exv10w1






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




 









 






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	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	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	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	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	 






 









 






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







 











 






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



1









 







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.



2









 





     “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



3









 







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



4









 







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.



5









 





     “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.



6









 





     “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.



7









 





     “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



8









 






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



9









 






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.




10









 








          (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.




11









 








          (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



12









 






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



13









 







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



14









 







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.




15









 








          (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



16









 







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,



17









 







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



18









 







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.



21









 





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



22









 







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.



23









 





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);




24









 








          (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.



25









 





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.



28









 





     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



29









 






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



30









 






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:




31









 








               (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



32









 






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



33









 







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



34









 







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



35









 







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






36









 






	 	 	 
	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



37









 







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



38









 






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