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EXHIBIT 10.1  






AMENDED AND RESTATED

CAPITAL CONTRIBUTION AGREEMENT  


 between  


 HIGHSTAR RENEWABLE FUELS LLC  


 and  


 MSW ACQUISITION LLC  


 Dated as of June 24, 2003  


 Acquisition from Duke Energy Global Markets, Inc.

of a 50% outstanding membership interest in Duke/UAE Ref-Fuel LLC  









 
  
 

    TABLE OF CONTENTS    
    



	 
	 	 
	 	Page

	ARTICLE 1	 	1
	1.1	 	Delivery of Letters of Credit	 	1
	

ARTICLE 2	
 	

2
	2.1	 	Actions on the Additional Capital Contribution Date	 	2
	2.2	 	Failure to Deliver the Additional Capital Contributions	 	3
	2.3	 	Actions on the Initial Closing Date	 	3
	2.4	 	Purchase Price Adjustment Additional Capital Contributions	 	3
	

ARTICLE 3	
 	

3
	3.1	 	Legal Existence and Ownership	 	3
	3.2	 	Compliance with Law	 	3
	3.3	 	Power and Authorization; Enforceable Obligations	 	3
	3.4	 	Governmental Actions and Other Consents and Approvals	 	4
	3.5	 	No Legal Bar	 	4
	3.6	 	No Proceeding or Litigation	 	4
	3.7	 	Investment Company Act	 	4
	3.8	 	Public Utility Status	 	4
	3.9	 	Brokers and Finders	 	4
	

ARTICLE 4	
 	

5
	4.1	 	Legal Existence and Ownership	 	5
	4.2	 	Compliance with Law	 	5
	4.3	 	Power and Authorization; Enforceable Obligations	 	5
	4.4	 	Governmental Actions and Other Consents and Approvals	 	5
	4.5	 	No Legal Bar	 	6
	4.6	 	No Proceeding or Litigation	 	6
	4.7	 	Investment Company Act	 	6
	4.8	 	Public Utility Status	 	6
	4.9	 	Brokers and Finders	 	6
	

ARTICLE 5	
 	

6
	5.1	 	Obligations of the Company under the Purchase Agreement and the EPA	 	6
	5.2	 	Indemnification Procedure	 	7
	

ARTICLE 6	
 	

7
	Miscellaneous Provisions	 	7
	6.1	 	Notices	 	7
	6.2	 	Entire Agreement	 	8
	6.3	 	Survival	 	8
	6.4	 	Modifications and Waivers	 	8
	6.5	 	Separable Provisions	 	8
	6.6	 	Counterparts	 	9
	6.7	 	Governing Law	 	9
	6.8	 	Dispute Resolution	 	9
	6.9	 	Further Assurances	 	9
	6.10	 	Successors and Assigns	 	9
	6.11	 	No Recourse	 	9
	6.12	 	Third Party Beneficiaries	 	9
	6.13	 	Performance by Affiliates	 	9
	 	 	 	 	 





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	6.14	 	Termination	 	9
	6.15	 	Existing Contribution Agreement Superceded	 	9
	
EXHIBITS	
 	

 
	

A-1	
 	

Existing LLC Agreement	
 	

 
	

A-2	
 	

Form of Amended and Restated LLC Agreement	
 	

 
	

B-1	
 	

Highstar Liquidated Damages Letter of Credit	
 	

 
	

B-2	
 	

Highstar Liquidated Damages Letter of Credit	
 	

 
	

B-3	
 	

MSW Liquidated Damages Letter of Credit	
 	

 
	

C-1	
 	

Highstar Backup Liquidated Damages Letter of Credit	
 	

 
	

C-2	
 	

Highstar Backup Liquidated Damages Letter of Credit	
 	

 
	

C-3	
 	

MSW Backup Liquidated Damages Letter of Credit	
 	

 
	

D-1	
 	

Existing Escrow Agreement	
 	

 
	

D-2	
 	

Form of Amended and Restated Escrow Agreement	
 	

 
	

E-1	
 	

First Joint Written Direction	
 	

 
	

E-2	
 	

Second Joint Written Direction	
 	

 
	
SCHEDULES	
 	

 
	

A	
 	

Rules of Usage and Definitions	
 	

 




ii






  



 
 

AMENDED AND RESTATED
  CAPITAL CONTRIBUTION AGREEMENT    
    


        THIS AMENDED AND RESTATED CAPITAL CONTRIBUTION AGREEMENT (this "Contribution Agreement"), dated as of
June 24, 2003, is entered into by and between HIGHSTAR RENEWABLE FUELS LLC, a Delaware limited liability company ("Highstar"), and MSW
ACQUISITION LLC, a Delaware limited liability company (formerly known as MSW Acquisition Corp.) ("MSW", and together with Highstar, the
"Sponsors"). The rules of usage set forth in Schedule A hereto shall apply to this Contribution
Agreement. Capitalized terms used but not defined herein shall have the respective meanings as set forth on Schedule A hereto. 


W I T N E S S E T H: 


        WHEREAS,
pursuant to that certain Limited Liability Company Agreement of MSW ENERGY HOLDINGS LLC, a Delaware limited liability company (the
"Company"), dated as of March 19, 2003 (the "Existing LLC Agreement"), as of the date hereof each
of the Sponsors own a fifty percent (50%) outstanding membership interest in the Company. A copy of the Existing LLC Agreement is attached hereto as  Exhibit A-1; 


        WHEREAS,
Duke Energy Global Markets, Inc., a Nevada corporation ("Duke"), indirectly owns a fifty percent (50%) outstanding
membership interest (the "Duke Interest") in Duke/UAE Ref-Fuel LLC, a Delaware limited liability company
("Duke/UAE"); 


        WHEREAS,
the Sponsors have formed the Company for the purpose of purchasing the Duke Interest from Duke; 


        WHEREAS,
Duke and the Company have entered into that certain Equity Purchase Agreement, dated as of March 19, 2003 (the "EPA"),
pursuant to which Duke has agreed to sell (or cause to be sold), and the Company has agreed to purchase, the Duke Interest (the purchase and sale of the Duke Interest under the EPA being referred to
herein as the "Duke Acquisition"); and 


        WHEREAS,
the Sponsors desire to cause the Company to consummate the Duke Acquisition and have agreed to make contributions of capital to the Company and take other actions in furtherance
thereof, on the terms and conditions set forth herein; 


        WHEREAS,
on March 19, 2003, the Sponsors executed and delivered the Capital Contribution Agreement (the "Existing Contribution
Agreement"); 


        WHEREAS,
the Sponsors desire to amend and restate the Existing Contribution Agreement on the terms set forth herein. 


        NOW,
THEREFORE, in consideration of the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and
in reliance upon the representations and warranties of each party set forth herein, the parties hereto agree as follows: 


 
 

ARTICLE 1    
    
    Sponsor Actions    
    



        1.1    Delivery of Letters of Credit.    As of March 19, 2003, (i) Highstar
delivered (1) the Highstar Liquidated Damages Letters of Credit to Duke, and (2) the Highstar Backup Liquidated Damages Letters of Credit to the Escrow Agent to be held in accordance
with the terms of the Escrow Agreement, and (ii) MSW delivered (1) the MSW Liquidated Damages Letter of Credit to Duke, and (2) the MSW Backup Liquidated Damages Letter of Credit
to the Escrow Agent to be held in accordance with the terms of the Escrow Agreement. Each of the Highstar Backup Liquidated 


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Damages
Letters of Credit and the MSW Backup Liquidated Damages Letter of Credit was issued by a commercial bank that has a rating accorded to such bank's U.S. dollar denominated long term senior debt
obligations by Standard & Poor's Rating Services, Inc. or by Moody's Investor Services, Inc. of at least BBB or Baa2, respectively. 


 
 

ARTICLE 2    
    
    Closing Actions; Post-Closing Actions    
    



        2.1    Actions on the Additional Capital Contribution Date.    


        (a)   On
the Additional Capital Contribution Date, each of the Sponsors shall execute and deliver (1) an Amended and Restated LLC Agreement of the Company (the
"Amended and Restated LLC Agreement") in substantially the form attached hereto as  Exhibit A-2, with such changes as shall be mutually
agreed upon by the Sponsors (including changes thereto to reflect and give effect
to the use of the Highstar Backup Equity Contribution Guaranty by Highstar), and (2) an Amended and Restated Escrow Agreement (the "Amended and Restated Escrow
Agreement") in substantially the form attached hereto as Exhibit D-2, with such changes as shall be mutually
agreed upon by the Sponsors (including changes thereto to reflect and give effect to the use of the Highstar Backup Equity Contribution Guaranty by Highstar). The execution and delivery of the Amended
and Restated LLC Agreement on the Additional Capital Contribution Date shall be deemed to have occurred immediately prior to the execution and delivery of the Amended and Restated Escrow Agreement on
the Additional Capital Contribution Date. 


        (b)   No
later than 5:00 p.m (New York time) on the Additional Capital Contribution Date, Highstar shall (1) deposit the Highstar Additional Capital Contribution Amount
by wire transfer of immediately available funds to the escrow account maintained by the Escrow Agent, and (2) deliver the First Joint Written Direction executed by Highstar and the Highstar
Backup Equity Contribution Security to the Escrow Agent. Highstar shall be responsible for all fees and other costs associated with providing the Highstar Backup Equity Contribution Security. The
Highstar Additional Capital Contribution Amount and the Highstar Backup Equity Contribution Security shall be held by the Escrow Agent in accordance with the terms of the Escrow Agreement. 


        (c)   No
later than 5:00 p.m (New York time) on the Additional Capital Contribution Date, MSW shall (1) deposit the MSW Additional Capital Contribution Amount by wire
transfer of immediately available funds to the escrow account maintained by the Escrow Agent, and (2) deliver the First Joint Written Direction executed by MSW and the MSW Backup Equity
Contribution Letter of Credit to the Escrow Agent. MSW shall be responsible for all fees and other costs associated with providing the MSW Backup Equity Contribution Letter of Credit. The MSW
Additional Capital Contribution Amount and the MSW Backup Equity Contribution Letter of Credit shall be held by the Escrow Agent in accordance with the terms of the Escrow Agreement. 


        2.2    Failure to Deliver the Additional Capital Contributions.    If a Sponsor (the
"Non-Delivering Sponsor") does not deposit the funds and deliver the items described in Section 2.1(b) or (c) above, as
applicable, when and as required by such applicable section, the Non-Delivering Sponsor shall be deemed to have transferred its entire Membership Interest and Ownership Percentage to the
Sponsor that has deposited the funds and delivered the items described in Section 2.1(b) or (c) above, as applicable (the "Delivering
Sponsor"), and the Non-Delivering Sponsor shall immediately thereafter automatically be deemed to have withdrawn as, and cease to be, a Member of the Company
without any further action on the part of any Person. The Non-Delivering Sponsor shall promptly execute and deliver such additional instruments as may be reasonably requested by the
Delivering Sponsor to evidence such assignment of its Membership Interest and Ownership Percentage and its withdrawal as a Member of the Company. 


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        2.3    Actions on the Initial Closing Date.    Upon the satisfaction (or joint waiver by both
of the Sponsors) of all conditions precedent to the Company's obligation to proceed with the Initial Closing under Section 6.1 of the EPA and Duke is otherwise prepared to close the Duke
Acquisition and so long as (1) each of the Sponsors has executed and delivered the Amended and Restated LLC Agreement and the Amended and Restated Escrow Agreement and the Escrow Agent has
countersigned the Amended and Restated Escrow Agreement, and (2) the funds and items described in Sections 2.1(b) and (c) above have been deposited with or delivered to the Escrow Agent,
each of the Sponsors shall execute and deliver the Second Joint Written Direction to the Escrow Agent directing the Escrow Agent to distribute the Highstar Remaining Additional Capital Contribution
Amount and the MSW Remaining Additional Capital Contribution Amount in accordance with the Second Joint Written Direction, and deliver the Highstar Backup Equity Contribution Security and the MSW
Backup Equity Contribution Letter of Credit to the L/C Issuer to consummate the Duke Acquisition in accordance with the EPA. Upon delivery of such items by the Escrow Agent, Highstar shall be deemed
to have made a capital contribution to the Company in an amount equal to the Highstar Additional Capital Contribution Amount and MSW shall be deemed to have made a capital contribution to the Company
in an amount equal to the MSW Additional Capital Contribution Amount. 


        2.4    Purchase Price Adjustment Additional Capital Contributions.    If the Adjustment Amount
is owing from the Company to Duke pursuant to the terms of the EPA, Highstar shall deposit the Highstar Purchase Price Adjustment Amount and MSW shall deposit the MSW Purchase Price Adjustment Amount
by wire transfer of immediately available funds to the Company's account no later than 5:00 p.m. (New York time) on the day that is one (1) day prior to the day that the Company is
required to pay the Adjustment Amount to Duke under the EPA. Upon delivery of the Highstar Purchase Price Adjustment Amount to the Company, Highstar shall be deemed to have made a capital contribution
to the Company in an amount equal to the Highstar Purchase Price Adjustment Amount. Upon delivery of the MSW Purchase Price Adjustment Amount to the Company, MSW shall be deemed to have made a capital
contribution to the Company in an amount equal to the MSW Purchase Price Adjustment Amount. 


 
 

ARTICLE 3    
    
    Representations and Warranties of Highstar    
    



        Highstar represents and warrants to MSW as of March 19, 2003, as of the date hereof, as of the Additional Capital Contribution Date and as of the Initial
Closing Date that: 



        3.1    Legal Existence and Ownership.    Highstar is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Delaware. 


        3.2    Compliance with Law.    To Highstar's knowledge, Highstar is in compliance with all
Applicable Laws, except where such non-compliance would not reasonably be expected to have a material adverse effect on the business, operations or financial condition of Highstar. 


        3.3    Power and Authorization; Enforceable Obligations.    Highstar has full power and
authority to conduct its business as now conducted and as proposed to be conducted by it, to execute, deliver and perform this Contribution Agreement and the LLC Agreement, and to take all action as
may be necessary to complete the transactions contemplated hereunder and thereunder. Highstar has taken all necessary limited liability company and legal action to authorize the execution, delivery
and performance of this Contribution Agreement and the LLC Agreement. No consent or authorization of, filing with, or other act by or in respect of any other Person is required in connection with the
execution, delivery or performance by Highstar or the validity or enforceability as to Highstar of this Contribution Agreement or the LLC Agreement. This Contribution Agreement and the LLC Agreement
have been duly executed and delivered by Highstar and constitute legal, valid and binding obligations of Highstar, enforceable against 



3





 




Highstar
in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity. 


        3.4    Governmental Actions and Other Consents and Approvals.    No Governmental Actions are
required in connection with (i) the participation by Highstar in the transactions contemplated by this Contribution Agreement or the LLC Agreement, (ii) the validity and enforceability
of this Contribution Agreement or the LLC Agreement, and (iii) the consummation of the transactions contemplated by this Contribution Agreement or the LLC Agreement (other than any Governmental
Actions, consents or approvals under any regulatory law peculiarly applicable to the Company). All such Governmental
Actions have been duly obtained or made, are in full force and effect and are Final. The information set forth in each application and other written materials submitted by Highstar to the applicable
Governmental Authority in connection with each Governmental Action was accurate and complete in all material respects at the time submitted; to the extent that any such information has since become
inaccurate or incomplete, required supplemental information has been submitted by Highstar to the applicable Governmental Authority in connection therewith as required for correcting and completing
such information in all material respects to the extent such further submission is required in order to maintain compliance with or the effectiveness of such Governmental Action. True, correct and
complete copies of all such Governmental Actions have been delivered to MSW. 


        3.5    No Legal Bar.    The execution, delivery and performance by Highstar of this
Contribution Agreement and the LLC Agreement (i) will not violate any Applicable Law (other than immaterial violations of Applicable Law that may result from performance of this Contribution
Agreement or the LLC Agreement), (ii) will not violate any Contractual Obligation of Highstar (other than immaterial violations of any such Contractual Obligations that may result from
performance of this Contribution Agreement or the LLC Agreement), and (iii) will not violate the constitutive documents of Highstar. 


        3.6    No Proceeding or Litigation.    No action, litigation, proceeding or investigation of
or before any arbitrator or Governmental Authority is pending or, to the knowledge of Highstar, threatened against or affecting Highstar or against or affecting any of its properties, rights, revenues
or assets, which would reasonably be expected to have a material adverse effect on the business, operations or financial condition of Highstar. No action, litigation, proceeding or investigation
before any Governmental Authority is pending (or, to Highstar's knowledge, is threatened) against Highstar or with respect to this Contribution Agreement or the LLC Agreement or the transactions
contemplated hereby or thereby, and no order, judgment or decree has been issued (or, to Highstar's knowledge, is proposed to be issued) by any Governmental Authority to set aside, restrain, enjoin or
prevent Highstar from consummating of any of the transactions contemplated hereby or thereby. 


        3.7    Investment Company Act.    Highstar is not an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 


        3.8    Public Utility Status.    Highstar is not regulated as a "holding company", or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" (other than as a "holding company" exempt from the provisions
of PUHCA pursuant to Section 3 thereof or otherwise), as such quoted terms are defined in PUHCA. 



        3.9    Brokers and Finders.    No broker, finder, agent or similar intermediary, other than
CSFB, has acted for or on behalf of Highstar or any of its affiliates in connection with this Contribution Agreement or the LLC Agreement or the transactions contemplated hereby or thereby, and no 



4





 




broker,
finder, agent or similar intermediary, other than CSFB, is entitled to any fee or commission in connection herewith or therewith based on any agreement, arrangement or understanding with, or
action taken by, Highstar or any of its affiliates. 



 
 

ARTICLE 4    
    
    Representations and Warranties of MSW    
    


        MSW represents and warrants to Highstar as of March 19, 2003, as of the date hereof, as of the Additonal Capital Contribution Date and as of the Initial
Closing Date that: 



        4.1    Legal Existence and Ownership.    As of March 19, 2003, MSW was a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware. As of the date hereof, as of the Additional Capital Contribution Date and as of the Initial Closing Date,
MSW is and will be a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. 


        4.2    Compliance with Law.    To MSW's knowledge, MSW is in compliance with all Applicable
Laws, except where such non-compliance would not reasonably be expected to have a material adverse effect on the business, operations or financial condition of MSW. 


        4.3    Power and Authorization; Enforceable Obligations.    MSW has full power and authority
to conduct its business as now conducted and as proposed to be conducted by it, to execute, deliver and perform this Contribution Agreement and the LLC Agreement, and to take all action as may be
necessary to complete the transactions contemplated hereunder and thereunder. MSW has taken all necessary corporate or limited liability company and legal action to authorize the execution, delivery
and performance of this Contribution Agreement and the LLC Agreement. No consent or authorization of, filing with, or other act by or in respect of any other Person is required in connection with the
execution, delivery or performance by MSW or the validity or enforceability as to MSW of this Contribution Agreement or the LLC Agreement. This Contribution Agreement and the LLC Agreement have been
duly executed and delivered by MSW and constitute legal, valid and binding obligations of MSW, enforceable against MSW in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity. 



        4.4    Governmental Actions and Other Consents and Approvals.    No Governmental Actions are
required in connection with (i) the participation by MSW in the transactions contemplated by this Contribution Agreement or the LLC Agreement, (ii) the validity and enforceability of
this Contribution Agreement or the LLC Agreement, and (iii) the consummation of the transactions contemplated by this Contribution Agreement or the LLC Agreement (other than any Governmental
Actions, consents or approvals under any regulatory law peculiarly applicable to the Company). All such Governmental Actions have been duly obtained or made, are in full force and effect and are
Final. The information set forth in each application and other written materials submitted by MSW to the applicable Governmental Authority in connection with each Governmental Action was accurate and
complete in all material respects at the time submitted; to the extent that any such information has since become inaccurate or incomplete, required supplemental information has been submitted by MSW
to the applicable Governmental Authority in connection therewith as required for correcting and completing such information in all material respects to the extent such further submission is required
in order to maintain compliance with or the effectiveness of such Governmental Action. True, correct and complete copies of all such Governmental Actions have been delivered to Highstar. 



5





 




        4.5    No Legal Bar.    The execution, delivery and performance by MSW of this Contribution
Agreement and the LLC Agreement (i) will not violate any Applicable Law (other than immaterial violations of Applicable Law that may result from performance of this Contribution Agreement or
the LLC Agreement), (ii) will not violate any Contractual Obligation of MSW (other than immaterial violations of any such Contractual Obligations that may result from performance of this
Contribution Agreement or the LLC Agreement), and (iii) will not violate the constitutive documents of MSW. 


        4.6    No Proceeding or Litigation.    No action, litigation, proceeding or investigation of
or before any arbitrator or Governmental Authority is pending or, to the knowledge of MSW, threatened against or affecting MSW or against or affecting any of its properties, rights, revenues or
assets, which would reasonably be expected to have a material adverse effect on the business, operations or financial condition of MSW. No action, litigation, proceeding or investigation before any
Governmental Authority is pending (or, to MSW's knowledge, is threatened) against MSW or with respect to this Contribution Agreement or the LLC Agreement or the transactions contemplated hereby or
thereby, and no order, judgment or decree has been issued (or, to MSW's knowledge, is proposed to be issued) by any Governmental Authority to set aside, restrain, enjoin or prevent MSW from
consummating of any of the transactions contemplated hereby or thereby. 


        4.7    Investment Company Act.    MSW is not an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 



        4.8    Public Utility Status.    MSW is not regulated as a "holding company", or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" (other than as a "holding company" exempt from the provisions of PUHCA
pursuant to Section 3 thereof or otherwise), as such quoted terms are defined in PUHCA. 


        4.9    Brokers and Finders.    No broker, finder, agent or similar intermediary, other than
CSFB, has acted for or on behalf of MSW or any of its affiliates in connection with this Contribution Agreement or the LLC Agreement or the transactions contemplated hereby or thereby, and no broker,
finder, agent or similar intermediary, other than CSFB, is entitled to any fee or commission in connection herewith or therewith based on any agreement, arrangement or understanding with, or action
taken by, MSW or any of its affiliates. 



 
 

ARTICLE 5    
    
    Sponsor Covenants    
    



        5.1    Obligations of the Company under the Purchase Agreement and the EPA.    Each of the
Sponsors shall take all actions within its control to cause the Company to perform all of its obligations under the Purchase Agreement that are required to be performed by it on and prior to the Note
Closing Date. Each of the Sponsors shall take all actions within its control to cause the Company to perform all of its obligations under the EPA that are required to be performed by it on and prior
to the Initial Closing Date. If Highstar has failed to deposit the Highstar Additional Capital Contribution Amount, and the Highstar Backup Equity Contribution Security in accordance with
Section 2.1(b) hereof, has failed to execute and deliver the Second Joint Written Direction in accordance with Section 2.3 hereof, or otherwise caused a breach by the Company of any of
its obligations under the EPA (including any payment obligations thereunder), Highstar shall be solely liable for all Damages under the EPA arising out of, resulting from or incurred in connection
with such breach, MSW shall be entitled to receive from escrow the Highstar Backup Liquidated Damages Letters of Credit and the MSW Backup Liquidated Damages Letter of Credit in accordance with the
Escrow Agreement, and Highstar shall promptly reimburse MSW for the amount equal to the product of (i) the aggregate amount owing by 


6





 

the
Company under the Note Documents multiplied by (ii) MSW's Ownership Percentage without giving effect to Section 2.2. In addition, Highstar shall indemnify MSW and its affiliates from
any and all Damages incurred by MSW or its affiliates as a result of (a) a breach described in the preceding sentence, (b) any payment by the Company under the Tax Indemnity Agreement
dated March 19, 2003 (the "Tax Indemnity Agreement") in favor of American Ref-Fuel Company of Delaware Valley, L.P. that was caused
by the actions of Highstar and its affiliates (for the avoidance of doubt, the ownership of Highstar's interest in the Company by any entity that is not a corporation for federal income tax purposes
shall be considered an action by Highstar), or (c) any required payment by the Company under Section 11.1(b)(ii) of the EPA resulting from the actions of Highstar or its
affiliates. If MSW has failed to deposit the MSW Additional Capital Contribution Amount and the MSW Backup Equity Contribution Letter of Credit in accordance with Section 2.1(c) hereof, has
failed to execute and deliver the Second Joint Written Direction in accordance with Section 2.3 hereof, or otherwise caused a breach by the Company of any of its obligations under the EPA
(including any payment obligations thereunder), MSW shall be solely liable for all Damages under the EPA arising out of, resulting from or incurred in connection with such breach, Highstar shall be
entitled to receive from escrow the MSW Backup Liquidated Damages Letter of Credit and the Highstar Backup Liquidated Damages Letters of Credit in accordance with the Escrow Agreement, and MSW shall
promptly reimburse Highstar for the amount equal to the product of (i) the aggregate amount owing by the Company under the Note Documents multiplied by (ii) Highstar's Ownership
Percentage without giving effect to Section 2.2. In addition, MSW shall indemnify Highstar and its affiliates from any and all Damages incurred by Highstar as a result of (a) a breach
described in the preceding sentence, (b) any payment under the Tax Indemnity Agreement that was caused by the actions of MSW and its affiliates (for the avoidance of doubt, the ownership of
MSW's interest in the Company by any entity that is not a corporation for federal income tax purposes shall be considered an action by MSW), or (c) any required payment by the Company under
Section 11.1(b)(ii) of the EPA resulting from the actions of MSW or its affiliates. 


        5.2    Indemnification Procedure.    Any Person seeking to be indemnified or held harmless
(the "Indemnified Party") under this Contribution Agreement shall give notice to the party responsible for providing the indemnity (the
"Indemnifying Party") as soon as reasonably practicable after the Indemnified Party becomes aware of any claim, action or proceeding that may give rise
to an indemnification obligation hereunder. The Indemnifying Party shall have the right to assume the defense of any such claim, action or proceeding. Any Indemnified Party shall have the right to
employ separate counsel with respect to any such claim, action or proceeding, but the Indemnifying Party shall maintain control of the defense,
and the fees and expenses of such separate counsel shall be borne by the Person so employing such separate counsel. The Indemnifying Party shall not be liable for any settlement, compromise, consent
to the entry of judgment in or termination of any claim, action or proceeding effected without the Indemnifying Party's written consent (which consent shall not be unreasonably withheld, delayed or
conditioned). The Indemnifying Party will not, without the Indemnified Party's written consent (which consent shall not be unreasonably withheld, delayed or conditioned) settle, compromise, consent to
the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder unless such settlement, compromise, consent or
termination includes an unconditional release of the Indemnified Party from any liabilities arising out of such claim, action or proceeding. 


 
 

ARTICLE 6    
    
    Miscellaneous Provisions    
    


        6.1    Notices.    All notices or other communications required or permitted by this
Contribution Agreement shall be in writing and shall be deemed to have been duly given upon receipt if delivered in 


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person,
by facsimile transmission, by Federal Express or other reputable overnight courier, or mailed by certified or registered mail, return receipt requested, postage pre-paid, and
addressed as follows: 



if
to Highstar: 


Highstar
Renewable Fuels LLC

c/o AIG Global Investment Group, Inc.

175 Water Street

New York, New York 10038

Attention: Christopher H. Lee

Facsimile: (212) 458-2222 



with
a copy to: 




Highstar
Renewable Fuels LLC

c/o AIG Global Investment Group, Inc.

175 Water Street

New York, New York 10038

Attention: Marc C. Baliotti

Facsimile: (212) 458-2222 


if
to MSW: 


MSW
Acquisition LLC

c/o DLJ Merchant Banking III, Inc.

Eleven Madison Avenue

New York, New York 10010-3629

Attention: Ari Benacerraf

Facsimile: (646) 935-7190 




        or
to such other address or facsimile number as may be specified by a party hereto pursuant to notice given by such party in accordance with the provisions of this Section 6.1. 



        6.2    Entire Agreement.    This Contribution Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings of the parties relating to the subject matter hereof. 


        6.3    Survival.    None of the representations and warranties made in this Contribution
Agreement and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated by this Contribution
Agreement. 


        6.4    Modifications and Waivers.    No amendment or other modification of any provision of
this Contribution Agreement shall be valid or binding unless it is in writing and signed by each of the parties hereto. No waiver of any provision of this Contribution Agreement shall be valid or
binding unless it is in writing and signed by the party waiving compliance with such provision. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver of any partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other such right, power or privilege.
No waiver of any breach, term or condition of this Contribution Agreement by any party shall constitute a subsequent waiver of the same or any other breach, term or condition. 


        6.5    Separable Provisions.    If any provision of this Contribution Agreement shall be held
invalid or unenforceable by a court of competent jurisdiction, the remainder nevertheless shall remain in full force and effect. 


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        6.6    Counterparts.    This Contribution Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 


        6.7    Governing Law.    This Contribution Agreement shall be governed by and construed in
accordance with the law of the State of New York without regard to its principles of conflicts of laws. 



        6.8    Dispute Resolution.    Any dispute, controversy or Claim arising out of or relating to
this Contribution Agreement shall be considered a dispute under the Amended and Restated LLC Agreement and shall be resolved in accordance with the dispute resolution provisions of the Amended and
Restated LLC Agreement. 


        6.9    Further Assurances.    Each of the parties shall execute such agreements, instruments
and other documents and take such further actions as may be reasonably required or desirable to carry out the provisions and the transactions contemplated by this Contribution Agreement, including but
not limited to the execution of such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization, and cooperating in obtaining any third party consents and
approvals necessary in order to accomplish and give full force and effect to the transactions contemplated hereby. 


        6.10    Successors and Assigns.    Each and all of the covenants, terms, provisions and
agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Contribution Agreement, their respective successors and assigns.
No Sponsor may assign its rights or obligations under this Contribution Agreement except with the consent of the other Sponsor; provided that either Sponsor may assign its rights under this
Contribution Agreement to any entity that is the assignee of such Sponsor's membership interests in the Company in accordance with the LLC Agreement. Any purported assignment not in compliance with
the immediately preceding sentence shall be void and not given effect. 


        6.11    No Recourse.    No past, present or future director, officer, employee, member,
manager, shareholder, affiliate, incorporator or partner, as such of any Sponsor shall have any liability for any obligations of such Sponsor under this Contribution Agreement or for any claim based
on, in respect of or by reason of such obligations or their creation. 



        6.12    Third Party Beneficiaries.    The provisions of this Contribution Agreement shall only
be for the benefit of, and enforceable by, the parties hereto and shall not inure to the benefit of or be enforceable by any third party. 


        6.13    Performance by Affiliates.    Any obligation of any party hereto owed to any other
party hereto under this Contribution Agreement, which obligation is performed, satisfied or fulfilled by an affiliate of such party, shall be deemed to have been performed, satisfied or fulfilled by
such party. 


        6.14    Termination.    This Contribution Agreement and the obligations of the Sponsors
hereunder, shall automatically terminate upon the occurrence of the Special Mandatory Redemption, the Non-Delivering Sponsor Cessation, the termination of the EPA or the payment of the
Adjustment Amount by Duke or the Company, as applicable; provided, however, that the obligations contained in Sections 2.2, 5.1 and 5.2 hereof and this
Article 6 and all of the definitions set forth herein shall survive such termination. 



        6.15    Existing Contribution Agreement Superceded.    This Contribution Agreement shall, as
of the date hereof, amend and restate the Existing Contribution Agreement in its entirety and the rights and obligations of the parties evidenced by the Existing Contribution Agreement shall be
evidenced by this Contribution Agreement. 


[Signature
Page Follows] 


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        IN
WITNESS WHEREOF, the parties hereto have caused this Contribution Agreement to be executed by their respective duly authorized representative as of the date first above written. 



	 	 	HIGHSTAR RENEWABLE FUELS LLC
	

 	
 	

 	

 	

 
	

 	
 	

By:	

/s/  MICHAEL J. MILLER      

	 	 	 	Name:	Michael J. Miller
	 	 	 	Title:	President
	

 	
 	

 	

 	

 
	

 	
 	
MSW ACQUISITION LLC
	

 	
 	

 	

 	

 
	

 	
 	

By:	

/s/  OHSANG KWON      

	 	 	 	Name:	OhSang Kwon
	 	 	 	Title:	Secretary




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SCHEDULE A    
    
    RULES OF USAGE AND DEFINITIONS    
    


        1.    Rules of Usage.    


        (a)   All
terms defined in this Schedule A and this Contribution Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto. The meanings below are equally applicable to both the singular and plural forms of the terms defined. 


        (b)   As
used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms not defined in this  Schedule A and this Contribution Agreement, and accounting terms
partly defined in this  Schedule A and this Contribution Agreement to the extent not defined, shall have the respective meanings given to them under GAAP. 


        (c)   The
word "hereof," "herein" and "hereunder" and words of similar import when used in this Contribution Agreement shall refer to this Contribution Agreement as a whole
and not to any particular provision of this Contribution Agreement, and section, Schedule and Exhibit references are to this Contribution Agreement unless otherwise specified. 



        (d)   References
to agreements defined herein shall include such agreements as they may be amended, supplemented or otherwise modified from time to time. 


        (e)   Terms
defined in this Contribution Agreement by reference to any other agreement, document or instrument shall have the meanings assigned to them in such agreement,
document or instrument whether or not such agreement, document or instrument is then in effect. 


        (f)    The
words "include" and "including" and words of similar import when used in this Contribution Agreement shall be deemed to be followed by the words "without
limitation." 


        (g)   References
to statutes or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending or replacing the statute or
regulation referred to. 


        (h)   Reference
to consents that will not be unreasonably withheld shall not be unreasonably withheld or delayed. 


        (i)    The
words "sole and absolute discretion" when used in the Contribution Agreement shall mean that the Person entitled to use its "sole and absolute discretion" shall not
be obligated to act reasonably or in accordance with any covenant of good faith or fair dealing or similar standard, whether express or implied. 



        2.    Definitions.    


        "Act" shall have the meaning set forth in the LLC Agreement. 


        "Acquisition Debt" means the debt incurred by the Company in connection with the Duke Acquisition. 


        "Additional Capital Contribution Date" means June 24, 2003. 


        "Adjustment Amount" shall have the meaning set forth in the EPA. 


        "Amended and Restated Escrow Agreement" has the meaning set forth in Section 2.1(a). 


        "Amended and Restated LLC Agreement" has the meaning set forth in Section 2.1(a). 



        "Applicable Law" means any statute, law, ordinance, executive order, rule or regulation (including a regulation that has been formally
promulgated in a rule-making proceeding but, pending final adoption, is in proposed or temporary form having the force of law); guideline or notice having the force of law; 


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or
approval, permit, license, franchise, judgment, order, decree, injunction or writ of any Governmental Authority applicable to a specified Person or specified property, as in effect from time to
time. 


        "ARC" means American Ref-Fuel Company LLC, a Delaware limited liability company. 


        "Claim" means any and all claims, lawsuits, demands, causes of action, investigations and other proceedings (whether or not before a
Governmental Authority). 


        "Contractual Obligation" means, as to any Person, any provision of any security by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its properties bound. 


        "CSFB" means Credit Suisse First Boston LLC. 


        "Damages" means all demands, Claims, causes of action, suits, judgments, damages, amounts paid in settlement (with the approval of the
indemnifying party where applicable), penalties, Liabilities, losses or deficiencies, costs and expenses, including reasonable attorney's fees, court costs, expenses of arbitration or mediation, and
other out-of-pocket expenses incurred in investigating or preparing the foregoing. "Damages" does not include incidental, indirect or consequential damages, damages for lost
profits or other special damages or punitive or exemplary damages; provided, however, that in the case of third-party Claims, "Damages" shall be deemed
to include all forms of relief, monetary and otherwise, asserted therein, without any of the foregoing exceptions. 


        "Equity Contribution Agreement" means that certain Equity Contribution Agreement, dated as of April 30, 2001, between Duke Capital
Corporation, United American Energy Corp., Duke/UAE and ARC. 


        "Equity Contribution Letter of Credit" means a letter of credit, meeting the requirements of Section 2.4(a) of the Equity
Contribution Agreement, to be provided to ARC by the Company in an amount equal to Fifty Million Dollars ($50,000,000). 


        "Escrow Agent" means Wachovia Bank, National Association. 


        "Escrow Agreement" means, prior to the Additional Capital Contribution Date, the Existing Escrow Agreement, and on and after the
Additional Capital Contribution Date, the Amended and Restated Escrow Agreement. 


        "Existing Contribution Agreement" has the meaning set forth in the recitals hereto. 


        "Existing Escrow Agreement" means that certain Escrow Agreement, dated as of March 19, 2003, by and among the Sponsors and the
Escrow Agent. A copy of the Escrow Agreement is attached hereto as Exhibit D-1. 


        "Existing LLC Agreement" has the meaning set forth in the recitals hereto. 



        "Final" as to any Governmental Action issued or transferred to any Person, means the status of such Governmental Action as (a) duly
issued in the name of, or validly transferred to, such Person and accepted by such Person, (b) in full force and effect, and (c) not then subject to any pending judicial or
administrative proceedings. If the Applicable Law under which such Governmental Action was issued provides for a fixed period for judicial or administrative appeal or review thereof, such Governmental
Action shall not be deemed "Final" unless such period has expired and no petition for administrative or judicial appeal or review has been filed. 



        "First Joint Written Direction" shall mean a written direction, in substantially the form of  Exhibit E-1 attached hereto, executed by each of the
Sponsors and directing the Escrow Agent to disburse the Highstar Prepaid Note
Interest Amount and the MSW Prepaid Note Interest Amount to the Note Holder Escrow Agent on Note Closing Date. 


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        "GAAP" means United States generally accepted accounting principles. 


        "Governmental Action" means all permits, authorizations, registrations, consents, approvals, waivers, exceptions, variances, claims,
orders, judgments and decrees, licenses, exemptions, publications, filings, notices to and declarations of or with any Governmental Authority. 


        "Governmental Authority" means any Federal, state, local or foreign governmental department, commission, board, bureau, authority, agency,
court, instrumentality or judicial or regulatory body or entity. 


        "Highstar Additional Capital Contribution Amount" means the amount equal to the sum of the Highstar Prepaid Note Interest Amount and the
Highstar Remaining Additional Capital Contribution Amount. 


        "Highstar Backup Equity Contribution Guaranty" means one or more guarantees from each of The Variable Annuity Life Insurance Company and
AIG Annuity Insurance Company (or any other guarantor that is acceptable to the L/C Issuer) to be issued in favor of the L/C Issuer by or on behalf of Highstar with an aggregate maximum liability to
the guarantors thereunder equal to equal to the product of (i) the face amount of the Equity Contribution Letter of Credit multiplied by (ii) Highstar's Ownership Percentage, in form and
substance satisfactory to the L/C Issuer, to enable the Company to obtain the Equity Contribution Letter of Credit, which aggregate amount is expected to be Twenty-Five Million Dollars
($25,000,000). 


        "Highstar Backup Equity Contribution Letter of Credit" means the letter of credit to be provided to the L/C Issuer by or on behalf of
Highstar in an amount equal to the product of (i) the face amount of the Equity Contribution Letter of Credit multiplied by (ii) Highstar's Ownership Percentage, which amount is expected
to be Twenty-Five Million Dollars ($25,000,000), in form and substance satisfactory to the L/C Issuer, to enable the Company to obtain the Equity Contribution Letter of Credit. 


        "Highstar Backup Equity Contribution Security" means the Highstar Backup Equity Contribution Guaranty or the Highstar Backup Equity
Contribution Letter of Credit. 


        "Highstar Backup Liquidated Damages Letters of Credit" means the two (2) letters of credit that were placed in escrow by Highstar
in an aggregate amount equal to Twelve Million Five Hundred Thousand Dollars ($12,500,000). Copies of the Highstar Backup Liquidated Damages Letters of Credit are attached hereto as  Exhibit C-1 and Exhibit C-2. 


        "Highstar Liquidated Damages Letters of Credit" means the two (2) letters of credit that were provided to Duke by Highstar in an
aggregate amount equal to Twelve Million Five Hundred Thousand Dollars ($12,500,000). Copies of the Highstar Liquidated Damages Letters of Credit are attached hereto as  Exhibit B-1 and
Exhibit B-2. 



        "Highstar Prepaid Note Interest Amount" means Two Million Two Hundred Forty-Three Thousand Fifty-Five Dollars and 56/100 Cents
($2,243,055.56). 


        "Highstar Purchase Price Adjustment Amount" means one-half (1/2) of the Purchase Price Adjustment Amount,
provided that the Highstar Purchase Price Adjustment Amount shall not exceed an amount equal to five million dollars ($5,000,000). 


        "Highstar Remaining Additional Capital Contribution Amount" means Seventy-Two Million Seven Hundred Fifty-Six
Thousand Nine Hundred Forty-Four Dollars and 44/100 Cents ($72,756,944.44). 


        "Initial Closing Date" shall have the meaning set forth in the EPA. 


        "Liabilities" means any and all debts, liabilities, commitments and obligations, whether or not fixed, contingent or absolute, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, 


3





 



known
or unknown, whether or not required by GAAP to be reflected in financial statements or disclosed in the notes thereto. 


        "LLC Agreement" means, prior to the Additional Capital Contribution Date, the Existing LLC Agreement, and on and after the Additional
Capital Contribution Date, the Amended and Restated LLC Agreement. 


        "L/C Issuer" means the issuer of the Equity Contribution Letter of Credit. 


        "Member" shall have the meaning set forth in the LLC Agreement. 


        "Membership Interest" means a Member's entire interest in the Company, including such Member's share of the profits, losses and
distributable cash or distributions of the Company, and the Member's right to vote on, consent to, or otherwise participate in any decision or action of or by the Members granted pursuant to the LLC
Agreement or the Act. 


        "MSW Additional Capital Contribution Amount" means the amount equal to the sum of the MSW Prepaid Note Interest Amount and the MSW
Remaining Additional Capital Contribution Amount. 


        "MSW Backup Equity Contribution Letter of Credit" means the letter of credit to be provided to the L/C Issuer by or on behalf of MSW in an
amount equal to the product of (i) the face amount of the Equity Contribution Letter of Credit multiplied by (ii) MSW's Ownership Percentage, which amount is expected to be
Twenty-Five Million Dollars ($25,000,000), in form and substance satisfactory to the L/C Issuer, to enable the Company to obtain the Equity Contribution Letter of Credit. 



        "MSW Backup Liquidated Damages Letter of Credit" means the letter of credit that was placed in escrow by MSW in an amount equal to Twelve
Million Five Hundred Thousand Dollars ($12,500,000). A copy of the MSW Backup Liquidated Damages Letter of Credit is attached hereto as  Exhibit C-3. 


        "MSW Energy Finance" means MSW Energy Finance Co., Inc. 


        "MSW Liquidated Damages Letter of Credit" means the letter of credit that was provided to Duke by MSW in an amount equal to Twelve Million
Five Hundred Thousand Dollars ($12,500,000). A copy of the MSW Liquidated Damages Letter of Credit is attached hereto as Exhibit B-3. 


        "MSW Prepaid Note Interest Amount" means Two Million Two Hundred Forty-Three Thousand Fifty-Five Dollars and 55/100 Cents
($2,243,055.55). 


        "MSW Purchase Price Adjustment Amount" means one-half (1/2) of the Purchase Price Adjustment Amount, provided
that if the Purchase Price Adjustment Amount exceeds an amount equal to ten million dollars ($10,000,000), the MSW Purchase Price Adjustment Amount shall equal five million dollars
($5,000,000) plus the additional amount in excess of the amount equal to ten million dollars ($10,000,000) that is necessary to pay the
Adjustment Amount to Duke in accordance with the EPA, and the contribution of such additional amount shall not affect the equal voting and management rights of Highstar and MSW in the Company;
provided further that if the contribution of the MSW Purchase Price Adjustment Amount would cause Highstar's ownership percentage to be less than forty and one-tenth percent (40.1%), a
portion of such MSW Purchase Price Adjustment Amount shall be made as a Capital Contribution Loan in accordance with Section 5.2 of the Amended and Restated LLC Agreement to the extent
necessary to maintain Highstar's ownership percentage at forty and one-tenth percent (40.1%) unless Highstar is the Non-Delivering Sponsor. 



        "MSW Remaining Additional Capital Contribution Amount" means Seventy-Two Million Seven Hundred Fifty-Six Thousand
Nine Hundred Forty-Four Dollars and 45/100 Cents ($72,756,944.45). 


        "Non-Delivering Sponsor Cessation" means the cessation of a Sponsor as a Member of the Company pursuant to Section 2.2
hereof. 


        "Note Closing Date" means June 25, 2003. 


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        "Note Documents" means the documents to be executed and delivered under and in accordance with the terms of the Purchase Agreement. 


        "Note Holder Escrow Agent" means Wells Fargo Bank Minnesota, N.A., a national banking association, in its capacity as the "Escrow Agent"
under the Note Holder Escrow Agreement. 


        "Note Holder Escrow Agreement" means the "Escrow Agreement" under and as defined in the Purchase Agreement. 


        "Ownership Percentage" means, prior to the Additional Capital Contribution Date, a Member's percentage interest in the profits, losses and
distributable cash or distributions of the Company, and on and after the Additional Capital Contribution Date, such term as defined in the Amended and Restated LLC Agreement. 


        "Person" means any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental
agency or any other entity, whether acting in an individual, fiduciary or other capacity. 


        "PUHCA" means the Public Utility Holding Company Act of 1935, as amended. 


        "Purchase Agreement" means that certain Purchase Agreement, dated as of June 11, 2003, by and among the Company, MSW Energy
Finance, and CSFB, pursuant to which the Company and MSW Energy Finance have agreed to sell and CSFB has agreed to purchase the Senior Secured Notes. 



        "Purchase Price Adjustment Amount" means the amount of the Adjustment Amount (to the extent such amount is owing from the Company to Duke
under and in accordance with the terms of the EPA) that exceeds the funds that are available to the Company to pay such Adjustment Amount to Duke. 


        "Second Joint Written Direction" shall mean a written direction, in substantially the form of  Exhibit E-2 attached hereto, executed by each of the
Sponsors and directing the Escrow Agent to (i) disburse the Highstar
Remaining Additional Capital Contribution Amount and the MSW Remaining Additional Capital Contribution Amount in an amount sufficient to consummate the Duke Acquisition, (ii) deliver the MSW
Backup Equity Contribution Letter of Credit to the L/C Issuer, and (iii) deliver the Highstar Backup Equity Contribution Security to the L/C Issuer. 


        "Senior Secured Notes" means the Two Hundred Million Dollar ($200,000,000) original principal amount 81/2% Senior Secured
Notes Due 2010 to be issued by the Company and MSW Energy Finance. 



        "Special Mandatory Redemption" has the meaning set forth in the Purchase Agreement. 


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QuickLinks


TABLE OF CONTENTS



AMENDED AND RESTATED CAPITAL CONTRIBUTION AGREEMENT

ARTICLE 1 Sponsor Actions

ARTICLE 2 Closing Actions; Post-Closing Actions

ARTICLE 3 Representations and Warranties of Highstar

ARTICLE 4 Representations and Warranties of MSW

ARTICLE 5 Sponsor Covenants

ARTICLE 6 Miscellaneous Provisions


SCHEDULE A RULES OF USAGE AND DEFINITIONS