Exhibit 10.1
MEMBERSHIP INTEREST PURCHASE AGREEMENT
dated as of January 1, 2009
by and between
RENEGY HOLDINGS, INC.,
a Delaware corporation
and
AZ BIOMASS LLC,
a Delaware limited liability company
with respect to certain
Class A membership interests of
Snowflake White Mountain Power, LLC,
an Arizona limited liability company

 

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TABLE OF CONTENTS

                      Page
 
            ARTICLE 1 INTERPRETATION     1  
 
           
1.01.
  Definitions; Defined Terms     1  
1.02.
  Interpretation     8  
 
            ARTICLE 2 SALE OF MEMBERSHIP INTERESTS AND CLOSING     9  
 
           
2.01.
  Purchase and Sale     9  
2.02.
  Purchase Price     9  
2.03.
  Closing     11  
2.04.
  Further Assurances; Post-Closing Cooperation     11  
2.05.
  Repurchase of Purchased Interests     12  
 
            ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER     13  
 
           
3.01.
  Existence     13  
3.02.
  Authority     13  
3.03.
  Organization of the Project Company     13  
3.04.
  Membership Interests     13  
3.05.
  Subsidiaries; No Other Business     14  
3.06.
  No Conflicts     14  
3.07.
  Governmental Approvals and Filings     14  
3.08.
  Membership Records     15  
3.09.
  Financial Statements and Condition     15  
3.10.
  Taxes     15  
3.11.
  Legal Proceedings     16  
3.12.
  Bankruptcy     16  
3.13.
  Permits     17  
3.14.
  Compliance With Laws, Orders and Regulatory Matters     17  
3.15.
  Employees     17  
3.16.
  Insurance     18  
3.17.
  Regulatory Status     18  
3.18.
  Brokers     18  
3.19.
  Intellectual Property     18  
3.20.
  Disclosure     19  
3.21.
  Environmental Law Compliance     19  
3.22.
  Transactions With Certain Persons     20  
3.23.
  No Defects     20  
3.24.
  Project Documents     20  
3.25.
  In-Service Representation     20  
3.26.
  Base Case Projections     20  
3.27.
  Properties and Encumbrances     21  
3.28.
  Affiliate Valuations     21  

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                      Page
 
            ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER     22  
 
           
4.01.
  Existence     22  
4.02.
  Authority     22  
4.03.
  No Conflicts     22  
4.04.
  Governmental Approvals and Filings     22  
4.05.
  Legal Proceedings     22  
4.06.
  Purchase for Investment     23  
4.07.
  Investigation     23  
4.08.
  Disclaimer Regarding Condition     23  
4.09.
  Brokers     23  
 
            ARTICLE 5 COVENANTS OF SELLER     24  
 
           
5.01.
  Regulatory and Other Approvals     24  
5.02.
  Investigation by Purchaser     24  
5.03.
  Conduct of Business; Compliance with Law     24  
5.04.
  Certain Restrictions     24  
5.05.
  Cooperation     25  
 
            ARTICLE 6 COVENANTS OF PURCHASER     25  
 
           
6.01.
  Regulatory and Other Approvals     25  
 
            ARTICLE 7 CONDITIONS TO OBLIGATIONS OF PURCHASER     26  
 
           
7.01.
  Representations and Warranties     26  
7.02.
  Performance     26  
7.03.
  Officers’ Certificates     26  
7.04.
  Organizational Documents     26  
7.05.
  Project Documents     26  
7.06.
  Litigation, Orders and Laws     26  
7.07.
  Regulatory Consents and Approvals     27  
7.08.
  Third Party Consents     27  
7.09.
  Opinion of Counsel     27  
7.10.
  LLC Agreement     27  
7.11.
  Non-Foreign Status     27  
7.12.
  Other Matters     27  
7.13.
  Pledge Agreement     27  
7.14.
  Credit Facilities     27  
7.15.
  Deposit Account Control Agreement     27  
7.16.
  Side Letter     28  
7.17.
  Security Agreement     28  
 
            ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLER     28  
 
           
8.01.
  Representations and Warranties     28  
8.02.
  Performance     28  
8.03.
  Officers’ Certificates     28  
8.04.
  Litigation, Orders and Laws     28  

 

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                      Page  
 
           
8.05.
  Regulatory Consents and Approvals     28  
8.06.
  Third Party Consents     29  
8.07.
  Opinion of Counsel     29  
8.08.
  LLC Agreement     29  
8.09.
  Other Matters     29  
8.10.
  Side Letter     29  
8.11.
  Deposit Account Control Agreement     29  
8.12.
  Security Agreement     29  
 
            ARTICLE 9 TAX MATTERS     29  
 
           
9.01.
  Certain Taxes     29  
9.02.
  Allocation of Purchase Price     30  
 
            ARTICLE 10 SURVIVAL; NO OTHER REPRESENTATIONS     31  
 
           
10.01.
  Survival of Representations and Warranties     31  
10.02.
  No Other Representations     31  
 
            ARTICLE 11 INDEMNIFICATION; LIQUIDATED DAMAGES     31  
 
           
11.01.
  Indemnification     31  
11.02.
  Method of Asserting Claims     32  
11.03.
  Liquidated Damages     34  
 
            ARTICLE 12 TERMINATION     35  
 
           
12.01.
  Termination     35  
12.02.
  Effect of Termination     35  
12.03.
  Rescission Right     35  
 
            ARTICLE 13 MISCELLANEOUS     36  
 
           
13.01.
  Notices     36  
13.02.
  Entire Agreement     37  
13.03.
  Expenses     37  
13.04.
  Public Announcements     37  
13.05.
  Confidentiality     38  
13.06.
  Waiver     39  
13.07.
  Amendment     39  
13.08.
  No Third Party Beneficiary     39  
13.09.
  No Assignment; Binding Effect     39  
13.10.
  Invalid Provisions     39  
13.11.
  Governing Law     39  
13.12.
  Venue and Consent to Jurisdiction     40  
13.13.
  Attorney’s Fees     40  
13.14.
  Waiver Of Consequential Damages     40  
13.15.
  Waiver Of Trial By Jury     40  
13.16.
  Facsimile Signature; Counterparts     41  

 

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EXHIBITS

     
Exhibit A
  Form of Pledge Agreement
Exhibit B
  Assignment of Interests
Exhibit C
  Officer’s Certificate (Seller)
Exhibit D-1
  Secretary’s Certificate (Seller)
Exhibit D-2
  Secretary’s Certificate (Project Company)
Exhibit E
  Opinion of Counsel To Seller
Exhibit F
  Officer’s Certificate (Purchaser)
Exhibit G
  Secretary’s Certificate (Purchaser)
Exhibit H
  Opinion of Counsel to Purchaser
Exhibit I
  Form of Deposit Account Control Agreement
Exhibit J
  Form of Side Letter
Exhibit K
  Form of Security Agreement

SCHEDULES

     
SCHEDULE 1
  AMENDED AND RESTATED PROJECT COMPANY OPERATING AGREEMENT
SCHEDULE 3.06
  REQUIRED SELLER CONSENTS
SCHEDULE 3.07
  GOVERNMENT APPROVALS
SCHEDULE 3.09
  MATERIAL ADVERSE CHANGES
SCHEDULE 3.13
  MATERIAL PERMITS
SCHEDULE 3.14
  COMPLIANCE WITH LAWS, ORDERS AND REGULATORY MATTERS
SCHEDULE 3.16
  INSURANCE COVERAGE
SCHEDULE 3.18
  BROKERS
SCHEDULE 3.19
  INTELLECTUAL PROPERTY
SCHEDULE 3.21
  ENVIRONMENTAL DISCLOSURE
SCHEDULE 3.24
  MATERIAL CONTRACTS
SCHEDULE 3.26
  BASE CASE PROJECTIONS
SCHEDULE 3.27
  REAL AND PERSONAL PROPERTY
SCHEDULE 4.03
  REQUIRED PURCHASER CONSENTS
SCHEDULE 4.04
  GOVERNMENT APPROVALS REQUIRED OF PURCHASER
SCHEDULE 7.07
  REGULATORY CONSENTS

 

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MEMBERSHIP INTEREST PURCHASE AGREEMENT
     This MEMBERSHIP INTEREST PURCHASE AGREEMENT dated as of January 1, 2009 is
made and entered into by and between Renegy Holdings, Inc., a Delaware
corporation (“Seller”), and AZ Biomass LLC, a Delaware limited liability company
(“Purchaser”), (Purchaser and Seller being sometimes hereinafter referred to
individually as a “Party” and collectively as the “Parties”). Capitalized terms
used herein without definition shall have the same meanings set forth in
Section 1.01.
     WHEREAS, Seller owns, beneficially and of record, all of the authorized and
outstanding membership interests (the “Membership Interests”) of Snowflake White
Mountain Power, LLC, an Arizona limited liability company (the “Project
Company”); and
     WHEREAS, the Project Company has developed and owns a 24 MW biomass
electric generation station located adjacent to a paper mill near Snowflake,
Arizona (the “Project”); and
     WHEREAS, Seller desires to sell, and Purchaser desires to purchase, all of
the authorized “Class A Membership Interests” (as such term is defined in the
LLC Agreement) (the “Purchased Interests”) on the terms and subject to the
conditions set forth in this Agreement.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE 1
INTERPRETATION
     1.01. Definitions; Defined Terms. As used in this Agreement, the following
defined terms have the meanings indicated below:
     “Actions or Proceedings” means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation.
     “Affiliate” means any Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning
fifty percent (50%) or more of the voting or equity securities of another Person
shall be deemed to control that Person.
     “After-Tax Basis” means, with respect to any payment received or deemed to
have been received by any Person, the amount of such payment (the “Base
Payment”) supplemented by a further payment (the “Additional Payment”) to that
Person so that the sum of the Base Payment plus the Additional Payment shall,
after deduction of the amount of all Federal, state and local income Taxes
required to be paid by such Person in respect of the receipt or accrual of the
Base Payment and the Additional Payment (taking into account the net present
value of any reduction

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in such income Taxes resulting from Tax benefits realized by the recipient as a
result of the payment or the event giving rise to the payment), be equal to the
amount required to be received. Such calculations shall be made on the basis of
the highest generally applicable Federal, state and local income tax rates
applicable to a corporation for all relevant periods, and shall take into
account the deductibility of state and local income taxes for Federal income tax
purposes.
     “Agreement” means this Membership Interest Purchase Agreement and all
exhibits hereto and the certificates delivered in accordance with Sections 7.03
and 8.03, as any of the same shall be amended from time to time.
     “Assets and Properties” means all assets, properties rights and interests
of any Person of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such Person
or that such Person has a contractual right to use.
     “Assignment of Interests” means the Assignment of Interests substantially
in the form of Exhibit B.
     “Base Amount” has the meaning set forth in Section 2.02(b).
     “Base Case Projections” means the estimated financial projections with
respect to the Project and the Project Company attached hereto as Schedule 3.26.
     “Books and Records” means all files, documents, instruments, papers, books
and records relating to the business of the Project Company, including financial
statements, Tax Returns and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts,
Licenses, customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
     “Business Day” means a day other than Saturday, Sunday or any day on which
banks located in the State of Arizona are authorized or obligated to close.
     “Claim Notice” means written notification pursuant to Section 11.02(a) of a
Third Party Claim as to which indemnity under Section 11.01 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party’s claim against the Indemnifying Party under Section 11.01, together with
the amount or, if not then reasonably determinable, the estimated amount,
determined in good faith, of the Loss arising from such Third Party Claim.
     “Class A Foreclosure Event” has the meaning set forth in Section 2.02(c).
     “Closing” has the meaning set forth in Section 2.03(a).
     “Closing Date” has the meaning set forth in Section 2.03(a).
     “CoBank Credit Agreement” has the meaning set forth in Section 3.28.

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     “Code” means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
     “Company Controlled Group” has the meaning set forth in Section 3.15.
     “Contested Taxes” has the meaning set forth in Section 9.01(b).
     “Contingent Events” means each of (i) the issuance by FERC of the FERC
Approval and (ii) the occurrence of Term-Conversion (as such term is defined in
the CoBank Credit Agreement), together with confirmation from CoBank ACB to
Purchaser that Term Conversion has occurred.
     “Contingent Events Date” means the date upon which the later of the two
Contingent Events occurs.
     “Contingent Events Deadline” means February 28, 2009.
     “Contract” means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract relating to the
Project entered into by the Project Company or by which the Project Company or
any of its Assets or Properties is bound.
     “Debt Repayment Period” has the meaning set forth in Section 2.05(b).
     “Deposit Account” means that certain interest bearing deposit account which
is identified in the Deposit Account Control Agreement and which is maintained
by Seller at a branch or office of the Depository Bank.
     “Deposit Account Control Agreement” means that certain Blocked Deposit
Account Control Agreement substantially in the form of Exhibit I hereto, dated
as of the Closing Date, among Seller, Purchaser and Depository Bank governing
the control and release of the funds in the Deposit Account.
     “Depository Bank” means US Bank National Association, Denver, Colorado.
     “Dispute Period” means the period ending sixty (60) days following delivery
by an Indemnifying Party of either a Claim Notice or an Indemnity Notice.
     “Environment” means air, land (including soil and any surface or subsurface
strata), and surface water or groundwater, or any combination or part thereof.
     “Environmental Claim” means any request for information by any Governmental
or Regulatory Authority or any claim by any Governmental or Regulatory Authority
for enforcement, cleanup, removal, response, remedial or other actions, costs or
damages pursuant to any common law cause of action or applicable Environmental
Requirement, or any claim brought or made by any other Person alleging any
liability under or violation of or noncompliance with any Environmental
Requirement or seeking damages, contribution, indemnification, costs, recovery,
compensation, injunctive or other relief resulting from the

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presence of Hazardous Materials at, or under or from any real property currently
owned or leased by the Project Company.
     “Environmental Requirement” means each and every Law or Order regulating or
otherwise relating in any way to (i) the protection of the Environment, (ii) the
Release or threatened Release of Hazardous Material into the Environment, or
(iii) the generation, distribution, use, treatment, storage, disposal, cleanup,
transport or handling of Hazardous Material.
     “Equity Option” means any security, right, subscription, warrant, option,
“phantom” stock right, commitment, conversion right, right of exchange, right of
first refusal or other Contract that gives a Person the right to (i) purchase or
otherwise receive or be issued any equity interest of a Person or any security
of any kind convertible into or exchangeable or exercisable for any equity
interest of such Person or (ii) receive or exercise any benefits or rights
similar to any rights enjoyed by or accruing to the holder of equity interests
of a Person, including any rights to participate in the equity or income of such
Person or to participate in or direct the election of any directors, managers or
officers of such Person or the manner in which any equity interests of such
Person are voted.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “FERC” means the Federal Energy Regulatory Commission.
     “FERC Approval” means an order issued by FERC granting all authorizations
requested by Seller, Project Company and Purchaser under the FPA 203
Application.
     “Financial Statements” means the financial statements of the Project
Company delivered to Purchaser pursuant to Section 3.09.
     “FPA 203 Application” means that certain Joint Application for
Authorization of Proposed Transaction under Section 203 of the Federal Power
Act, and Request for Expedited Consideration, Waiver of Certain Filing
Requirements, and Confidential Treatment, Docket No. EC09-31-000, filed with
FERC on December 18, 2008, by Seller, Project Company and Purchaser.
     “GAAP” means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
     “Governmental Approval” means any authorization, approval, consent,
License, exception, variance, Order, franchise, lease, ruling, permit, tariff,
certification, exemption, filing, notice to, declarations of, or registration by
or with any Governmental or Regulatory Authority.
     “Governmental or Regulatory Authority” means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States or any state, county, city or other political subdivision.
     “Hazardous Material” means any substance: (i) the Release or threatened
Release of which into the Environment requires, characterization, mitigation,
removal, or remediation

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pursuant to any Environmental Requirement; (ii) without limitation, any
“hazardous substance,” “toxic substance,” “hazardous waste,” “toxic waste,”
“pollutant,” or “contaminant,” as such terms are defined under applicable
Environmental Requirements; or (iii) without limitation, which is or contains
polychlorinated biphenyls (PCBs), asbestos, urea-formaldehyde foam insulation
(UFFI), radioactive materials, or petroleum hydrocarbons or other petroleum
products.
     “Holdback Amount” means $300,000.
     “Holdback Amount Release Date” has the meaning set forth in
Section 2.02(b).
     “Holdback Return Event” has the meaning set forth in Section 2.02(b).
     “Indebtedness” means all obligations of a Person (i) for borrowed money,
(ii) evidenced by notes, bonds, debentures or similar instruments, (iii) for the
deferred purchase price of goods or services (other than trade payables or
accruals incurred in the ordinary course of business), (iv) under capital leases
and (v) in the nature of guaranties of the obligations described in clauses
(i) through (iv) above of any other Person.
     “Indemnified Party” means either a Seller Indemnified Party or a Purchaser
Indemnified Party, as the context provides.
     “Indemnifying Party” means any Person against whom a claim for
indemnification is being asserted under any provision of Article 11.
     “Indemnity Notice” means written notification pursuant to
Section 11.02(a)(i) of a claim for indemnity under Article 11 by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably determinable, the estimated amount, determined
in good faith, of the Loss arising from such claim.
     “Information” has the meaning set forth in Section 13.05.
     “Intellectual Property” has the meaning set forth in Section 3.19.
     “IRS” means the United States Internal Revenue Service.
     “Laws” means all laws, statutes, treaties, rules, codes, ordinances,
regulations, permits, official guidelines, certificates, orders,
interpretations, licenses, leases and permits of any Governmental or Regulatory
Authority, Governmental Approvals, and judgments, decrees, injunctions, writs,
orders or like action of any court, arbitrator or other judicial or
quasi-judicial tribunal of competent jurisdiction and all requirements of law.
     “Lender” means (i) any and all bondholders, noteholders or lenders,
directly or indirectly, holding an interest in obligations issued pursuant to
any Project Debt Documents, (ii) the agent, trustee, collateral agent or
depositary for any Person listed in clause (i) above, and (iii) the successors
and permitted assigns of any of the foregoing.

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     “Liabilities” means all Indebtedness, obligations and other liabilities of
a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether
due or to become due and including, without limitation, liabilities arising from
an Action or Proceeding).
     “Liens” means any mortgage, deed of trust, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge, option, warrant, purchase
right or option, right of first refusal (or similar covenant, right or
easement), or other encumbrance or restriction of any kind, or any conditional
sale Contract, title retention Contract or other Contract to give any of the
foregoing.
     “LLC Agreement” means the Amended and Restated Limited Liability Company
Agreement of the Project Company, dated as of January 1, 2009, as set forth in
Schedule 1 hereto, and any and all amendments or variations thereto.
     “Loss” means any and all damages (including incidental and consequential
damages incurred with respect to any claim by a third party but not by a Party
except as expressly provided herein), fines, penalties, deficiencies, losses,
interest, awards, judgments, expenses (including interest, court costs,
reasonable fees of attorneys, accountants and other experts or other reasonable
expenses of litigation or other proceedings or of any claim, default or
assessment) and diminution of value, whether or not involving a third party
claim, but excluding Taxes.
     “Material Contracts” has the meaning set forth in Section 3.24.
     “Membership Interests” has the meaning set forth in the forepart of this
Agreement.
     “Order” means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority.
     “Party” or “Parties” has the meaning set forth in the forepart to this
Agreement.
     “Permit” means all material agreements, issuances, orders, licenses,
franchises, permits, certificates, orders, waivers, approvals and authorizations
that are required to be obtained from any Governmental or Regulatory Authority,
as of the date hereof and as of the Closing Date, necessary to own and operate
the Project as currently owned and operated, including, without limitation,
permits issued under applicable Environmental Requirements.
     “Permitted Lien” means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP on the Financial
Statements; (ii) any statutory Lien arising in the ordinary course of business
by operation of Law with respect to a Liability that is not yet due or
delinquent; and (iii) Liens created pursuant to that certain Leasehold Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
dated as of September 1, 2006, granted by Project Company for the benefit of
CoBank, ACB and that certain Pledge Agreement, dated as of October 1, 2007,
among Seller, Renegy, LLC, Renegy Trucking, LLC, Project Company and CoBank,
ACB.

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     “Person” means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
     “Project” has the meaning set forth in the forepart of this Agreement.
     “Project Company” has the meaning set forth in the forepart of this
Agreement, and shall include any successor of the Project Company.
     “Project Debt Documents” means the CoBank Credit Agreement and all other
credit agreements, reimbursement agreements, trust indentures, depositary
agreements, mortgages, security agreements, leases, leveraged leases, synthetic
leases, sale-leasebacks or other similar transactions or other documents under
which development, construction or permanent financing has been obtained
(including any credit enhancement, leveraged lease, synthetic lease or
otherwise) to provide funds (in whole or in part) for the acquisition,
development, construction or operation of all or any part of the Project or any
refinancing of any thereof.
     “Project Documents” means the Project Debt Documents and all other Material
Contracts.
     “PUHCA” has the meaning set forth in Section 3.17(a).
     “Purchase Price” has the meaning set forth in Section 2.02.
     “Purchased Interests” has the meaning set forth in the forepart of this
Agreement.
     “Purchaser” has the meaning set forth in the forepart of this Agreement,
and includes its successors and assigns.
     “Purchaser Indemnified Parties” means Purchaser and each of Purchaser’s
Affiliates, members and direct and indirect beneficial owners, and each of their
respective officers, directors, stockholders, members, managers, employees,
representatives, agents, successors and assigns.
     “Release” means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, migrating,
dumping or disposing into the Environment of any Hazardous Material.
     “Representatives” has the meaning set forth in Section 5.02.
     “Rescission Event” has the meaning set forth in Section 12.03.
     “Security Agreement” means that certain Security Agreement substantially in
the form of Exhibit K hereto, dated as of the Closing Date, between Seller, as
grantor, and Purchaser, as secured party.
     “Seller” has the meaning set forth in the forepart of this Agreement, and
includes its successors and assigns.

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     “Seller Indemnified Parties” means Seller and each of Seller’s Affiliates,
members and direct and indirect beneficial owners, and each of their respective
officers, directors, stockholders, members, managers, employees,
representatives, agents, successors and assigns.
     “Tax Credit” means the renewable electricity production credit allowable
pursuant to Section 45 of the Code.
     “Tax Returns” means any report, form, return, statement or other
information (including any amendments) required to be supplied to a Governmental
or Regulatory Authority by the Project Company with respect to Taxes, including
information returns, any amendments thereof or schedule or attachment thereto,
and any documents with respect to or accompanying requests for the extension of
time in which to file any such report, return, document, declaration or other
information.
     “Taxes” means any income, gross or net receipts, property, sales, use,
capital gain, transfer, excise, license, production, franchise, employment,
social security, occupation, payroll, registration, governmental pension or
insurance, withholding, royalty, severance, stamp or documentary, value added,
or other tax, charge, assessment, duty, levy, compulsory loan, business or
occupation (including any interest, additions to tax, or civil or criminal
penalties thereon) of the United States or any state or local jurisdiction
therein, or of any other nation or any jurisdiction therein.
     “Transfer Taxes” has the meaning set forth in Section 9.01(d).
     1.02. Interpretation.
          (a) Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
“hereof,” “herein,” “hereby” and derivative or similar words refer to this
entire Agreement; (iv) the terms “Article” or “Section” refer to the specified
Article or Section of this Agreement; (v) the words “include” and “including”
are not words of limitation and shall be deemed to followed by the words
“without limitation;” (vi) the use of the word “or” to connect two or more
phrases shall be construed as inclusive of all such phrases (e.g., “A or B”
means “A or B, or both”); and (vii) the phrase “ordinary course of business”
refers to the business of the Project Company.
          (b) Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.
          (c) All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
          (d) Unless the context otherwise requires, a reference to any Law
includes any amendment, modification or successor thereto.
          (e) Any representation or warranty contained herein as to the
enforceability of a Contract shall be subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar law affecting the
enforcement of creditors’ rights generally and to

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general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
          (f) In the event of a conflict between any of the terms of this
Agreement and any exhibit, schedule or appendix hereto, the terms of this
Agreement shall control.
          (g) The paragraph headings contained herein have been used solely for
convenience, and are not intended to describe, interpret, define or limit the
scope of this Agreement.
          (h) Conflicts or discrepancies, errors, or omissions in this Agreement
or the various documents delivered in connection with this Agreement will not be
strictly construed against the drafter of the contract language; rather, they
shall be resolved by applying the most reasonable interpretation under the
circumstances, giving full consideration to the intentions of the Parties at the
time of contracting.
          (i) A reference to any agreement or document is to that agreement or
document as amended, novated, supplemented or replaced from time to time.
          (j) Any reference herein to a time of day means New York City time.
          (k) As used herein the phrase “to Seller’s knowledge” or “to the best
of Seller’s knowledge” or any phrase of similar import means, with respect to
any matter, the actual knowledge of any of Bob Worsley, Rob Zack, Hugh Smith or
Eric Bombgardner.
ARTICLE 2
SALE OF MEMBERSHIP INTERESTS AND CLOSING
     2.01. Purchase and Sale. Upon the terms and subject to the conditions and
in reliance upon the representations and warranties set forth in this Agreement,
Seller shall sell, assign, transfer and convey, free and clear of any Liens
(other than Permitted Liens or Liens created or suffered to exist by Purchaser),
to Purchaser, and Purchaser shall purchase from Seller and accept the sale,
assignment, transfer and conveyance of, all right, title and interest in and to
the Purchased Interests at the Closing.
     2.02. Purchase Price. In consideration of the purchase and sale herein
described, Purchaser shall transfer to the Deposit Account at the Closing,
$12,300,000 in immediately available funds, which amount (subject to adjustment
as herein provided, the “Purchase Price”) shall be subject to withdrawal as
follows:
          (a) Within one Business Day following the Contingent Events Date,
Seller shall be entitled to withdraw all amounts in the Deposit Account less the
Holdback Amount and any amounts payable pursuant to Section 2.02(e) (the “Base
Amount”) and Purchaser shall instruct the Depository Bank to immediately allow
Seller to so withdraw the Base Amount from the Deposit Account within such time
period; provided, that prior to the Contingent Events Date (i) the Purchaser has
not timely elected to rescind this transaction pursuant to Section 12.03 and
(ii) neither the Manager (as defined in the LLC Agreement) nor any of its
Affiliates have taken

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any action on behalf of the Project Company that would, in the absence of the
Side Letter, require Purchaser’s consent (in which event Purchaser shall be
entitled to receive from the Base Amount an amount equal to the diminution in
value of the Class A Interest directly attributable to any such action taken by
Manager or its Affiliates on behalf of the Project Company, and Seller shall
receive the balance of the Base Amount).
          (b) Seller shall be entitled to immediately withdraw the Holdback
Amount and all other amounts then remaining in the Deposit Account (and
Purchaser shall so instruct the Depository Bank to allow Seller to so withdraw
such amounts) upon the earlier of:

  (i)   the fifth anniversary of the Closing Date; provided, that as of such
date (x) there then exists no Default or Event of Default (as such terms are
defined in the CoBank Credit Agreement), (y) the Project Company owns the
Project and (z) Purchaser has not been divested of the Purchased Interests by
foreclosure or other exercise by CoBank ACB or any other lenders under the
CoBank Credit Agreement of their remedies under the Pledge and Security
Agreement dated as of January 1, 2009 between Purchaser and CoBank covering the
Purchased Interests (a “Class A Foreclosure Event”); and     (ii)   the seventh
anniversary of the Closing Date, provided, that as of such date (x) the Project
Company owns the Project and (y) Purchaser had not been divested of the
Purchased Interests by a Class A Foreclosure Event,

(in each such case of clauses (i) and (ii), the “Holdback Amount Release Date”),
it being understood that if the conditions of clause (ii) above are not met as
of the seventh anniversary of the Closing Date or upon the earlier occurrence of
a Class A Foreclosure Event (each, a “Holdback Return Event”), whichever shall
first occur, then Seller shall instruct the Depository Bank to immediately pay
over the Holdback Amount and all other amounts then in the Deposit Account to
Purchaser and such amounts shall be treated as an adjustment to the Purchase
Price.
          (c) After the Base Amount has been released to Seller, the Depository
Bank shall allow Seller to withdraw from the Deposit Account all accrued
interest on the Holdback Amount on the last day of each calendar quarter,
commencing March 31, 2009 and continuing until the Depository Bank has received
notice from Seller and Purchaser of the occurrence of the Holdback Amount
Release Date or from Purchaser and Seller of the occurrence of a Holdback Return
Event, whichever shall first occur, and Purchaser shall so instruct the
Depository Bank to allow Seller to so withdraw such amounts.
          (d) Purchaser agrees that notwithstanding any provision to the
contrary set forth in the Deposit Account Control Agreement (and any related
rights thereunder) it shall not withdraw (or take any action to withdraw) any
portion of the funds in the Deposit Account unless and until it is specifically
permitted to do so under the applicable provisions of Sections 2.02 and 12.03
hereof.

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          (e) Seller and Purchaser shall instruct the Depository Bank to pay out
of the Deposit Account immediately following the Contingent Events Date all
amounts owed to (i) Meridian Investments, upon delivery by Meridian Investments
to the Seller of a receipt and release of all claims against Purchaser, Seller
and the Project Company therefor (in form and substance reasonably satisfactory
to Purchaser), and (ii) such other Persons as Seller may direct.
     2.03. Closing.
          (a) The closing of the transactions described in Section 2.03 (the
“Closing”) will take place, subject to the satisfaction of the conditions
contained in Article 7 and Article 8, at the offices of Greenberg Traurig, P.A.,
5100 Town Center Circle, Suite 400, Boca Raton FL, or at such other place as the
Parties mutually agree, at 10:00 A.M. local time, on January 2, 2009 or on such
other date as the Parties mutually agree upon in writing (the “Closing Date”).
          (b) At the Closing, Purchaser shall transfer to the Deposit Account
that amount of the Purchase Price set forth in Section 2.02. Simultaneously,
Seller shall (i) deliver an executed Pledge Agreement covering the “Class B
Membership Interests” (as such term is defined in the LLC Agreement) as security
for Seller’s indemnification obligations arising under this Agreement,
(ii) deliver an executed Security Agreement as security for Seller’s obligations
to refund to Purchaser the Purchase Price, or any portion thereof, pursuant to
Section 2.02(b) or Section 12.03, and (iii) assign and transfer to Purchaser the
Purchased Interests by delivering to Purchaser an executed Assignment of
Interests with respect to the Purchased Interests. Purchaser acknowledges that
the Class B Membership Interests pledged under the Pledge Agreement have
previously been pledged to the Lender under the Project Debt Documents and that
the pledge under the Pledge Agreement shall be subordinate, in all respects, to
the pledge of the Class B Membership Interests set forth in the applicable
Project Debt Document.
          (c) At the Closing, there shall also be delivered to Seller and
Purchaser the opinions, certificates and other documents and instruments to be
delivered on the Closing Date pursuant to Article 7 and Article 8.
     2.04. Further Assurances; Post-Closing Cooperation.
          (a) Subject to the terms and conditions of this Agreement, from time
to time after the Closing, each of the Parties shall execute and deliver such
other documents and instruments, provide such materials and information and take
such other actions as may reasonably be necessary, proper or advisable, to the
extent permitted by Law, to fulfill its obligations under this Agreement and
evidence the transfer of the Purchased Interests.
          (b) If, in order to properly prepare its Tax Returns, other documents
or reports required to be filed with Governmental or Regulatory Authorities or
its financial statements or to fulfill its obligations hereunder, it is
necessary that a Party be furnished with additional information, documents or
records relating to the business of the Project Company, and such information,
documents or records are in the possession or control of the other Party, such
other Party agrees to use commercially reasonable efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient’s request, cost and expense.

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          (c) Notwithstanding anything to the contrary contained in this
Section 2.04, if the Parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section 2.04 will be subject to any applicable rules
relating to discovery.
          (d) Any information obtained by Seller or the Project Company in
accordance with this Section shall be held confidential by the recipient in
accordance with Section 13.05.
     2.05. Repurchase of Purchased Interests. Notwithstanding any provision to
the contrary set forth herein or in the LLC Agreement, for the twelve-month
period immediately following the expiration of the Preference Period (as such
term is defined in the LLC Agreement) Seller shall have the right to repurchase
all (but not less than all) of the Purchased Interests in accordance with the
following procedure:
          (a) Seller shall give Purchaser written notice during such
twelve-month period specifying that it wants to repurchase the Purchased
Interests, which notice shall specify a date not less than 30 days from the date
of such notice at which the closing of such repurchase shall occur (provided,
that if an appraisal is conducted pursuant to Section 2.05(c) below, the closing
of such repurchase shall occur on the fifth Business Day following receipt of
the independent appraiser’s report, unless the Parties agree otherwise);
          (b) at the closing of such repurchase the Purchaser shall deliver to
the Seller any certificate which may have been issued evidencing the Purchased
Interests together with such other documents as the Seller may reasonably
request in connection with such transaction and the Seller shall deliver to the
Purchaser the price to be paid for such repurchase, which price (the “Repurchase
Price”) shall be calculated as follows: (i) if the repurchase occurs on or prior
to the end of the Debt Repayment Period (as such term is defined in the LLC
Agreement) the Repurchase Price shall be the greater of (A) the then current
fair market value for the Purchased Interests (as determined by any independent
valuation expert selected jointly by the Parties, or, if the Parties cannot
agree on such an expert, determined in accordance with the procedure set forth
in Section 2.05(c) below) and (B) an amount such that the aggregate cumulative
returns to Purchaser on an After-Tax Basis on the sum of (x) all capital
contributions made by the Purchaser to the Project Company and (y) the Purchase
Price, is equal to or greater than 20.52% per annum; provided, that the returns
on an After-Tax Basis shall be determined based on the net after tax effect of
all allocations of income, loss, deductions and credits (including Tax
liability, as defined in the LLC Agreement) and all distributions made to the
Purchaser at or prior to such determination and shall assume an effective tax
rate of 35% and the full utilization by the Purchaser of all tax items allocated
to it under the LLC Agreement or otherwise; and (ii) if the repurchase occurs
after the end of the Debt Repayment Period, the Repurchase Price shall be the
then-current fair market value of the Purchased Interests;
          (c) if Purchaser disputes Seller’s calculation of the Repurchase Price
pursuant to Section 2.05(b) above, it shall notify Seller of such fact and if
the Parties are unable to agree upon a price constituting the “Repurchase Price”
within 15 days after receipt of such notice then either Party may deliver notice
(an “Appraisal Notice”) to the other Party that the Party elects to have the
Repurchase Price determined by an independent appraiser. The Party making such
election shall propose an independent appraiser in the Appraisal Notice. If the
Parties are unable

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to agree on an independent appraiser within 10 Business Days after delivery of
the Appraisal Notice, then either Party may request the American Arbitration
Association to designate the independent appraisal and furnish a written report
thereof to each Party within 20 Business Days of such designation. The
independent appraiser’s review shall be conducted in accordance with applicable
Law and its determination of the Repurchase Price shall be final and binding on
the Parties for all purposes. The fees and expenses of the independent appraiser
shall be borne equally by the Parties;
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
     As of the date hereof and as of the Closing Date, Seller hereby represents
and warrants to Purchaser as follows:
     3.01. Existence. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller has full
power and authority to execute and deliver this Agreement and all other
agreements, instruments and documents to be executed and delivered hereunder or
in connection herewith and to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby including to
own, hold, sell and transfer the Purchased Interests.
     3.02. Authority. The execution and delivery by Seller of this Agreement and
all other agreements, instruments and documents to be executed and delivered by
Seller hereunder or in connection herewith and the performance by Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all appropriate action in accordance with the organizational and governing
documents of Seller and applicable Law. This Agreement and all other agreements,
instruments and documents which have been executed and delivered by Seller
hereunder or in connection herewith have been duly and validly executed and
delivered by Seller and, assuming valid execution and delivery by Purchaser,
constitute the legal, valid and binding obligations of Seller enforceable
against Seller in accordance with their terms.
     3.03. Organization of the Project Company. The Project Company is a limited
liability company validly existing and in good standing under the laws of the
State of Arizona, and has full power and authority to conduct its business as
and to the extent now conducted and as contemplated by this Agreement and the
LLC Agreement and to own, use, lease and operate all of its Assets and
Properties. The Project Company is in good standing under the laws of the State
of Arizona. The Project Company is not in default of any of the terms or
conditions of any of its governing documents, and Seller has complied with all
requirements set forth in the LLC Agreement or required by Law to effect the
transfer of the Purchased Interests.
     3.04. Membership Interests. Seller owns, beneficially and of record, and
has good, valid and transferable title (free and clear of all Liens other than
Permitted Liens) to one hundred percent (100%) of the Membership Interests of
the Project Company, which Membership Interests constitute 100% of the
authorized equity interests in the Project Company. The Membership Interests are
duly authorized, validly issued, outstanding and fully paid and were issued in
compliance with all applicable Laws and not in violation of the preemptive
rights of

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any Person. The Project Company has not issued any certificates or other
instruments to evidence the Membership Interests. Except for this Agreement, the
LLC Agreement and any Liens created in favor of Lenders under the Project Debt
Documents, there are no outstanding Equity Options with respect to the Project
Company or the Membership Interests, including without limitation, any
obligation (contingent or otherwise) by the Project Company or Seller to
purchase, redeem, or otherwise acquire any shares of capital stock or membership
or other ownership interests, as the case may be, or to pay any dividend or make
any distribution in respect thereof. There are no Membership Interests reserved
for issuance for any purpose. The delivery of the Assignment of Interests in the
manner provided in Section 2.03 will transfer to Purchaser good and valid title
to the Purchased Interests, free and clear of all Liens, other than Liens
created or suffered to exist by Purchaser or Liens created or existing under the
Project Debt Documents.
     3.05. Subsidiaries; No Other Business. The Project Company does not own, of
record or beneficially, or control, directly or indirectly, or have any
commitment to purchase any capital stock, securities convertible into capital
stock or other equity or ownership or proprietary interest in any Person, nor
does the Project Company have any direct or indirect subsidiaries. The Project
Company does not conduct, and has never conducted, (a) any business other than
the development and ownership of the Project or (b) any operations other than
those incidental to the development and ownership of the Project.
     3.06. No Conflicts. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations under this Agreement and the
consummation of the transactions contemplated hereby will not:
          (a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the LLC Agreement or the organizational
documents of Seller;
          (b) subject to obtaining any consents, approvals and actions, making
any filings and giving any notices disclosed in Schedule 3.06, conflict with or
result in a violation or breach of any term or provision of any Law or Order
applicable to Seller (other than such conflicts, violations or breaches as would
occur solely as a result of the identity or the legal or regulatory status of
Purchaser or any of its Affiliates); or
          (c) except as disclosed in Schedule 3.06, (i) conflict with or result
in a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require Seller or the Project Company to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, (iv) result in or give
to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, or (v) result in the creation or imposition
of any Lien upon Seller or the Project Company or any of their respective Assets
and Properties under, any Material Contract or Permit to which Seller or the
Project Company is a party or by which any of their respective Assets and
Properties is bound.
     3.07. Governmental Approvals and Filings. Except as set forth in
Schedule 3.07, no Governmental Approval on the part of Seller or the Project
Company is required by FERC, the Arizona Corporation Commission or any other
Governmental or Regulatory Authority in

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connection with the execution, delivery, compliance with, or performance of this
Agreement or the consummation of the transactions contemplated hereby, except
those as would be required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
     3.08. Membership Records. Seller has provided or made available to
Purchaser, prior to the date of this Agreement, true and correct copies of all
membership resolutions and other similar membership records of the Project
Company.
     3.09. Financial Statements and Condition.
          (a) Seller has delivered to Purchaser true and complete copies of
balance sheets of the Project Company as of September 30, 2008 and the related
statement of operations, members’ equity and cash flows for the nine month
period ended September 30, 2008 (collectively, the “Financial Statements”). The
Financial Statements have been prepared in accordance with GAAP (other than the
omission of any notes thereto), and show all liabilities, direct and contingent,
of the Project Company required to be shown in accordance with GAAP (excluding
any notes thereto). Since September 30, 2008 there has been no material adverse
change in the financial condition, business or Assets and Properties of the
Project Company, except as set forth in Schedule 3.09. Without limiting the
foregoing, the Project Company has not declared, paid or made any dividend or
other distribution after the date of the Financial Statements provided to
Purchaser prior to the execution of this Agreement.
          (b) The Financial Statements fairly present the financial condition
and results of operations of the Project Company as of the respective dates
thereof and for the respective periods covered thereby.
          (c) The Project Company has no outstanding Liabilities, whether
accrued, absolute, contingent or otherwise, of the type customarily reflected on
a balance sheet prepared in accordance with GAAP for an entity engaged in a
business similar to that of the Project Company, other than as and to the extent
set forth or reserved for in the balance sheet contained in the Financial
Statements for the Project Company, or arising in the ordinary course of
business consistent with past practices.
     3.10. Taxes.
          (a) The Project Company and Seller have filed or caused to be filed
(on a timely basis since its inception) all state, local and federal Tax Returns
required to be filed by the Project Company and Seller with the appropriate
Governmental or Regulatory Authorities in all jurisdictions in which such Tax
Returns are required to be filed. Such Tax Returns are correct in all respects,
and the Project Company and Seller have paid, or made adequate provision on the
Financial Statements for payment of, all Taxes, assessments and other charges
due and payable by the Project Company or the Seller. All Taxes required to be
withheld by the Project Company and Seller have been collected and withheld, and
have been either paid to the respective Governmental or Regulatory Authorities,
set aside in accounts for such purpose, or accrued, reserved against, and
entered upon the books and records of the Project Company and Seller, as
applicable.

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          (b) There are no (i) Actions or Proceedings currently pending or, to
Seller’s knowledge, threatened against the Project Company or Seller (to the
extent relating to the Project Company or its business, or any of the Project
Company’s Assets or Properties) by any Governmental or Regulatory Authority for
the assessment or collection of Taxes; (ii) audits or other examinations of any
Tax Return of the Project Company or Seller (to the extent relating to the
Project Company or its business, or any of the Project Company’s Assets or
Properties) that are in progress, and neither the Project Company nor Seller has
been notified of any request for examination; or (iii) claims for assessment or
collection of Taxes that have been asserted against the Project Company or
Seller. There are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any Tax of the Project Company or Seller,
and neither the Project Company nor Seller has requested any extensions of time
within which to file any Tax Return. There are no Liens for unpaid or delinquent
Taxes on any of the Purchased Interests or the Project Company’s Assets and
Properties except for Liens for current Taxes not yet due and payable.
          (c) Neither the Project Company nor Seller is a “foreign person”
within the meaning of Section 1445(f)(3) of the Code.
          (d) The Project Company is not a party to any Tax sharing, Tax
indemnity, or similar agreements or arrangements that are currently enforceable
against the Project Company.
          (e) The Project Company is a disregarded entity and the assets,
liabilities and operations of the Project Company are treated as the assets,
liabilities and operations of the Seller for federal and corresponding
provisions of Arizona state Laws relating to income Taxes. The Project Company
has not elected to be treated as an association taxable as a corporation for
United States federal income Tax purposes.
          (f) Each of Seller and the Project Company has disclosed on its United
States federal income Tax Return all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the meaning of
Code Section 6662. Neither Seller nor the Project Company has engaged in any
reportable transactions that were required to be disclosed pursuant to Treasury
Regulation Section 1.6011-4.
     3.11. Legal Proceedings. There are no Actions or Proceedings pending or to
the knowledge of Seller, threatened against, relating to or affecting Seller or
the Project Company or any of their respective Assets and Properties that
reasonably could be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement. To the best knowledge of
Seller, the Project Company is not subject to any Order other than the FERC
Order with respect to the status of Project Company as an “exempt wholesale
generator” under applicable Law.
     3.12. Bankruptcy. Neither Seller nor the Project Company has filed any
voluntary petition in bankruptcy or been adjudicated as bankrupt or insolvent,
filed any petition or answer seeking any reorganization, liquidation,
dissolution or similar relief under any Federal bankruptcy act, insolvency, or
other debtor relief law, nor sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator or liquidator of all or any
substantial part

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of its properties and Seller is not aware of any present threat by another
person or entity to commence any of the foregoing proceedings against Seller,
and Seller has no present intention to commence any such proceeding on its own
behalf. Except for any assignment, security interest or other Lien granted to
Lenders under the Project Debt Documents, neither Seller nor the Project Company
has made any assignment of any of its Assets or Properties, respectively, for
the benefit of creditors or been subject to any involuntary bankruptcy action or
other petition by a third party seeking reorganization, liquidation, dissolution
or similar relief under any Federal or State bankruptcy act, insolvency, or
other debtor relief law. To the best knowledge of Seller, no Governmental or
Regulatory Authority has entered any order appointing a receiver or trustee for
any Assets or Properties of the Project Company or Seller or has assumed the
custody of or sequestered any Assets or Properties of the Project Company or
Seller and no attachment has been made on any Assets or Properties of the
Project Company or any of the members thereof. As of the Effective Date Seller
is not, and immediately after the Closing Seller will not be, “insolvent,” as
that term is defined in applicable Law, and immediately after the Closing Seller
will be able to pay its liabilities as they mature.
     3.13. Permits. Schedule 3.13 lists all material Permits owned or validly
held by the Project Company, and Seller has provided or has made available to
Purchaser or their representatives true and correct copies of all such Permits.
     3.14. Compliance With Laws, Orders and Regulatory Matters.
          (a) The Project Company is not in violation of or in default under any
Law or Order applicable to the Project Company or any of its Assets and
Properties.
          (b) Except as set forth on Schedule 3.14, (i) the Project Company has
all Permits required to be obtained by the Project Company (including under
Environmental Requirements for (A) the business and operations of the Project as
currently conducted and (B) to occupy and operate its Assets and Properties, in
each case where the absence of such Permit would have a material adverse effect
on the ability of the Project Company to continue to own its Assets and
Properties and operate the Project as currently operated; (ii) all such Permits
are validly issued, final and in full force and effect; (iii) the Project
Company is in material compliance with such Permits and all applicable Laws, and
all reporting obligations of Governmental and Regulatory Authorities in
connection with such Permits; (iv) to Seller’s knowledge, there is no pending
notice alleging, and there are no current material violations of, any such
Permit or Law, nor any circumstances that, without redress in the normal course,
which is likely to cause a material violation of any such Permit or Law or the
revocation or limitation of any such Permit; and (v) there are no claims or
proceedings, pending or, to Seller’s knowledge, threatened, challenging the
validity of or seeking to revoke, discontinue or materially alter any such
Permit.
     3.15. Employees. The Project Company does not have any employees. Neither
the Project Company nor, to Seller’s knowledge, any member of its Company
Controlled Group now maintains or contributes to, has ever maintained or
contributed to, or has any plans or commitments for, (i) any employee pension
benefit plan (as such term is defined in Section 3(2) of ERISA) that is subject
to Title IV of ERISA or (ii) any “employee benefit plan” (as such term is
defined in Section 3(3) of ERISA). Neither the Project Company nor, to Seller’s
knowledge,

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any member of its Company Controlled Group has ever contributed to, or been
obligated to contribute to, a multiemployer plan (as such term is defined in
ERISA Section 3(37)). For purposes of this Agreement, “Company Controlled Group”
means a controlled or affiliated group within the meaning of Code
Section 414(b), (c), (m), or (o) of which the Project Company is a member.
     3.16. Insurance. The Project Company has in effect the insurance coverage
listed in Schedule 3.16 and as referenced under the Project Debt Documents and
such coverage remains in full force and effect as of the date hereof.
     3.17. Regulatory Status.
          (a) The Project Company is, and has received an Order from FERC
confirming its status as, an “exempt wholesale generator” within the meaning of
the Public Utility Holding Project Company Act of 2005, as amended (“PUHCA”).
The Project is, and the Project Company has received an Order from FERC
confirming that, the Project is an “eligible facility” within the meaning of 18
CFR 366.1 and the definitions incorporated therein from the Public Utility
Holding Project Company Act of 1935. The Project Company has received an Order
from FERC authorizing the Project Company to sell electricity at market-based
rates. Based on its status as an “exempt wholesale generator” under PUHCA, the
Project Company will not be subject to regulation under PUHCA, except that it
will be considered an “electric utility company,” “public utility” and
“public-utility company” under PUHCA, and subject to regulation as such under
the Federal Power Act.
          (b) The Project Company is not, and following the Closing will not be,
subject to regulation as a “public utility” or “public service corporation”
under the laws of the State of Arizona.
          (c) Neither Seller nor the Project Company is an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act or an “investment advisor” within the meaning of the
Investment Company Act.
     3.18. Brokers. Except as set forth on Schedule 3.18, no Person acting or
purporting to act on behalf of Seller or the Project Company is, or will be,
entitled to any commission or broker’s or finder’s fee from either Party, or any
Person respecting the transactions contemplated by this Agreement. All fees of
any Persons listed on Schedule 3.18 shall be paid by Seller, and such Persons
will, after such payment, have no claim against Purchaser or the Project Company
for any fees.
     3.19. Intellectual Property. Except as may be set forth on Schedule 3.19
and in each case of clauses (a) through (c) below where the absence of such
rights or title, as applicable, would have a material adverse effect on the
ability of the Project Company to continue to own its Assets and Properties and
operate the Project as currently operated, (a) the Project Company has all
material patents, patent rights, trademarks, trade names or service marks,
copyrights, inventions, formulas, confidential proprietary technical
information, trade secrets, know-how or other intellectual property
(individually and collectively, “Intellectual Property”) whether registered or
unregistered, or applications with respect thereto, required in connection with
its

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business and operations as presently and formerly conducted; (b) the Project
Company is the exclusive owner of its respective Intellectual Property, and the
inventions covered thereby, if any, free and clear of all Liens except Permitted
Liens; and (c) to the knowledge of Seller, the Project Company is not infringing
or conflicting with, or otherwise acting adversely to, any rights of third
parties in respect of its use of any Intellectual Property. Subject to the
preceding sentence, the Project Company has taken all reasonably necessary
actions to ensure usual and customary protection under any applicable Law for
all such Intellectual Property in connection with the operation of the Project
Company’s Assets and Properties, wherever located (including, without
limitation, maintaining the secrecy of all confidential Intellectual Property).
     3.20. Disclosure. Seller has made available for review by Purchaser copies
of all Books and Records in its possession relating to the Project Company which
contain any material data or information with respect to the ownership or
development of the Project.
     3.21. Environmental Law Compliance. Except as set forth in Schedule 3.21
hereto,
          (a) the Project Company is in compliance in all material respects with
all applicable Environmental Requirements and there is no uncured violation of
any Environmental Requirement with respect to any of the Project Company’s
operations or the Assets or Properties which would have a material adverse
effect on the continued operation of the Project;
          (b) there are no pending or, to Seller’s knowledge, threatened
Environmental Claims against the Project Company or with respect to the Assets
and Properties;
          (c) to Seller’s knowledge, none of the Project Company, its Affiliates
or any owner thereof have (i) treated, stored, handled, Released, transported,
arranged for the transportation or disposal of, or disposed of any Hazardous
Materials in a manner or to a location that could reasonably be expected to
result in any material Environmental Claim against the Project Company,
(ii) owned, leased, operated or occupied any real property or facility where a
Release of any Hazardous Materials has occurred, which Release would reasonably
be expected to result in a material Environmental Claim against the Project
Company, or (iii) contractually retained or assumed, any material liability or
any material investigatory, corrective or remedial obligation of any other
Person arising under any Environmental Requirement which could have a material
adverse effect on the Project Company or its operations;
          (d) the Project Company has obtained and maintains in full force and
effect all material Permits required under Environmental Requirements for its
business or operations and for the occupancy of its respective real properties,
and the Project Company is in compliance in all material respects with the terms
and conditions of all such Permits, and no actions are pending, or to Seller’s
knowledge, threatened, to revoke, terminate, limit, cancel, amend, challenge or
appeal any such Permits; and
          (e) there are no other reports in the custody of Project Company or
Seller relating to any Hazardous Materials or Environmental Claims involving the
Project or the Assets and Properties, except those required to be prepared
pursuant to Environmental Requirements in the ordinary course of business.

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     3.22. Transactions With Certain Persons. All transactions, agreements and
contracts between the Project Company and Seller or any Affiliate of Seller are
on economic terms and conditions that are not materially different from
comparable transactions, agreements and contracts entered into by Persons in the
same or similar business as the Project Company in arms’ length transactions
with unrelated Persons.
     3.23. No Defects. To Seller’s knowledge, the Assets and Properties of the
Project Company are in reasonably good working order and condition, in all
material respects, ordinary wear and tear excepted.
     3.24. Project Documents. The Project Company has duly authorized, executed
and delivered each Project Document (or assignment pursuant to which it assumes
or becomes a party to such Project Document) to which it is a party, and each
Project Document to which it is a party is valid, binding and enforceable
against each party to such Project Document in accordance with its terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws in effect from time to time relating to or affecting
the enforcement of creditors’ rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law), will continue to be so enforceable and in full force and effect on
identical terms immediately following the consummation of the transactions
contemplated by this Agreement, and the Project Company is not, nor to Seller’s
knowledge is any other party thereto, in default of any provision thereof which
would have material adverse effect on the Project and no event has occurred, or
as a result of the transactions contemplated by this Agreement, will occur,
which with the giving of notice, lapse of time, or both would become such a
breach, default or violation thereunder. Schedule 3.24 contains a list of all
written agreements, contracts, commitments, understandings and other obligations
to which the Project Company is a party or is otherwise subject or bound, which
requires the payment by any party thereto of, or pursuant to which the liability
of any party thereto upon a breach or default thereof would equal or exceed, or
would reasonably be expected to equal or exceed, $150,000, singly or in the
aggregate, in any period of twelve (12) months (collectively, “Material
Contracts”). Seller has made available for review by Purchaser true and correct
copies of the Project Documents.
     3.25. In-Service Representation. The Project Company is the “owner” of the
Project and is the “producer” of the electricity from the Project, in each case,
for purposes of Section 45(d)(3)(C) of the Code. Neither clause (i) nor clause
(ii) of Section 45(b)(4)(B) of the Code applies to the Project because the
Project was “originally placed in service” (for purposes of Section 45(b)(4)(B)
of the Code and Section 45(d)(3)(A)(ii) of the Code) on June 10, 2008.
     3.26. Base Case Projections. To Seller’s knowledge, the Base Case
Projections were made in good faith and the assumptions upon which such
projections were made were (when made) reasonable in the good faith judgment of
Seller based on information known to Seller at such time; provided, however,
Purchaser acknowledges that the Base Case Projections may not be accurate due to
unforeseen or other intervening events or circumstances, including any economic
downturn, and are not guaranteed in any respect.

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     3.27. Properties and Encumbrances
          (a) Schedule 3.27 contains a description of all tracts or parcels of,
or other interests in, real property owned or leased by the Project Company and
lists all instruments evidencing the Project Company’s real property interests.
          (b) The Project Company has good and marketable fee simple title to
each tract or parcel of, or other interest in, such owned real property, and, as
of the Closing Date, such Properties shall be free and clear of all Liens, other
than the Permitted Liens. The Project Company has the right to use such leased
real property in accordance with the terms of the applicable lease to which it
is a party for the conduct of its business as presently conducted.
          (c) Each of the leases is valid, binding and enforceable in accordance
with its terms, and no renewal, extension or termination options have been
granted to any party thereunder other than as expressly set forth therein. All
rents, royalties and other payments due from Seller or the Project Company as of
the Closing Date on each of the leases shall have been paid in full as of the
Closing Date.
          (d) Seller has received no written notice of any condemnation
proceedings pending against any of the Project Company’s real property
interests.
          (e) Seller has provided or made available to Purchaser or its
representatives all title insurance policies, title opinions or reports,
surveys, environmental reports and other similar instruments or documents, and
all amendments thereof in its possession, relating to the Project Company’s real
property interests.
          (f) Schedule 3.27 lists all leases of personal property and equipment
to which the Project Company is a party. Except as set forth on Schedule 3.27,
the Project Company has or will have as of the Closing Date good, insurable and
valid title to, or a valid leasehold interest pursuant to valid leases in, all
of the personal property incorporated into the Project, including, without
limitation, all the personal property reflected in the Financial Statements and
as described in this Agreement. As of the Closing Date, all of such personal
property shall be free and clear of all Liens, other than Permitted Liens.
     3.28. Affiliate Valuations. For purposes of classifying the liabilities of
the Project Company as “recourse liabilities” or “nonrecourse liabilities”
within the meaning of Section 752 of the Code as of the date hereof, and in
particular, for purposes of Treasury Regulations Section 1.752-2(k) (and to the
extent applicable, Treasury Regulations Section 1.752-2(h)), (a) each of Renegy
Trucking, LLC and Renegy, LLC, two of the co-borrowers under that certain
Amended and Restated Credit Agreement, dated January 1, 2009, among the Project
Company, Renegy, LLC, Renegy Trucking, LLC and CoBank, ACB (the “CoBank Credit
Agreement”), is disregarded as an entity separate from Seller under Treasury
Regulations Sections 301.7701-1 through 301.7701-3 and (b) the aggregate “net
value” (as defined in Treasury Regulations Section 1.752-2(k)(2)) of the two
co-borrowers is not materially greater or less than $10.53 Million as of the
date hereof.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
     As of the date hereof and as of the Closing Date, Purchaser hereby
represents and warrants to Seller as follows:
     4.01. Existence. Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Purchaser has full power and authority to execute and deliver this Agreement and
all other agreements, instruments and documents to be executed and delivered
hereunder or in connection herewith and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby
including purchasing the Purchased Interests.
     4.02. Authority. The execution and delivery by Purchaser of this Agreement
and all other agreements, instruments and documents to be executed and delivered
by Purchaser hereunder or in connection herewith, and the performance by
Purchaser of its obligations hereunder, have been duly and validly authorized by
all appropriate actions in accordance with the organizational and governing
documents of Purchaser and applicable Law. This Agreement and all other
agreements, instruments and documents which have been executed and delivered by
Purchaser hereunder or in connection herewith have been duly and validly
executed and delivered by Purchaser and, assuming valid execution and delivery
by Seller, constitute legal, valid and binding obligations of Purchaser
enforceable against it in accordance with its terms.
     4.03. No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby and
thereby will not:
          (a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the limited liability company agreement of
Purchaser;
          (b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Schedule 4.03, conflict with or
result in a violation or breach of any term or provision of any Law or Order
applicable to Purchaser or any of its Assets and Properties; or except as
disclosed in Schedule 4.03 (i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Purchaser to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien upon
Purchaser or any of its Assets or Properties under, any material Contract or
License to which Purchaser is a party or by which any of its Assets and
Properties is bound.
     4.04. Governmental Approvals and Filings. Except as disclosed in
Schedule 4.04, no Governmental Approval on the part of Purchaser is required in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
     4.05. Legal Proceedings. There are no Actions or Proceedings pending or, to
the knowledge of Purchaser, threatened against, relating to or affecting
Purchaser or any of its Assets and Properties which could reasonably be expected
to result in the issuance of an Order

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restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
     4.06. Purchase for Investment. The Purchased Interests will be acquired by
Purchaser for its own account for the purpose of investment and not with a view
to their resale or distribution, it being understood that the right to dispose
of such Membership Interests shall be subject to all applicable terms of the LLC
Agreement and this Agreement and for the requirements of applicable securities
laws. Purchaser will refrain from transferring or otherwise disposing of any of
the Membership Interests, or any interest therein, in such manner as to cause
Seller to be in violation of the registration requirements of the Securities Act
of 1933, as amended, or any applicable state securities or blue sky laws.
Purchaser is aware that the Purchased Interests are not registered under the
Securities Act of 1933, as amended (the “Securities Act”), or under any state or
foreign securities laws. Purchaser is an “accredited investor” within the
meaning of Rule 501(a) of Regulation D of the Securities Act.
     4.07. Investigation. Purchaser acknowledges that, except for the matters
that are expressly covered by the provisions of this Agreement, it is relying on
its own investigation and analysis in entering into the transactions
contemplated hereby. Purchaser is knowledgeable about the industry in which the
Project Company operates and is capable of evaluating the merits and risks of
the purchase of the Purchased Interest as contemplated by this Agreement and is
able to bear the substantial economic risk of such investment for an indefinite
period of time. Purchaser has been afforded full access to the books and
records, facilities and personnel of the Project Company and the Seller for
purposes of conducting a full due diligence investigation of the Project Company
and its business, and have conducted a full due diligence investigation of the
Project Company and its business.
     4.08. Disclaimer Regarding Condition. Without limitation of any
representation of warranty or agreement of the Seller herein contained, the
Purchaser acknowledges that except as set forth in this Agreement, (a) it is
accepting the Purchased Interests, in an “As-Is” “Where-Is” condition as of the
Closing and that (b) THE SELLER MAKES NO WARRANTY WITH RESPECT TO THE VALUE OF
THE PURCHASED INTERESTS OR ANY RIGHTS THEREUNDER OR THE VALUE, CONDITION OR USE
OF THE PROJECT COMPANY, OR ITS ASSETS, WHETHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR THE AVAILABILITY OF ANY TAX BENEFITS FROM SUCH PURCHASED
INTERESTS.
     4.09. Brokers. No Person acting or purporting to act on behalf of Purchaser
is, or will be, entitled to any commission or broker’s or finder’s fee from
either Party, or any Person respecting the transactions contemplated by this
Agreement, other than Meridian Investments, whose fee shall be paid by Seller.

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ARTICLE 5
COVENANTS OF SELLER
     Seller covenants and agrees with Purchaser that, at all times from and
after the date hereof until the Closing, Seller will comply with all covenants
and provisions of this Article 5, except to the extent Purchaser may otherwise
consent in writing.
     5.01. Regulatory and Other Approvals. Seller will, and will cause the
Project Company to, as promptly as practicable (a) take all commercially
reasonable steps necessary or desirable to obtain all Governmental Approvals and
all consents, approvals or actions of, make all filings with any other Person
required of either Seller or the Project Company to consummate the transactions
contemplated hereby; (b) provide such other information and communications to
such Governmental or Regulatory Authorities or other Persons as such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) provide reasonable cooperation to Purchaser in
connection with the performance of its obligations under Section 6.01.
     5.02. Investigation by Purchaser. Seller will, and will cause the Project
Company to, (a) provide Purchaser and its directors, officers, partners,
managers, employees, affiliates, controlling persons, representatives (including
financial advisors, attorneys and accountants) and agents (together,
“Representatives”) with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants of the
Project Company and its Assets and Properties and Books and Records, but only to
the extent that such access does not unreasonably interfere with the business
and operations of the Project Company, and (b) furnish Purchaser and such other
Persons with all such information and data (including copies of Contracts, and
Books and Records) concerning the business and operations of the Project Company
as Purchaser or any of such other Persons reasonably may request in connection
with such investigation, except to the extent that furnishing any such
information or data would violate any Law, Order, Contract or License applicable
to Seller or the Project Company or by which any of their respective Assets and
Properties is bound.
     5.03. Conduct of Business; Compliance with Law. Seller will cause the
Project Company to conduct business in the ordinary course, consistent with its
applicable Contracts, Licenses, and Government Approvals. Seller will cause the
Project Company to comply in all material respects with all applicable Laws
(including all Environmental Requirements).
     5.04. Certain Restrictions. Seller shall cause the Project Company to
refrain from:
          (a) amending the LLC Agreement or taking any action with respect to
any such amendment or any recapitalization, reorganization, liquidation or
dissolution of the Project Company;
          (b) authorizing, issuing, selling or otherwise disposing of any
Membership Interests or Equity Options with respect to the Project Company;
          (c) declaring, setting aside or paying any distribution with respect
to its Membership Interests (other than in accordance with the LLC Agreement);

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          (d) redeeming or otherwise acquiring any of its Membership Interests
or other securities;
          (e) acquiring, transferring or disposing of, or incurring any Lien
(other than a Permitted Lien) on, any Membership Interests or Assets and
Properties of the Project Company;
          (f) other than Indebtedness that will be repaid prior to or
concurrently with the Closing voluntarily incurring or guaranteeing any
Indebtedness, or waiving any right under any Indebtedness;
          (g) engaging with any Person in any merger or other business
combination;
          (h) making any change in its fiscal year;
          (i) taking any action or engaging in any transaction that would cause
any of the representations or warranties of Seller set forth in Article 3 hereof
to be untrue as of the Closing Date in any material respect; or
          (j) entering into any Contract to do or engage in any of the
foregoing.
     5.05. Cooperation. Seller agrees to use commercially reasonable efforts to
confer and discuss, from time to time and as reasonably requested by Purchaser,
the ongoing operations and business of the Project Company. Seller agrees to
notify Purchaser promptly of any event after the date hereof which can
reasonably be expected to result in a breach of any material representation or
warranty or requirement to disclose under Article 3 or a material adverse change
in the financial condition, business or Assets and Properties of the Project
Company.
ARTICLE 6
COVENANTS OF PURCHASER
     Purchaser covenants and agrees with Seller that, at all times from and
after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this Article 6, except to the extent Seller may
otherwise consent in writing.
     6.01. Regulatory and Other Approvals. Purchaser will as promptly as
practicable (a) take all commercially reasonable steps necessary or desirable to
obtain all Governmental Approvals and all consents, approvals or actions of,
make all filings with any other Person required, to Purchaser’ knowledge, for
Purchaser to consummate the transactions contemplated hereby, (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as such Governmental or Regulatory Authorities or
other Persons may reasonably request in connection therewith and (c) provide
reasonable cooperation to Seller and the Project Company in connection with the
performance of their obligations under Sections 5.01, 5.02, and 5.05.

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ARTICLE 7
CONDITIONS TO OBLIGATIONS OF PURCHASER
     The obligations of Purchaser hereunder to purchase the Purchased Interests
are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser):
     7.01. Representations and Warranties. The representations and warranties
made by Seller in this Agreement, shall be true and correct in all material
respects on and as of the Closing Date, as though made on and as of the Closing
Date or, in the case of representations and warranties expressly made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and Seller shall have delivered to Purchaser a certificate, dated the Closing
Date, to such effect.
     7.02. Performance. Seller shall have performed and complied in all material
respects with the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by Seller at or before the
Closing, and Seller shall have delivered to Purchaser a certificate, dated the
Closing Date, to such effect.
     7.03. Officers’ Certificates. Seller shall have delivered to Purchaser a
certificate, dated the Closing Date and executed in the name and on behalf of
Seller by the President or any Vice President (or comparable officer) of Seller
substantially in the form and to the effect of Exhibit C, and a certificate,
dated the Closing Date and executed by the Secretary or any Assistant Secretary
of Seller, substantially in the form and to the effect of Exhibit D-1. The
Purchaser shall have received a certificate, dated the Closing Date and executed
by the Secretary or any Assistant Secretary of the Project Company,
substantially in the form and to the effect of Exhibit D-2.
     7.04. Organizational Documents. Seller shall have delivered to Purchaser
(a) a copy of the Certificate of Formation of Limited Liability Company of the
Project Company certified as of a date not later than the Closing Date by the
Secretary of State of the State of Arizona, and (b) certificates from the
Secretary of State of Arizona as well as of any states in which the Project
Company is qualified to do business, as of a date not later than the Closing
Date, to the effect that the Project Company is in good standing in its state of
organization or formation and in any state where it is qualified to do business.
     7.05. Project Documents. Seller shall have delivered fully executed copies
of the Project Documents or, in the case of Project Documents which have not
been executed as of the Closing Date, execution forms of any such Project
Documents (to the extent readily available).
     7.06. Litigation, Orders and Laws. There shall not be in effect on the
Closing Date any Action or Proceeding, Order or Law (a) restraining, enjoining
or otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or (b) seeking to place any Lien on
the Membership Interests; and no Actions or Proceedings shall have been
commenced or threatened by or before a Governmental or Regulatory Authority with
respect to any of the transactions contemplated by this Agreement.

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     7.07. Regulatory Consents and Approvals. Except as set forth in Schedule
7.07, all Governmental Approvals necessary to permit Purchaser, Seller and the
Project Company to perform their obligations under this Agreement and to
consummate the transactions contemplated hereby shall have been duly obtained,
made or given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement shall have occurred.
     7.08. Third Party Consents. The consents (or in lieu thereof waivers) set
forth in Schedule 3.06 shall have been obtained and shall be in full force and
effect.
     7.09. Opinion of Counsel.
          (a) Purchaser shall have received the opinion of Greenberg Traurig
LLP, counsel to Seller, dated the Closing Date, substantially in the form and to
the effect of Exhibit E.
          (b) Purchaser shall have received an acceptable Tax opinion from
Greenberg Traurig LLP, counsel to Seller, dated the Closing Date.
     7.10. LLC Agreement. Purchaser shall have received a copy of the LLC
Agreement executed by Seller and such other executed documents as it shall
reasonably request to evidence Purchaser’s agreement to be bound from and after
the Closing by the terms and conditions of the LLC Agreement with respect to its
Membership Interests.
     7.11. Non-Foreign Status. Seller shall have delivered to Purchaser a
certification of non-foreign status substantially in the forms provided in
Treasury Regulations Section 1.1445-2(b)(2)(iv).
     7.12. Other Matters. Purchaser shall have received such other documents,
certificates and opinions as Purchaser, or their counsel, shall reasonably
request by written notice to Seller not less than ten days prior to the Closing
Date; in order to consummate the transactions herein contemplated.
     7.13. Pledge Agreement. Seller shall have delivered to Purchaser a Pledge
Agreement covering the “Class B Membership Interests” (as such term is defined
in the LLC Agreement) in substantially the form set forth in Exhibit A, as
security for Seller’s payment, lending obligations, contribution obligations and
indemnification and set-off obligations arising under this Agreement and the LLC
Agreement.
     7.14. Credit Facilities. Purchaser shall have entered into (or shall
contemporaneously be entering into) a standstill agreement with CoBank ACB
relating to such Lender’s rights under the Project Debt Documents, on terms
reasonably satisfactory to Purchaser.
     7.15. Deposit Account Control Agreement. Purchaser shall have received a
copy of the Deposit Account Control Agreement, substantially in the form set
forth in Exhibit I and duly executed by Seller and the Depository Bank.

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     7.16. Side Letter. Purchaser shall have received a copy of the Side Letter
Pending Receipt of Regulatory Approval dated January 1, 2009 by and between the
Project Company, Seller and Purchaser, substantially in the form set forth in
Exhibit J and duly executed by Seller and Project Company.
     7.17. Security Agreement. Purchaser shall have received a copy of the
Security Agreement, substantially in the form set forth in Exhibit K and duly
executed by Seller.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLER
     The obligations of Seller hereunder to sell the Purchased Interests are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Seller):
     8.01. Representations and Warranties. The representations and warranties
made by Purchaser in this Agreement, shall be true and correct in all material
respects on and as of the Closing Date, as though made on and as of the Closing
Date or, in the case of representations and warranties expressly made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and Purchaser shall have delivered to Seller a certificate, dated the Closing
Date, to such effect.
     8.02. Performance. Purchaser shall have performed and complied in all
material respects with the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or before the
Closing, and Purchaser shall have delivered to Seller a certificate, dated the
Closing Date, to such effect.
     8.03. Officers’ Certificates. Purchaser shall have delivered to Seller a
certificate, dated the Closing Date and executed in the name and on behalf of
Purchaser by the President or any Vice President of the manager of Purchaser on
behalf of Purchaser, substantially in the form and to the effect of Exhibit F,
and a certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of the manager of Purchaser on behalf of Purchaser,
substantially in the form and to the effect of Exhibit G.
     8.04. Litigation, Orders and Laws. There shall not be in effect on the
Closing Date any Action or Proceeding, Order or Law restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement.
     8.05. Regulatory Consents and Approvals. All Governmental Approvals
necessary to permit Seller, Purchaser and the Project Company to perform their
obligations under this Agreement and to consummate the transactions contemplated
hereby shall have been duly obtained, made or given and shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement shall have occurred.

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     8.06. Third Party Consents. The Consents (or in lieu thereof waivers) set
forth in Schedule 4.03 shall have been obtained and shall be in full force and
effect, including without limitation the consent of the Lender under the Project
Debt Documents.
     8.07. Opinion of Counsel. Seller shall have received the opinion of Pierce
Atwood, LLP, counsel to Purchaser, dated the Closing Date, substantially in the
form and to the effect of Exhibit H.
     8.08. LLC Agreement. Seller shall have received a copy of the LLC Agreement
executed by Purchaser and such other executed documents as it shall reasonably
request to evidence Purchaser’s agreement to be bound from and after the Closing
by the terms and conditions of the LLC Agreement with respect to the Purchased
Interests.
     8.09. Other Matters. Seller shall have received such other documents,
certificates and opinions as Seller, or their counsel, shall reasonably request
by written notice to Purchaser not less than ten days prior to the Closing Date,
in order to consummate the transactions herein contemplated.
     8.10. Side Letter. Seller shall have received a copy of the Side Letter
Pending Receipt of Regulatory Approval dated January 1, 2009 by and between the
Project Company, Seller and Purchaser, substantially in the form set forth in
Exhibit J and duly executed by Purchaser.
     8.11. Deposit Account Control Agreement. Seller shall have received a copy
of the Deposit Account Control Agreement, substantially in the form set forth in
Exhibit I and duly executed by Purchaser and the Depository Bank.
     8.12. Security Agreement. Seller shall have received a copy of the Security
Agreement, substantially in the form set forth in Exhibit K and duly executed by
Purchaser.
ARTICLE 9
TAX MATTERS
     9.01. Certain Taxes.
          (a) All Taxes of the Project Company and all Taxes with respect to the
Assets and Properties of the Project Company for Tax periods within which the
Closing Date occurs (collectively, the “Apportioned Obligations”) shall be
apportioned between Seller and the Project Company as of the Closing Date based
on, (i) with respect to Taxes determined on the basis of income or gross
receipts of the Project Company, a closing of the books of the Project Company
as of the Closing Date; and (ii) with respect to all other Taxes of the Project
Company, the number of days in any such Tax period falling on or before the
Closing Date, on the one hand, and after the Closing Date, on the other hand. If
any refund, rebate or similar payment is received by the Project Company for any
Taxes that are Apportioned Obligations, such refund, rebate or similar payment
shall be apportioned between Seller and the Project Company as aforesaid on the
basis of each Party’s respective responsibility for such Taxes. If it is
determined subsequent to the Closing Date that additional Taxes that are
Apportioned Obligations are required to be paid for a Tax period in which the
Closing Date falls, such additional Taxes will

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be apportioned between Seller and the Project Company as aforesaid on the basis
of each party’s respective responsibility for such Taxes.
          (b) Seller shall indemnify, defend and hold the Project Company and
Purchaser Indemnified Parties harmless, on an After-Tax Basis, from and against
any and all Taxes which may be suffered or incurred by the Project Company or
that otherwise relate to the ownership, sale, operation or use of the Assets and
Properties of the Project Company for or with respect to (A) all Tax periods
ending on or prior to the Closing Date, (B) any income or transfer Taxes
resulting from the sale of the Purchased Interests to Purchaser, and (C) any
liability for Taxes attributable to inaccuracy in, the breach of, or the failure
to comply with or perform any of Seller’s covenants, representations or
warranties in this Agreement that relates to Tax matters. Notwithstanding
Article 10, the representations made by Seller that give rise to an indemnity
claim under this Article 9 and Seller’s indemnity obligations pursuant to this
paragraph shall survive the Closing until the expiration of the applicable
statute of limitations, and shall not be subject to the limitations otherwise
provided in Article 10. Purchaser shall notify Seller within thirty (30) days of
receipt of written notice of any pending or threatened Tax examination, audit or
other administrative or judicial proceeding relating to the Project Company that
could reasonably be expected to result in an indemnification obligation of
Seller (“Contested Taxes”); provided that Purchaser’s failure to give, or delay
in giving, notice to Seller of any such matter that may give rise to a right of
indemnification hereunder shall not relieve Seller of any liability which Seller
may have to any Purchaser Indemnified Party except to the extent that the
failure to give such notice adversely prejudiced Seller. Seller shall control
the defense and settlement of any Contested Taxes; provided, that if the
Contested Taxes relate to any period beginning on or after the Closing Date or
to any Taxes for which Purchaser is liable hereunder, Purchaser shall have the
right to observe the conduct of any such defense and settlement at its own
expense, including through its own counsel and other professional experts.
          (c) Seller, the Project Company and Purchaser shall reasonably
cooperate, and shall cause their respective Affiliates, employees and agents
reasonably to cooperate, in preparing and filing all Tax Returns, and in
resolving all disputes and audits with respect to such Tax Returns.
          (d) Seller will pay all sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees (“Transfer
Taxes”), if any, arising out of or in connection with the transactions effected
pursuant to this Agreement, and shall indemnify, defend and hold harmless
Purchaser on an After-Tax Basis with respect to such Transfer Taxes.
     9.02. Allocation of Purchase Price.
          (a) The Parties acknowledge that for Federal income tax purposes the
purchase and sale of the Purchased Interests shall be treated as a sale by
Seller of Assets and Properties in the Project Company. The Purchase Price shall
be allocated among the Assets and Properties of the Project Company in
accordance with an allocation to be agreed upon by the Parties within 60 days
after the Closing, based upon an initial allocation prepared by the Seller and
delivered to the Purchaser within 20 days after the Closing; provided, that if
the Parties are unable to agree upon such an allocation of the Purchase Price by
the end of the such 60 day period the undetermined matters relating to such
allocation shall be referred to an independent

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accountant jointly selected by the Parties and who shall have experience in
resolving similar matters; provided further, that if the Parties are unable to
agree upon an experienced independent accountant to resolve such undetermined
matters within 30 days the Parties agree to use the applicable American
Arbitration Association commercial arbitration selection rules to select such an
accountant. Any determination of the allocation of the Purchase Price made by an
accountant as herein provided shall be final and binding upon the Parties,
absent manifest error or prejudice. No Party shall file any Tax Return or take a
position with any Governmental Body that is inconsistent with the allocations
agreed upon or determined as set forth above.
          (b) For purposes of and to the extent permitted under any State
transfer Tax law, Purchaser and Seller acknowledge and agree that they shall
treat the transactions contemplated by this Agreement as a sale of membership
interests in the Project Company.
ARTICLE 10
SURVIVAL; NO OTHER REPRESENTATIONS
     10.01. Survival of Representations and Warranties. The representations and
warranties, covenants and agreements of Seller and Purchaser contained in this
Agreement will survive the Closing for a period of twelve (12) months (it being
understood that representations and warranties relate to the date when they are
made or deemed to be made and not to subsequent periods); provided, that the
representations and warranties made by Seller in Section 3.25 shall survive
Closing indefinitely. Any claims made by a Party under Section 11.01 in
accordance with the terms of Article 11 prior to the expiration of the
applicable survival period with respect to a representation or warranty shall
survive the expiration of the representations and warranties until finally and
conclusively resolved pursuant to Article 11 and the expiration of such survival
period shall not act as a limitation on any recovery or Loss payable in respect
thereof.
     10.02. No Other Representations. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser agrees that Seller is not making any
representation or warranty whatsoever, express or implied, except those
representations and warranties contained in Article 3, and in any certificate
delivered pursuant to Section 7.03. Notwithstanding anything to the contrary
contained in this Agreement, Seller agrees that Purchaser is making no
representation or warranty whatsoever, express or implied, except those
representations and warranties contained in Article 4 and in any certificate
delivered pursuant to Section 8.04.
ARTICLE 11
INDEMNIFICATION; LIQUIDATED DAMAGES
     11.01. Indemnification.
          (a) Subject to the other Sections of this Article 11, Seller agrees to
indemnify Purchaser Indemnified Parties in respect of, and defend and hold each
of them harmless from and against, any and all Losses (on an After-Tax Basis)
suffered, incurred or sustained by any of them or to which any of them become
subject, resulting from, arising out of or relating to:

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               (i) any inaccuracy in or breach of any representation or warranty
made by Seller contained in this Agreement or in any other document (other than
the LLC Agreement) delivered to Purchaser at the Closing pursuant to the terms
hereof; or
               (ii) any nonfulfillment of or failure to comply with or perform
any covenant, agreement or obligations of Seller contained in this Agreement;
provided however, that the indemnification obligations of Seller under this
Section 11.01 shall not be in duplication of Seller’s indemnification
obligations under Article 9; and provided further, that for purposes of any
inaccuracy in or breach of any representations and warranties contained in
Section 3.22, Section 3.25 and Section 3.28 (which shall be covered by the
indemnification obligations under this Article 11), the definition of “Loss”
shall include any loss of tax benefits such as depreciation benefits and Tax
Credits when such benefits or Tax Credits otherwise would have been available to
a Purchaser Indemnified Party but for the inaccuracy in or breach of the
representation or warranty giving rise to the Loss suffered, incurred or
sustained.
          (b) Subject to the other Sections of this Article 11, Purchaser agrees
to indemnify Seller Indemnified Parties in respect of, and defend and hold each
of them harmless from and against, any and all Losses (on an After-Tax Basis)
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to (i) any inaccuracy in or
breach of Purchaser’s representations or warranties contained in this Agreement
or in any other document delivered to Seller at the Closing pursuant to the
terms hereof or (ii) any nonfulfillment of or failure to comply with or perform
any covenant, agreement or obligations of Purchaser contained in this Agreement.
          (c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim in
respect of a Loss arising under Section 11.01 by an Indemnified Party:
               (i) if, and to the extent that, (A) in the case of a claim by a
Seller Indemnified Party, such Seller Indemnified Party and all other Seller
Indemnified Parties would receive payments pursuant to this Agreement, including
in respect of claims made under Section 11.01(a)(i) hereof, in an aggregate
amount that would exceed the Purchase Price and (B) in the case of a claim by a
Purchaser Indemnified Party, such Purchaser Indemnified Party and all other
Purchaser Indemnified Parties would receive payments in respect of claims made
under Section 11.01(a) in an aggregate amount that would exceed the Purchase
Price;
               (ii) to the extent it arises from or was caused by the
Indemnified Party’s fraud or willful misconduct; or
               (iii) to the extent provided in Section 11.02(a)(i).
     11.02. Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 11.01 will be asserted and resolved as follows:
          (a) If any claim or demand in respect of which an Indemnified Party
might seek indemnity under Section 11.01 is asserted against or sought to be
collected from such Indemnified Party by a Person other than Seller or Purchaser
or any Affiliate of Seller or of

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Purchaser (a “Third Party Claim”), the Indemnified Party shall deliver a Claim
Notice with reasonable promptness to the Indemnifying Party. The Indemnifying
Party will notify the Indemnified Party as soon as practicable within the
Dispute Period whether the Indemnifying Party disputes its liability to the
Indemnified Party under Section 11.01 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
               (i) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Section 11.02(a), then the Indemnifying Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, such Third Party Claim by
all appropriate proceedings, which proceedings will be prosecuted to a final
conclusion or will be settled at the discretion of the Indemnifying Party. The
Indemnifying Party will have full control of such defense and proceedings,
including any settlement thereof; provided, however, that the Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party’s delivery of the notice referred to in the first
sentence of this subsection 11.01(a)(i), file any motion, answer or other
pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests and is not
prejudicial to the Indemnifying Party (it being understood and agreed that,
except as provided in subsection 11.02(a)(ii), if an Indemnified Party takes any
such action that is prejudicial and causes a final adjudication that is adverse
to the Indemnifying Party, the Indemnifying Party will be relieved of its
obligations hereunder with respect to the portion of such Third Party Claim
prejudiced by the Indemnified Party’s action); and provided further, that if
requested by the Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest, or, if appropriate and related to the Third Party Claim
in question, in making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person (other than the
Indemnified Party or any of its Affiliates). The Indemnified Party may retain
separate counsel to represent it in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
subsection 11.01(a)(i), and the Indemnified Party will bear its own costs and
expenses with respect to such separate counsel.
               (ii) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to defend
the Third Party Claim pursuant to Section 11.02(a) then the Indemnified Party
will have the right to defend, at the sole cost and expense of the Indemnifying
Party (to the extent indemnifiable hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings will be prosecuted to a final
conclusion or settled at the discretion of the Indemnified Party. The
Indemnified Party will have full control of such defense and proceedings,
including any settlement thereof; provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party is contesting, or,
if appropriate and related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the Indemnifying Party or any of
its Affiliates). Notwithstanding the foregoing provisions of this subsection
11.02(a)(ii), if the Indemnifying Party has notified the Indemnified Party
within the

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Dispute Period that the Indemnifying Party disputes its liability hereunder to
the Indemnified Party with respect to such Third Party Claim and if such dispute
is resolved in favor of the Indemnifying Party in the manner provided in
subsection 11.02(a)(iii), the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party’s defense pursuant to this
subsection 11.02(a)(ii) or of the Indemnifying Party’s participation therein at
the Indemnified Party’s request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The Indemnifying Party
may retain separate counsel to represent it in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this subsection
11.02(a)(ii), and the Indemnifying Party will bear its own costs and expenses
with respect to such participation.
               (iii) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability to the Indemnified Party with respect to
the Third Party Claim under Section 11.01 or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third Party Claim, the
Loss arising from such Third Party Claim will be conclusively deemed a liability
of the Indemnifying Party under Section 11.01 and the Indemnifying Party shall
pay the amount of such Loss to the Indemnified Party on demand following the
final determination thereof.
          (b) If any Indemnified Party should have a claim under Section 11.01
against any Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver an Indemnity Notice with reasonable promptness
to the Indemnifying Party. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute the claim described in such Indemnity Notice or
fails to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss arising from the claim specified in such Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party disputes the claim described in the Indemnity Notice, the Indemnified
Party may proceed to take any and all actions available to it in law or equity
to recover any amounts due to it pursuant to this Article 11.
          (c) Indemnified Party’s failure to give, or delay in giving, an
Indemnity Notice or Claim Notice to Indemnifying Party in accordance with this
Article 11 shall not relieve Indemnifying Party of any liability which
Indemnifying Party may have to the Indemnified Party except to the extent that
the failure to give, or delay in giving, such Indemnity Notice or Claim Notice
adversely prejudiced the Indemnifying Party.
     11.03. Liquidated Damages. If at any time either (a) Purchaser or Seller
fails to provide the Depository Bank with any instruction or consent it is
required to provide pursuant to the provisions of Section 2.02 (a) or (b) and,
as a result of such failure, the other Party is not able to withdraw from the
Deposit Account any portion of the amounts then held in the Deposit Account as
and when it is entitled under such sections or (b) Purchaser withdraws any
amounts from the Deposit Account in violation of the provisions of
Section 2.02(d), then, in any such event, liquidated damages shall be payable as
follows: (i) for any failure under clause (a) above, the Party failing to give
the required instruction or consent shall pay to the other Party as liquidated

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damages and not as a penalty (A) with respect to any failure to give an
instruction or consent under Section 2.02(a), the sum of $10,000 for each day
(or portion thereof) that such amounts cannot be so withdrawn by the applicable
Party, or (B) with respect to any failure to give an instruction or consent
under Section 2.02(b), the sum of $1,000 for each day (or portion thereof) that
such amounts cannot be so withdrawn by the applicable Party and (ii) for any
breach under clause (b) above, Purchaser shall pay to Seller the sum of the sum
of $10,000 for each day (or portion thereof) that such improperly withdrawn
amount remains outstanding until the entire amount thereof is returned by
Purchaser to the Deposit Account. The Parties understand and agree that such
liquidated damage amounts provided above (x) are reasonable, considering the
difficulty of proving the actual amount of damages that the applicable Party
would sustain in the applicable circumstance, and (y) shall apply
notwithstanding the actual amount of damages sustained by the applicable Party
in any such circumstance.
ARTICLE 12
TERMINATION
     12.01. Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned:
          (a) at any time before the Closing, by mutual written agreement of
Seller and Purchaser;
          (b) at any time before the Closing, by Seller or Purchaser, if any
Order or Law becomes effective restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement, upon notification of the non-terminating Party by the
terminating Party; or
          (c) either (i) by Purchaser if all of the conditions set forth in
Article 7 shall not have been satisfied by Seller or waived by Purchaser on or
before February 28, 2009 (or such later date as mutually agreed upon between the
Parties), other than through the failure of Purchaser to fully comply with its
obligations hereunder, or (ii) by Seller if all of the conditions set forth in
Article 8 shall not have been satisfied by Purchaser or waived by Seller on or
before February 28, 2009 (or such later date as mutually agreed upon among the
Parties), other than through the failure of Seller to fully comply with its
obligations hereunder.
     12.02. Effect of Termination. If this Agreement is validly terminated
pursuant to Section 12.01, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of Seller or Purchaser
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except that the provisions set forth in
Article 11, Section 13.03, Section 13.05, Section 13.11, Section 13.12,
Section 13.13, Section 13.14 and Section 13.15 will continue to apply following
any such termination.
     12.03. Rescission Right. If either of the Contingent Events does not occur
on or before the Contingent Events Deadline or if FERC earlier denies the FPA
203 Application (each, a “Rescission Event”), then Purchaser shall have the
right, by notice to Seller within 10 Business Days after the occurrence of a
Rescission Event, to terminate this Agreement, the LLC Agreement, the Assignment
of Interests, the Pledge Agreement covering the Class B

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Membership Interests and all other agreements contemplated hereby to which
Purchaser is a party except for the Deposit Account Control Agreement and
Security Agreement, and rescind the transactions contemplated hereby and thereby
except for those transactions contemplated by the Deposit Account Control
Agreement and the Security Agreement. In the event of such termination and
rescission, Seller and Purchaser shall instruct the Depository Bank to pay over
all funds in the Deposit Account to Purchaser, and (a) Purchaser simultaneously
shall reassign the Purchased Interests to Seller (subject to the Pledge
Agreement dated as of the Effective Date between Purchaser, the Project Company
and CoBank, ACB, as Collateral Agent, pledging the Class A Interest) and
(b) each Party shall execute such other documents as the other Party may
reasonably request to document such termination and rescission, including
without limitation any amendment of the LLC Agreement requested by Seller. The
indemnity obligations of Articles 9 and 11 shall apply to the period between
Closing and the reassignment of the Purchased Interests to Seller, and the
provisions set forth in Article 11, Section 13.03, Section 13.05, Section 13.11,
Section 13.12, Section 13.13, Section 13.14 and Section 13.15 shall continue to
apply following any such termination and rescission. If Purchaser has not
exercised the rescission and termination right provided in this Section 12.03
within the 10 Business Day period following a Rescission Event, then Purchaser
shall be deemed to have irrevocably waived its rescission and termination rights
under this Section 12.03. Nothing in Section 3.07, Section 4.04 or Section 7.07
hereof shall be construed to limit the rights of Purchaser under this
Section 12.03.
ARTICLE 13
MISCELLANEOUS
     13.01. Notices . All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally, by facsimile transmission, by reputable national overnight courier
service or mailed (registered or certified mail with postage prepaid) to the
Parties at the following addresses or facsimile numbers:

     
If to Purchaser, to:
  AZ Biomass LLC
c/o State Street Bank and Trust Company,
Energy Credit Investments
State Street Financial Center
One Lincoln Street, SFC 12
Boston, Massachusetts 02110-2900
Attn: Francine E. Lyons
Tel: (617)-664-4718
Fax: (617)-664-4850

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with a copy to:
  Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, Colorado 80203-4541
Attn: Steven B. Richardson
Tel:(303)-861-7000
Fax:(303)-866-0200
 
   
If to Seller, to:
  Renegy Holdings, Inc.
3418 North Val Vista Drive
Mesa, Arizona 85213
Tel:(480)-556-5555
Fax:(480)-556-5500
 
   
with a copy to:
  Greenberg Traurig, P.A.
5100 Town Center Circle, Suite 400
Boca Raton, FL 33486
Attn: Barry A. Weiss, Esq.
Tel: (561) 955-7658
Fax: (561) 367-6258
Email: weissba@gtlaw.com

All such notices, requests and other communications will be deemed given upon
the earlier to occur of (a) its actual receipt, (b) the date it is sent by
confirmed facsimile (if sent before 4:00 p.m. local time of the receiving party
on a Business Day) or next Business Day (if sent after 4:00 p.m. of such local
time or sent on a day that is not a Business Day) to the facsimile provided in
this Section 13.01, (c) the fifth Business Day following its deposit in
registered or certified mail, with postage prepaid and return receipt requested,
and (d) the first Business Day following its deposit with a reputable national
overnight courier service, with charges prepaid, in the manner described above
to the address provided in this Section 13.01. Any Party from time to time may
change its address, facsimile, email address or other information for the
purpose of notices to that Party by giving notice specifying such change to the
other Party.
     13.02. Entire Agreement. This Agreement supersedes all prior discussions
and agreements among the Parties with respect to the subject matter hereof, and
contains the entire agreement among the Parties with respect to the subject
matter hereof.
     13.03. Expenses. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, each Party
will pay its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the transactions contemplated
hereby.
     13.04. Public Announcements. Promptly after the Closing, the Parties shall
develop a mutually agreed approach for advising public officials and making a
joint public announcement reporting the sale hereunder, without disclosing the
terms of the sale. At all times prior to such joint public announcement, Seller,
Purchaser and the Project Company will not issue or make

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any reports, statements or releases to the public with respect to this Agreement
or the transactions contemplated hereby without the consent of the other, unless
such report, statement or release is, in the opinion of legal counsel to such
Party, required by Law in order to discharge such Party’s disclosure
obligations, in which case the issuing Party shall provide the other Party, in
writing, no less than one Business Day prior to such proposed statement, the
content of the proposed statement and an opportunity to comment on the
statement. The issuing Party may thereafter release such statement and, upon
such release, shall promptly furnish the other Party with a copy thereof.
     13.05. Confidentiality.
          (a) This Agreement and all written and oral information that has been
clearly marked or identified by the disclosing party as confidential (the
“Information”) furnished (whether before or after the date hereof) by the
Representatives of either Party to the Representatives of the other Party in
connection with the transactions contemplated by this Agreement shall not be
disclosed in any manner by the receiving Party to any third party without prior
written consent of the other Party and shall be used by the receiving Party
solely in connection with the purposes of this Agreement.
          (b) The term “Information” will not, however, include information that
can be shown to have been (i) previously independently known by the receiving
Party, (ii) in the public domain (either prior to or after the furnishing of
such documents or information hereunder) through no fault of the receiving Party
or (iii) later acquired by the receiving Party from another source if the
receiving Party is not aware that such source is under an obligation to another
Party to keep such documents and information confidential.
          (c) Notwithstanding anything contained in this Section 13.05, the
foregoing restrictions will not apply to (i) use after the Closing by Purchaser,
its successors or permitted assigns of Information furnished concerning the
Project Company or the Business or Condition of the Project Company,
(ii) disclosure by any Party required or compelled by judicial or administrative
process (including in connection with obtaining the necessary Governmental
Approvals under or in respect of this Agreement and the transactions
contemplated hereby) or by other requirements or provisions of Law or of any
recognized stock exchange, (iii) disclosure voluntarily made by a Party to the
IRS or other Governmental or Regulatory Authority with jurisdiction over such
Party in connection with such authorities’ review or approval of the
transactions contemplated by the Agreement, or (iv) disclosure in an Action or
Proceeding brought by a Party in pursuit of its rights or in the exercise of its
remedies hereunder.
          (d) Notwithstanding anything contained in this Section 13.05, either
Party may reveal the Information to actual and prospective Lenders, actual and
prospective equity investors or transferees of a direct or indirect ownership
interest in such Party, the Project Company or the Project, advisers and other
third parties as may be necessary for Purchaser and Seller to perform their
obligations under this Agreement and any Project Debt Documents or other
financing documents so long as such Persons (i) need to know the Information for
purposes of evaluating the Agreement, the Project Company or the business of the
Project Company, (ii) are informed of the confidential nature of the Information
and (iii) are bound by an agreement to maintain the confidentiality of such
Information in a manner consistent with the requirements of

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this or are otherwise obligated to so maintain the confidentiality of such
Information under Law or by Order or ethical rules or codes of conduct.
          (e) If the transactions contemplated hereby are not consummated, upon
the request of the other Party, each Party will, and will cause its Affiliates,
any Person who has provided, or who is providing, financing to such Party and
their respective Representatives to, promptly (and in no event later than five
(5) Business Days after such request) redeliver or cause to be redelivered all
copies of Information furnished by the other Party in connection with this
Agreement or the transactions contemplated hereby and destroy or cause to be
destroyed all notes, memoranda, summaries, analyses, compilations and other
writings related thereto or based thereon prepared by the Party furnished such
Information or its Representatives.
     13.06. Waiver. Any term or condition of this Agreement may be waived at any
time by the Party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition. No waiver by any Party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
     13.07. Amendment. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each Party.
     13.08. No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each Party and their respective
successors or permitted assigns, and it is not the intention of the Parties to
confer third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under Article 11.
     13.09. No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any Party without the prior
written consent of the other Party and any attempt to do so will be void;
provided, that Purchaser shall be permitted to transfer all of its rights and
obligations under this Agreement and the other Transaction Documents to an
Affiliate or successor by merger, consolidation or other reorganization without
such consent. Subject to the preceding sentence, this Agreement is binding upon,
inures to the benefit of and is enforceable by the Parties and their respective
successors and permitted assigns.
     13.10. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any Party under this Agreement will not be materially
and adversely affected thereby, (a) such provision will be fully severable,
(b) this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom.
     13.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York without regard to principles
of conflict of laws except Section 5-1401 of the New York General Obligations
Law.

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     13.12. Venue and Consent to Jurisdiction. Each of the Parties hereby
irrevocably consents and agrees that any legal action or proceeding with respect
to this Agreement may be brought in any of the courts of the State of New York
and the courts of the United States of America for the Southern District of New
York, and the appellate courts from any thereof having subject matter
jurisdiction and, by execution and delivery of this Agreement and such other
documents executed in connection herewith, each Party hereby (a) accepts the
exclusive jurisdiction of the aforesaid courts (provided, that to the extent
that such courts refuse to exercise jurisdiction hereunder for any reason
whatsoever, the parties consent that any legal action or proceeding shall be
brought in any U.S. District Court or court of the State of Arizona located in
the Maricopa County, Arizona); (b) irrevocably agrees to be bound by any final
judgment (after any and all appeals) of any such court with respect to such
documents; (c) irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceedings with respect to such documents brought in any such court,
and further irrevocably waives, to the fullest extent permitted by law, any
claim that any such suit, action or proceedings brought in any such court has
been brought in any inconvenient forum; (d) agrees that service of process in
any such action may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
such Party at its address set forth below, or at such other address of which the
other Parties shall have been notified; and (e) agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law.
     13.13. Attorney’s Fees. In the event of any suit or other proceeding
between any of the Parties with respect to any of the transactions contemplated
hereby or subject matter hereof, the prevailing Party shall, in addition to such
other relief as the court may award, be entitled to recover reasonable
attorneys’ fees, costs (including at the trial and appellate levels and in any
bankruptcy proceeding) and expenses of investigation and litigation.
     13.14. Waiver Of Consequential Damages. NOTWITHSTANDING ANY PROVISION IN
THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY OR ITS AFFILIATES,
OR ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES, BE LIABLE
HEREUNDER AT ANY TIME FOR PUNITIVE, CONSEQUENTIAL, SPECIAL, OR INDIRECT LOSS OR
DAMAGE OF ANY OTHER PARTY OR ANY OF SUCH PARTY’S AFFILIATES, INCLUDING LOSS OF
PROFIT, LOSS OF REVENUE OR ANY OTHER SPECIAL OR INCIDENTAL DAMAGES, WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, AND EACH
PARTY HEREBY EXPRESSLY RELEASES THE OTHER PARTIES, THEIR AFFILIATES, AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND REPRESENTATIVES THEREFROM;
PROVIDED, THAT THIS SECTION 13.14 SHALL NOT BE INTERPRETED IN ANY MANNER SO AS
TO LIMIT (A) THE INDEMNIFICATION RIGHTS OF THE PURCHASER INDEMNIFIED PARTIES
WITH RESPECT TO ANY TAX BENEFITS SUCH AS DEPRECIATION BENEFITS AND TAX CREDITS,
TO THE EXTENT RESULTING FROM ANY BREACH OF ANY REPRESENTATION OR WARRANTY SET
FORTH HEREIN OR (B) ANY LIQUIDATED DAMAGES PAYABLE UNDER THE PROVISIONS OF
SECTION 11.03 HEREOF.
     13.15. Waiver Of Trial By Jury. EACH OF THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A

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TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
     13.16. Facsimile Signature; Counterparts. This Agreement may be executed by
facsimile signature in any number of counterparts, each of which will be deemed
an original, but all of which together will constitute one and the same
instrument.
[Signatures on next page]

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each Party as of the date first above written.

            RENEGY HOLDINGS, INC.
      By:   /s/ Robert M. Worsley         Name:   Robert M. Worsley       
Title:   Chief Executive Officer        AZ BIOMASS LLC
      By:   Antrim Corporation         Its: Manager                    By:   /s/
Francine E. Lyons         Name:   Francine E. Lyons        Title:   Vice
President