inc. (or any successor thereto);
(iii) Obligations evidenced by notes, bonds, debentures or similar
instruments that are secured by mortgages;
(iv) Preferred or convertible preferred stock of any corporation
incorporated under any State of the United States of America, which preferred
stock is rated BB or better by Standard & Poor's Ratings Services (or any
successor thereto) or Ba2 or better Moody's Investor's Service, Inc. (or any
successor thereto); and
(v) Fixed income securities of foreign governments, which securities are
rated A or better by Standard & Poor's Ratings Services (or any successor
thereto) or A2 or better Moody's Investor's Service, Inc. (or any successor
thereto).
"Equities" shall mean:
(i) Common stock of any corporation;
(ii) Shares in real estate investment trusts, master limited
partnerships, income trusts or royalty trusts (other than the Fund) that are
organized under the laws of the United States of America or any State thereof or
the laws of Canada, so long as (A) with respect to each such trust or
partnership, the aggregate net asset value of such trust or partnership on the
date of acquisition of any shares thereof is not less than $300,000,000, and (B)
such shares are traded on any of the New York Stock Exchange, Toronto Stock
Exchange, American Stock Exchange or National Association of Securities Dealers
Automated Quotation;
(iii) Convertible Preferred Stock of any corporation, which
convertible preferred stock is traded on any of the New York Stock Exchange,
Toronto Stock Exchange, American Stock Exchange or National Association of
Securities Dealers Automated Quotation; and
(iv) American Depositary Receipts.
Schedule 4.03(b
Other Permitted Investments
Funds in the Debt Service Reserve Account and the Construction Reserve Account
may be invested in Convertible Debt, Corporate Fixed Income Securities,
Equities, Preferred Stock or Other Investments, each as defined below (the
foregoing being "Other Permitted Investments"). In no event, however, may the
aggregate amount of Other Permitted Investments that are made consist of (i)
more than 50% Fixed Income Securities, (ii) 10% Preferred Stock, (iii) 10%
Convertible Notes or Bonds or (iv) 5% Equities.
"Convertible Notes or Bonds" shall mean convertible notes or bonds of any
corporation incorporated under the laws of any State of the United States of
America, which convertible notes or bonds are rated BB or better by Standard &
Poor's Ratings Services (or any successor thereto) or Ba2 or better Moody's
Investor's Service, Inc. (or any successor thereto) and which convertible notes
or bonds are traded on any of the New York Stock Exchange, Toronto Stock
Exchange, American Stock Exchange or National Association of Securities Dealers
Automated Quotation.
"Corporate Fixed Income Securities" shall mean (i) Preferred Stock and (ii)
notes or bonds of any corporation incorporated under the laws of any State of
the United States of America, which notes or bonds are rated BB or better by
Standard & Poor's Ratings Services (or any successor thereto) or Ba2 or better
Moody's Investor's Service, Inc. (or any successor thereto).
"Equities" shall mean shares in real estate investment trusts, master limited
partnerships, income trusts or royalty trusts, so long as (A) with respect to
each such trust or partnership, the aggregate net asset value of such trust or
partnership on the date of acquisition of any shares thereof is not less than
$300,000,000, and (B) such shares are traded on any of the New York Stock
Exchange, Toronto Stock Exchange, American Stock Exchange or National
Association of Securities Dealers Automated Quotation.
"Preferred Stock" shall mean preferred stock of any corporation incorporated
under the laws of any State of the United States of America, which preferred
stock is rated BB or better by Standard & Poor's Ratings Services (or any
successor thereto) or Ba2 or better Moody's Investor's Service, Inc. (or any
successor thereto).
"Other Investments" shall mean:
(i) Shares in money market mutual funds;
(ii) Direct obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal and interest by the
United States of America, or by any agency thereof;
(iii) Commercial paper issued by
any corporation incorporated under the laws of any State of the United States of
America denominated in U.S. dollars rated A-2 or better by Standard & Poor's
Ratings Services (or any successor thereto) or P-2 or better by Moody's
Investor's Service, Inc. (or any successor thereto);
(iv) Certificates of deposit denominated in U.S. dollars issued by any
bank or trust company whose deposits are insured by the Federal Deposit
Insurance Corporation;
(v) Obligations evidenced by notes, bonds, debentures or similar
instruments that are secured by mortgages; and Fixed income securities of
foreign governments, which securities are rated A or better by Standard & Poor's
Ratings Services (or any successor thereto) or A2 or better Moody's Investor's
Service, Inc. (or any successor thereto).
