Exhibit 10.2
 
COVANTA GUARANTY
 
As of August 19, 2008
 
Ridgewood Providence Power Partners, L.P.,
Ridgewood Rhode Island Generation, LLC,
Linwood 0708 LLC
947 Linwood Avenue
Ridgewood, NJ 07450
Fax: (201) 447-0474
 
Attn: Randall D. Holmes
 
Ladies and Gentlemen:
 
For value received, Covanta Energy Corporation (the “Guarantor”), a corporation
duly organized under the laws of Delaware, unconditionally and absolutely
guarantees to Ridgewood Providence Power Partners, L.P. (“RPPP”), Ridgewood
Rhode Island Generation, LLC (“RRIG”), Linwood 0708 LLC (“Linwood”) and Rhode
Island LFG Genco, LLC (“RILG” and together with RRIG, RPPP and Linwood, the
“Counterparties”), the prompt and complete payment when due, whether by
acceleration or otherwise, of all payment obligations and liabilities (the
“Guaranteed Obligations”), whether now in existence or hereafter arising, of
Indeck Maine Energy, LLC, a limited liability company duly organized under the
laws of the State of Illinois (together with its successors, the “Company”),
pursuant to that certain Backup Certificate Agreement, dated on the date hereof,
among the Company, RPPP, RRIG, Linwood, RILG and Ridgewood Power Management LLC,
as agent for RPPP, RRIG and Linwood under the Agreement (defined below) (the
“Backup Agreement”). Each capitalized term used but not defined herein shall
have the meaning given to it in the Backup Agreement.
 
This Guaranty is one of payment and not of collection. Notwithstanding anything
to the contrary, the total liability of Guarantor hereunder, regardless of any
amendment or modification to the Backup Agreement, shall not exceed at any time
an amount equal to 80% of the amount required to be funded at such time in the
Account (as defined in the Agreement as defined below) under and pursuant to
Section 5.2 of the Certificate Purchase and Sale Agreement dated as of April 30,
2003 among the Company, RPPP, RRIG, Ridgewood Power Management LLC as agent
(“RPMC”) and Constellation Energy Commodities Group, Inc., f/k/a Constellation
Power Source, Inc. (“Constellation”), as amended by that certain letter
agreement dated January 25, 2006, by Amendment No. 1 thereto dated as of
October 31, 2006 and by the Assignment, Assumption, Release and Amendment
Agreement of Certificate Purchase and Sale Agreement, among Constellation, the
Company, RPPP, RRIG, RPMC, Ridgewood Electric Power Trust III, Ridgewood
Electric Power Trust IV, Ridgewood Electric Power Trust V, Ridgewood Power B
Fund/Providence Expansion and Linwood, dated as of July 31, 2008 (together the
“Agreement”), but not the amount required with respect to Section 3.6 of the
Agreement, but in any event not to exceed a maximum amount of $7,300,000 (the
“Liability Cap”). For the avoidance of doubt, the Guaranteed Obligations may at
any time and from time to time exceed the liability of the Guarantor hereunder
without impairing this Guaranty. The Guarantor’s obligations and liability under
this Guaranty shall be limited to payment obligations only, and the Guarantor
shall have no obligation to perform (other than payment of this Guaranty) under
the Backup Agreement, including no obligation to generate, obtain or provide
Certificates.
 
The Guarantor hereby waives notice of acceptance of this Guaranty and notice of
any obligation or liability to which it may apply, and waives presentment,
demand for payment, protest, notice of dishonor or non-payment of any such
obligation or liability, suit or the taking of other action by the
Counterparties against, and any other notice to, the Company, the Guarantor or
others.

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The Counterparties, at any time and from time to time without notice to or
consent of the Guarantor and without impairing or releasing the obligations of
the Guarantor hereunder, may, with respect to the Guaranteed Obligations:
(1) agree with the Company to make any change in the terms of any obligation or
liability of the Company to the Counterparties, (2) take or fail to take any
action of any kind in respect of any security for any obligation or liability of
the Company to the Counterparties, (3) exercise or refrain from exercising any
rights against the Company or others, or (4) compromise or subordinate any
obligation or liability of the Company to the Counterparties including any
security therefor. Any other suretyship defenses are hereby waived by the
Guarantor.
 
This Guaranty shall be subject to and only effective on and after the closing of
the transactions contemplated in the Purchase and Sale Agreement, dated as of
the date hereof, between Ridgewood Maine, L.L.C. (“RM”), Indeck Energy Services
(“IES”) and Guarantor, pursuant to which RM and IES shall sell, assign, transfer
and convey to Guarantor their respective membership interests in the Company.
This Guaranty shall continue in full force and effect until the later of (A) the
termination or expiration of the Backup Agreement and (B) the satisfaction of
all of the Company’s obligation under the Backup Agreement and the Guarantor’s
obligations under this Guaranty.
 
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations are
annulled, set aside, invalidated, declared to be fraudulent or preferential,
rescinded or must otherwise be returned, refunded or repaid by the
Counterparties upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any other guarantor, or upon or as a result of
the appointment of a receiver or conservator of, or trustee for the Company or
any other guarantor or any substantial part of its property or otherwise, all as
though such payment or payments had not been made. To the extent that any
payment by the Guarantor hereunder is annulled, set aside, invalidated, declared
to be fraudulent or preferential, rescinded or must otherwise be returned,
refunded or repaid by the Counterparties, the amount available under the
Liability Cap will be restored by an amount equal to such payment.
 
The Guarantor may not assign its rights nor delegate its obligations under this
Guaranty, in whole or in part, without prior written consent of the
Counterparties, and any purported assignment or delegation absent such consent
is void, except for an assignment and delegation of all of the Guarantor’s
rights and obligations hereunder in whatever form the Guarantor determines may
be appropriate to a partnership, corporation, trust or other organization in
whatever form that succeeds to all or substantially all of the Guarantor’s
assets and business and that assumes such obligations by contract, operation of
law or otherwise. Upon any such delegation and assumption of obligations
(including any obligations arising prior to such delegation and assumption), the
Guarantor shall be relieved of and fully discharged from all obligations
hereunder, whether such obligations arose before or after such delegation and
assumption.
 
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW. GUARANTOR AGREES TO THE EXCLUSIVE JURISDICTION OF COURTS LOCATED IN THE
STATE OF NEW YORK, UNITED STATES OF AMERICA, OVER ANY DISPUTES ARISING UNDER OR
RELATING TO THIS GUARANTY.
 
Very truly yours,
 

COVANTA ENERGY CORPORATION
 

  By: 
/s/  Anthony J. Orlando

Name:     Anthony J. Orlando

  Title:  President and Chief Executive Officer

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