exv10w11







Exhibit 10.11




 

 






AMENDED AND RESTATED CREDIT AGREEMENT




dated as of January 1, 2009




among




SNOWFLAKE WHITE MOUNTAIN POWER, LLC




RENEGY, LLC




and




RENEGY TRUCKING, LLC

(as Borrowers)




COBANK, ACB

(LC Issuer)




COBANK, ACB

(Lead Arranger, Administrative Agent and Collateral Agent)




and




THE FINANCIAL INSTITUTIONS PARTIES HERETO

(Lenders)




 






24 MW BIOMASS FIRED POWER PLANT

SNOWFLAKE, ARIZONA




 

 















 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE 1 DEFINITIONS
 	 	 	1	 
	 
	 	 	 	 	 	 
	1.1

	 	Definitions
	 	 	1	 
	1.2

	 	Rules of Interpretation
	 	 	1	 
	1.3

	 	Accounting Terms; GAAP
	 	 	1	 
	1.4

	 	Classification of Loans and Borrowings
	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE 2 THE CREDIT FACILITIES	 	 	2	 
	 
	 	 	 	 	 	 
	2.1

	 	Loan Facilities
	 	 	2	 
	2.2

	 	Letter of Credit Facility
	 	 	12	 
	2.3

	 	Total Commitments
	 	 	17	 
	2.4

	 	Fees
	 	 	17	 
	2.5

	 	Other Payment Terms
	 	 	18	 
	2.6

	 	Pro Rata Treatment
	 	 	22	 
	2.7

	 	Change of Circumstances
	 	 	23	 
	2.8

	 	Funding Losses
	 	 	25	 
	2.9

	 	Alternate Office; Minimization of Costs
	 	 	26	 
	2.10

	 	Register
	 	 	27	 
	2.11

	 	Joint and Several Liability of Borrowers
	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE 3 CONDITIONS PRECEDENT	 	 	30	 
	 
	 	 	 	 	 	 
	3.1

	 	Conditions Precedent to the Closing Date
	 	 	30	 
	3.2

	 	Conditions Precedent to Each Credit Event
	 	 	39	 
	3.3

	 	Conditions Precedent to Each Construction Credit Event
	 	 	40	 
	3.4

	 	Conditions Precedent to Term-Conversion
	 	 	42	 
	3.5

	 	No Approval of Work
	 	 	45	 
	3.6

	 	Adjustment of Drawdown Requests
	 	 	45	 
	3.7

	 	Determinations Under Section 3.1
	 	 	45	 
	 
	 	 	 	 	 	 
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES	 	 	45	 
	 
	 	 	 	 	 	 
	4.1

	 	Organization
	 	 	46	 
	4.2

	 	Authorization; No Conflict
	 	 	46	 
	4.3

	 	Enforceability
	 	 	46	 
	4.4

	 	Compliance with Law
	 	 	46	 
	4.5

	 	Single Purpose, Debt, Contracts, Joint Ventures, Proceeds, Etc.
	 	 	47	 
	4.6

	 	Adverse Change
	 	 	47	 
	4.7

	 	Investment Company Act
	 	 	47	 
	4.8

	 	ERISA
	 	 	47	 
	4.9

	 	Permits
	 	 	48	 
	4.10

	 	Hazardous Substances
	 	 	48	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	4.11

	 	Litigation
	 	 	49	 
	4.12

	 	No Labor Disputes; Acts of God; Force Majeure
	 	 	50	 
	4.13

	 	Operative Documents
	 	 	50	 
	4.14

	 	Disclosure
	 	 	51	 
	4.15

	 	Private Offering by Borrowers
	 	 	51	 
	4.16

	 	Taxes
	 	 	51	 
	4.17

	 	Governmental Regulation
	 	 	52	 
	4.18

	 	Regulation U, Etc.
	 	 	52	 
	4.19

	 	Budgets; Projections
	 	 	52	 
	4.20

	 	Financial Statements
	 	 	53	 
	4.21

	 	No Default
	 	 	53	 
	4.22

	 	Organizational ID Number; Location of Tangible Collateral
	 	 	53	 
	4.23

	 	Title and Liens
	 	 	54	 
	4.24

	 	Intellectual Property
	 	 	54	 
	4.25

	 	Collateral
	 	 	54	 
	4.26

	 	Sufficiency of Project Documents
	 	 	55	 
	4.27

	 	Utilities
	 	 	55	 
	4.28

	 	Other Facilities
	 	 	55	 
	4.29

	 	Insurance
	 	 	56	 
	4.30

	 	Anti-Terrorism Law
	 	 	56	 
	4.31

	 	Construction Loan Borrowings
	 	 	57	 
	4.32

	 	No Recordation, Etc.
	 	 	57	 
	 
	 	 	 	 	 	 
	ARTICLE 5 AFFIRMATIVE COVENANTS	 	 	57	 
	 
	 	 	 	 	 	 
	5.1

	 	Use of Proceeds, Equity Contributions and Project Revenues
	 	 	57	 
	5.2

	 	Payment
	 	 	57	 
	5.3

	 	Maintenance of Property
	 	 	58	 
	5.4

	 	Notices
	 	 	58	 
	5.5

	 	Financial Reporting
	 	 	60	 
	5.6

	 	Books, Records, Access
	 	 	61	 
	5.7

	 	Compliance with Laws, Instruments, Applicable Permits, Etc.
	 	 	62	 
	5.8

	 	Reports
	 	 	62	 
	5.9

	 	Existence, Conduct of Banking, Properties, Etc.
	 	 	64	 
	5.10

	 	Debt Service Coverage Ratio
	 	 	64	 
	5.11

	 	Indemnification
	 	 	64	 
	5.12

	 	Exemption from Regulation
	 	 	67	 
	5.13

	 	Construction of the Project
	 	 	68	 
	5.14

	 	Completion
	 	 	68	 
	5.15

	 	Operation and Maintenance of Project; Operating Budget
	 	 	68	 
	5.16

	 	Preservation of Rights; Further Assurances
	 	 	69	 
	5.17

	 	Maintenance of Insurance
	 	 	71	 
	5.18

	 	Taxes, Other Government Charges and Utility Charges
	 	 	71	 
	5.19

	 	Event of Eminent Domain
	 	 	71	 
	5.20

	 	Interest Rate Protection
	 	 	72	 
	5.21

	 	Environmental Laws
	 	 	72	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	5.22

	 	Fuel Supply Plan
	 	 	73	 
	5.23

	 	Independent Consultants
	 	 	73	 
	5.25

	 	Major Source Permit
	 	 	73	 
	 
	 	 	 	 	 	 
	ARTICLE 6 NEGATIVE COVENANTS	 	 	74	 
	 
	 	 	 	 	 	 
	6.1

	 	Contingent Liabilities
	 	 	74	 
	6.2

	 	Limitations on Liens
	 	 	74	 
	6.3

	 	Indebtedness
	 	 	74	 
	6.4

	 	Sale or Lease of Assets
	 	 	74	 
	6.5

	 	Changes
	 	 	74	 
	6.6

	 	Restricted Payments
	 	 	75	 
	6.7

	 	Investments
	 	 	76	 
	6.8

	 	Transactions With Affiliates
	 	 	76	 
	6.9

	 	Margin Loan Regulations
	 	 	76	 
	6.10

	 	Partnerships, etc.
	 	 	77	 
	6.11

	 	Dissolution; Merger
	 	 	77	 
	6.12

	 	Amendments; Change Orders; Completion
	 	 	77	 
	6.13

	 	Name and Location; Fiscal Year
	 	 	79	 
	6.14

	 	Use of Site
	 	 	79	 
	6.15

	 	Assignment
	 	 	79	 
	6.16

	 	Accounts
	 	 	79	 
	6.17

	 	Hazardous Substances
	 	 	80	 
	6.18

	 	Additional Project Documents
	 	 	80	 
	6.19

	 	Project Budget Amendments
	 	 	80	 
	6.20

	 	Assignment By Third Parties
	 	 	80	 
	6.21

	 	Acquisition of Real Property
	 	 	80	 
	6.22

	 	ERISA
	 	 	81	 
	6.23

	 	No Merchant Sales
	 	 	81	 
	6.24

	 	Lease Obligations
	 	 	81	 
	6.25

	 	Sale and Leaseback Transactions
	 	 	81	 
	6.26

	 	Other Agreements
	 	 	81	 
	6.27

	 	Disputes
	 	 	81	 
	6.28

	 	Anti-Terrorism Law; Anti-Money Laundering
	 	 	81	 
	6.29

	 	Embargoed Persons
	 	 	82	 
	6.30

	 	Bonds
	 	 	82	 
	6.31

	 	Ground Lease
	 	 	83	 
	 
	 	 	 	 	 	 
	ARTICLE 7 Accounts	 	 	83	 
	 
	 	 	 	 	 	 
	7.1

	 	Construction Account
	 	 	83	 
	7.2

	 	Revenue Account
	 	 	84	 
	7.3

	 	Debt Service Reserve Account
	 	 	85	 
	7.4

	 	Major Maintenance Account
	 	 	86	 
	7.5

	 	Application of Insurance Proceeds
	 	 	87	 
	7.6

	 	Application of Eminent Domain Proceeds
	 	 	89	 






iii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	7.7

	 	Checking Accounts
	 	 	90	 
	7.8

	 	Proceeds and Accounts; Control
	 	 	90	 
	7.9

	 	Permitted Investments
	 	 	91	 
	 
	 	 	 	 	 	 
	ARTICLE 8 EVENTS OF DEFAULT; REMEDIES	 	 	91	 
	 
	 	 	 	 	 	 
	8.1

	 	Events of Default
	 	 	91	 
	8.2

	 	Remedies
	 	 	98	 
	 
	 	 	 	 	 	 
	ARTICLE 9 SCOPE OF LIABILITY	 	 	100	 
	 
	 	 	 	 	 	 
	ARTICLE 10 AGENTS; SUBSTITUTION	 	 	101	 
	 
	 	 	 	 	 	 
	10.1

	 	Appointment and Authority
	 	 	101	 
	10.2

	 	Rights as a Lender
	 	 	101	 
	10.3

	 	Exculpatory Provisions
	 	 	101	 
	10.4

	 	Reliance
	 	 	102	 
	10.5

	 	Delegation of Duties
	 	 	103	 
	10.6

	 	Resignation
	 	 	103	 
	10.7

	 	Non-Reliance
	 	 	104	 
	10.8

	 	Administrative Agent May File Proofs of Claim
	 	 	104	 
	10.9

	 	Collateral Matters
	 	 	105	 
	10.10

	 	Indemnification
	 	 	105	 
	10.11

	 	Withholding Tax
	 	 	106	 
	10.12

	 	General Provisions as to Payments
	 	 	106	 
	10.13

	 	Substitution of Lender
	 	 	106	 
	10.14

	 	Administrative Agent Has LC Issuer’s Power of Attorney
	 	 	107	 
	 
	 	 	 	 	 	 
	ARTICLE 11 INDEPENDENT CONSULTANTS	 	 	107	 
	 
	 	 	 	 	 	 
	11.1

	 	Removal and Fees
	 	 	107	 
	11.2

	 	Duties
	 	 	107	 
	11.3

	 	Independent Consultants’ Certificates
	 	 	107	 
	11.4

	 	Certification of Dates
	 	 	108	 
	 
	 	 	 	 	 	 
	ARTICLE 12 MISCELLANEOUS	 	 	108	 
	 
	 	 	 	 	 	 
	12.1

	 	Notices; Signatures
	 	 	108	 
	12.2

	 	Additional Security; Right to Set-Off
	 	 	109	 
	12.3

	 	Delay and Waiver
	 	 	110	 
	12.4

	 	Costs, Expenses and Attorneys’ Fees
	 	 	111	 
	12.5

	 	Entire Agreement
	 	 	112	 
	12.6

	 	Governing Law
	 	 	112	 
	12.7

	 	Severability
	 	 	113	 
	12.8

	 	Headings
	 	 	113	 
	12.9

	 	Additional Financing, Etc.
	 	 	113	 
	12.10

	 	No Partnership, Etc.
	 	 	113	 






iv









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	12.11

	 	Mortgage/Collateral Documents
	 	 	113	 
	12.12

	 	Limitation on Liability
	 	 	113	 
	12.13

	 	Waiver of Jury Trial
	 	 	114	 
	12.14

	 	Consent to Jurisdiction
	 	 	115	 
	12.15

	 	Knowledge and Attribution
	 	 	115	 
	12.16

	 	Effectiveness
	 	 	116	 
	12.17

	 	Successors and Assigns
	 	 	116	 
	12.18

	 	Counterparts
	 	 	119	 
	12.19

	 	Survival
	 	 	120	 
	12.20

	 	Amendments; Waivers
	 	 	120	 
	12.21

	 	Laws
	 	 	122	 
	12.22

	 	Assignability as Collateral
	 	 	122	 
	12.23

	 	Service of Process
	 	 	123	 
	12.24

	 	Interest Rate Limitation
	 	 	123	 
	12.25

	 	Marshalling; Assets Set Aside
	 	 	123	 
	12.26

	 	Independence of Covenants
	 	 	124	 
	12.27

	 	Construction of the Documents
	 	 	124	 
	12.28

	 	Syndication
	 	 	124	 
	12.29

	 	Waiver
	 	 	124	 
	12.30

	 	The Platform
	 	 	124	 






Index of Exhibits




	 	 	 
	Exhibit A

	 	Definitions and Rules of Interpretation
	 
	 	 
	 

	 	Notes
	 
	 	 
	Exhibit B-1

	 	Form of Construction Note
	Exhibit B-2

	 	Form of Term Note
	Exhibit B-3

	 	Form of Renegy Term Note
	Exhibit B-4

	 	Form of Revolving Note
	Exhibit B-5

	 	Form of LC Loan Note
	Exhibit B-6

	 	Form of Letter of Credit
	 
	 	 
	 

	 	Loan Disbursement Procedures
	 
	 	 
	Exhibit C-1

	 	Form of Notice of Borrowing
	Exhibit C-2

	 	Form of Notice of Term-Conversion
	Exhibit C-3

	 	Form of Notice of Interest Terms
	Exhibit C-4

	 	Form of Drawdown Certificate
	Exhibit C-5

	 	Form of Independent Engineer’s Drawdown Certificate
	 
	 	 
	 

	 	Security-Related Documents
	 
	 	 
	Exhibit D-1

	 	Form of Mortgage
	Exhibit D-2

	 	Form of Security Agreement
	Exhibit D-3(A)

	 	Form of Renegy Holdings Pledge Agreement
	Exhibit D-3(B)

	 	Form of AZ Biomass Pledge Agreement






v









 






	 	 	 
	Exhibit D-4

	 	Form of Bond Pledge Agreement
	Exhibit D-5

	 	Form of Sponsor Guaranty
	Exhibit D-6

	 	Schedule of Security Filings
	 
	 	 
	 

	 	Consents
	 
	 	 
	Exhibit E-1

	 	Form of Consent for Contracting Party
	Exhibit E-2

	 	Schedule of Closing Date Consents
	 
	 	 
	 

	 	Closing Certificates
	 
	 	 
	Exhibit F-1

	 	Form of Borrowers’ Closing Certificate
	Exhibit F-2

	 	Form of Insurance Consultant’s Certificate
	Exhibit F-3

	 	Form of Independent Engineer’s Certificate
	Exhibit F-4

	 	Form of Fuel Consultant’s Certificate
	 
	 	 
	 

	 	Project Description Exhibits
	 
	 	 
	Exhibit G-1

	 	Permit Schedule
	Exhibit G-2

	 	Project Budget
	Exhibit G-3

	 	Base Case Project Projections
	Exhibit G-4

	 	Project Schedule
	Exhibit G-5

	 	Pending Litigation
	Exhibit G-6

	 	Hazardous Substances Disclosure
	Exhibit G-7

	 	Construction Contracts Not in Place on Closing Date
	 
	 	 
	 

	 	Other
	 
	 	 
	Exhibit H

	 	Lenders Proportionate Shares
	Exhibit I-1

	 	Term Loan Amortization Schedule
	Exhibit I-2

	 	Renegy Term Loan Amortization Schedule
	Exhibit I-3

	 	Bond Optional Redemption Schedule
	Exhibit J

	 	Form of Non-Bank Certificate
	Exhibit K

	 	Insurance Requirements
	Exhibit L

	 	Form of Annual Insurance Certificate
	Exhibit M

	 	Form of Monthly Disbursement Requisition







vi











 





          This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 1, 2009 (“Agreement”),
by and among SNOWFLAKE WHITE MOUNTAIN POWER, LLC, an Arizona limited liability company, as a
borrower (“SWMP”), RENEGY, LLC, an Arizona limited liability company, as a borrower
(“Renegy”), and RENEGY TRUCKING, LLC, an Arizona limited liability company, as a borrower
(“Renegy Trucking,” and, collectively with SWMP and Renegy, “Borrowers”), THE
FINANCIAL INSTITUTIONS LISTED ON EXHIBIT H OR WHO LATER BECOME A PARTY HERETO, (the
financial institutions party to this Agreement being collectively referred to as the
“Lenders”), COBANK, ACB, as letter of credit issuer (in such capacity, “LC
Issuer”), COBANK, ACB, as administrative agent for the Lenders (in such capacity,
“Administrative Agent”), and COBANK, ACB, as collateral agent for the Secured Parties (in
such capacity, “Collateral Agent”).




RECITALS




          A. Borrowers desire to develop, construct, finance, own, operate and maintain the Project
referred to herein to be located near Snowflake, Arizona, and, in connection therewith, Borrowers
have requested that the Lenders provide credit facilities in connection therewith.




          B. The Lenders are willing to provide such credit facilities to Borrowers upon the terms and
subject to the conditions set forth herein and in the other Credit Documents.




AGREEMENT




          NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and promises
set forth herein and in the other Credit Documents and in reliance upon the representations and
warranties set forth herein and therein, the parties hereto agree as follows:




ARTICLE 1

DEFINITIONS




          1.1 Definitions.
For all purposes of the Credit Documents, except as otherwise expressly provided, capitalized
terms used in the Credit Documents (including annexes, appendices, exhibits and schedules thereto)
shall have the meanings given to such terms in Exhibit A.




          1.2 Rules of Interpretation.
Except as otherwise expressly provided, the “Rules of Interpretation” set forth in Exhibit
A shall apply to the Credit Documents.




          1.3 Accounting Terms; GAAP.
Except as otherwise expressly provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time and as applied by the accounting entity to which they refer; provided, however
that, if Borrowers notify Administrative Agent that Borrowers request an amendment to any




 









 







provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP
or in the application thereof on the operation of such provision (or if Administrative Agent
notifies Borrowers that the Majority Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such change in GAAP or in
the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.




          1.4 Classification of Loans and Borrowings.
For purposes of this Agreement, Loans may be classified and referred to by class (e.g.,
“Construction Loan”) or by Type (e.g., “LIBOR Loan”) or by class and Type (e.g., “Base Rate Term
Loan”). Borrowings may also be classified and referred to by class or Type or both.




ARTICLE 2

THE CREDIT FACILITIES




          2.1 Loan Facilities.




               2.1.1 Construction Loan Facility.




          (a) Availability. Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations and warranties of Borrowers set forth herein, each
Lender severally agrees to advance to Borrowers from time to time during the Construction Loan
Availability Period such loans as Borrowers may request pursuant to this Section 2.1.1
(individually, a “Construction Loan” and, collectively, the “Construction
Loans”), in an aggregate principal amount which, when added to such Lender’s Proportionate
Share of the aggregate principal amount of all prior Construction Loans made by such Lender,
does not exceed such Lender’s Construction Loan Commitment.




          (b) Notice of Borrowing. Borrowers shall request Construction Loans by delivering
to Administrative Agent a written notice in the form of Exhibit C-1, appropriately
completed (“Notice of Borrowing”), which contains or specifies, among other things:



               (i) the portion of the requested Borrowing which will be Base Rate Loans and the portion which
will be LIBOR Loans;



               (ii) the aggregate principal amount of the requested Borrowing, which shall be in the minimum
amount of $100,000; provided, that such minimum amount shall not apply to the Final
Construction Drawing;



               (iii) the proposed date of the requested Borrowing (which shall be a Business Day);



               (iv) the initial Interest Period requested for a LIBOR Borrowing in accordance with Section
2.1.5(d);



               (v) a certification by Borrowers that the conditions set forth in Sections 3.2 and 3.2.5 are
satisfied as of the date of the notice; and



2









 





               (vi) a certification by Borrowers that, as of the date such requested Construction Loan is
proposed to be made, the Construction Loan proposed to be made on such date, when added together
with all other Construction Loans, does not exceed the Total Construction Loan Commitment.



          Notwithstanding any provision to the contrary in this section, Borrowers (x) shall request no
more than one Construction Loan Borrowing per month, and (y) may not select LIBOR Loans for any
Borrowing that is less than $100,000 or if the obligations of the Lenders to make LIBOR Loans shall
then be suspended pursuant to Section 2.7. Borrowers shall give each Notice of Borrowing to
Administrative Agent with at least the Minimum Notice Period applicable to Construction Loans of
the Type requested and not later than 11:00 a.m., Denver time on the applicable day. Any Notice of
Borrowing shall be irrevocable and binding on Borrowers.





          (c) Construction Loan Principal Payments. Borrowers shall repay to Administrative
Agent, for the account of each Lender, in full on the Construction Loan Maturity Date the unpaid
principal amount of all Construction Loans made by such Lender which will not be Term-Converted
to Term Loans and at such time as provided in Section 2.1.2(a), together with any unpaid
interest, fees and costs related thereto. Borrowers may not re-borrow the principal amount of
any Construction Loan so repaid.



               2.1.2 Term Loan Facility.




          (a) Availability. Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations and warranties of Borrowers set forth herein, each
Lender severally agrees to make to Borrowers on the Term-Conversion Date, at the request of
Borrowers, a term loan under this Section 2.1.2 (individually, a “Term Loan” and
collectively, the “Term Loans”) in a principal amount not to exceed the lesser of (i)
such Lender’s Term Loan Commitment, and (ii) the aggregate principal amount of outstanding
Construction Loans made by such Lender. Each Lender shall make its Term Loan through its
outstanding Construction Loans converting to a Term Loan.




          (b) Notice of Term-Conversion. Borrowers shall request Term-Conversion by
delivering to Administrative Agent a written notice in the form of Exhibit C-2,
appropriately completed (the “Notice of Term-Conversion”), which specifies, among other
things:



               (i) the portion of the Term Loans which will be Base Rate Loans and the portion which will be
LIBOR Loans;



               (ii) the aggregate principal amount of the requested Term Loans, which shall not exceed the
lesser of (A) the Total Term Loan Commitment and (B) the aggregate principal amount of all
Construction Loans outstanding on the Term-Conversion Date (which amount shall be calculated
immediately prior to Term-Conversion, after giving effect to the Final Construction Drawing (if any), and the application of all liquidated damages and other amounts
required to be applied to the prepayment of Construction Loans pursuant hereto);



3









 





               (iii) the proposed date of Term-Conversion (which shall be a Business Day on or before the
Date Certain);



               (iv) in the case of any LIBOR Term Loan, the initial Interest Period requested therefor (which
shall be an Interest Period contemplated by Section 2.1.4(c)); and



               (v) a certification by Borrowers that the conditions set forth in Sections 3.4.1 and 3.4.2 are
satisfied as of the date of the notice.



          Notwithstanding any provision to the contrary in this section, Borrowers may not select LIBOR
Loans for any portion of the Term Loans that is less than $100,000 or if the obligations of the
Lenders to make LIBOR Loans shall then be suspended pursuant to Section 2.7. Borrowers shall
deliver the Notice of Term-Conversion to Administrative Agent with at least the Minimum Notice
Period applicable to Loans of the Type requested upon Term-Conversion; provided, that not
later than 10 Business Days prior to delivery of the Notice of Term-Conversion, Borrowers shall
deliver to Administrative Agent a draft of such Notice of Term-Conversion and evidence documenting
satisfaction of the conditions to Term-Conversion set forth in Section 3.3.8.





          (c) Term Loan Principal Payment. Borrowers shall repay to Administrative Agent,
for the account of each Lender, the aggregate unpaid principal amount of the Term Loan made by
such Lender in installments payable on each Principal Repayment Date in accordance with the
repayment schedule set forth on Exhibit I-1 (the “Term Loan Amortization
Schedule”), with any remaining unpaid principal, interest, fees and costs due and payable on
the Term Loan Maturity Date. Borrowers may not re-borrow the principal amount of any Term Loan
so repaid.



          2.1.3 Renegy Term Loan Facility.





          (a) Availability. Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations and warranties of Borrowers set forth herein, each
Lender severally agrees to advance to Borrowers from time to time during the Construction Loan
Availability Period such loans as Borrowers may request pursuant to this Section 2.1.3
(individually, a “Renegy Term Loan” and, collectively, the “Renegy Term Loans”),
in an aggregate principal amount which, when added to such Lender’s Proportionate Share of the
aggregate principal amount of all prior Renegy Term Loans made by such Lender, does not exceed
such Lender’s Renegy Term Loan Commitment.




          (b) Notice of Renegy Term Loan Borrowing. Borrowers shall request Renegy Term
Loans by delivering to Administrative Agent a Notice of Borrowing which contains or specifies,
among other things:



               (i) the aggregate principal amount of the requested Borrowing;



               (ii) the proposed date of the requested Borrowing (which shall be a Business Day);



4









 





               (iii) a certification by Borrowers that the conditions set forth in Sections 3.2 and 3.2.5 are
satisfied as of the date of the notice; and



               (iv) a certification by Borrowers that, as of the date such requested Renegy Term Loan is
proposed to be made, the Renegy Term Loan proposed to be made on such date, when added together
with all other Renegy Term Loans, does not exceed the Total Renegy Term Loan Commitment.



          Notwithstanding any provision to the contrary in this section, Borrowers shall request no more
than one Renegy Term Loan Borrowing per month. Borrowers shall give each such Notice of Borrowing
to Administrative Agent with at least the Minimum Notice Period applicable to Renegy Term Loans and
not later than 11:00 a.m., Denver time on the applicable day. Any Notice of Borrowing shall be
irrevocable and binding on Borrowers.





          (c) Renegy Term Loan Principal Payment. Borrowers shall repay to Administrative
Agent, for the account of each Lender, the aggregate unpaid principal amount of the Renegy Term
Loans made by such Lender either (i) on the Construction Loan Maturity Date, or (ii) if the
Construction Loans have Term-Converted, on Principal Repayment Dates in accordance with the
repayment schedule set forth on Exhibit I-2 (the “Renegy Term Loan Amortization
Schedule”), with any remaining unpaid principal, interest, fees and costs due and payable on
the Renegy Term Loan Maturity Date. Borrowers may not re-borrow the principal amount of any
Renegy Term Loan so repaid.



          2.1.4 Revolving Loan Facility.





          (a) Availability. Subject to the terms and conditions set forth in this Agreement
and in reliance upon the representations and warranties of Borrowers set forth herein, each
Revolving Lender severally agrees to advance to Borrowers from time to time during the Revolving
Loan Availability Period, other than during the Clean-Up Period, such loans as Borrowers may
request pursuant to this Section 2.1.4 (individually, a “Revolving Loan” and,
collectively, the “Revolving Loans”), in an aggregate principal amount which, when added
to such Lender’s Proportionate Share of the aggregate principal amount of all outstanding
Revolving Loans of such Lender, does not exceed such Lender’s Revolving Loan Commitment.




          (b) Notice of Revolving Loan Borrowing. SWMP shall request Revolving Loans by
delivering to Administrative Agent a Notice of Borrowing, which contains or specifies, among
other things:



               (i) the portion of the requested Borrowing which will be Base Rate Loans and the portion which
will be LIBOR Loans;



               (ii) the aggregate principal amount of the requested Borrowing, which shall be in integral
multiples of $50,000;



               (iii) the proposed date of the requested Borrowing (which shall be a Business Day);



5









 





               (iv) the initial Interest Period requested for a LIBOR Borrowing in accordance with Section
2.1.5(d);



               (v) a certification by SWMP that the conditions set forth in Section 3.2 are satisfied as of
the date of the notice; and



               (vi) a certification by SWMP that, as of the date such requested Revolving Loan is proposed to
be made, the Revolving Loan proposed to be made on such date, when added together with all other
outstanding Revolving Loans, does not exceed the Total Revolving Loan Commitment.



          Notwithstanding any provision to the contrary in this section, SWMP shall request no more than
two Revolving Loan Borrowings per month. SWMP shall give each Notice of Revolving Loan Borrowing
to Administrative Agent with at least the Minimum Notice Period applicable to the Type of Loans
being requested and not later than 11:00 a.m., Denver time on the applicable day. Any Notice of
Revolving Loan Borrowing shall be irrevocable and binding on SWMP.





          (c) Revolving Loan Principal Payments. SWMP may repay and reborrow Revolving
Loans. SWMP shall repay to Administrative Agent, for the account of each Revolving Lender, in
full on the Revolving Loan Maturity Date the unpaid principal amount of all Revolving Loans made
by such Lender.



          2.1.5 Interest Provisions Relating to All Loans.





          (a) Interest Rate. Subject to Section 2.5.3, Borrowers shall pay interest on the
unpaid principal amount of each Loan from the date of Borrowing of such Loan until the repayment
thereof at either (i) for Construction Loans, Term Loans and Revolving Loans, the Adjusted LIBO
Rate or Base Rate, plus in each case the applicable Rate Margin, (ii) for Renegy Term Loans, the
Fixed Rate, and (iii) for LC Loans, the Base Rate plus the applicable Rate Margin.




          (b) Changes of Loan Type. The basis for determining the interest rate with respect
to any Loan may be changed from time to time as specified in a Notice of Interest Terms
delivered pursuant to Section 2.1.9. If on any day a Loan is outstanding with respect to which
notice has not been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest, then for that
day such Loan shall bear interest determined by reference to the Base Rate. Notwithstanding any
provision in this Agreement to the contrary, the Renegy Term Loans may not change in Type.




          (c) Interest Payment Dates. Subject to the last sentence of Section 2.5.3,
Borrowers shall pay accrued interest on the unpaid principal amount of each Loan (i) in the case
of each Base Rate Loan, on the last Business Day of each month, (ii) in the case of each LIBOR
Loan, on the last day of each Interest Period related to such LIBOR Loan and, with respect to Interest Periods longer than three months, the last Business Day of each third
month in which such LIBOR Loan is outstanding, (iii) in the case of Renegy Term Loans, on



6









 







each Payment Date until the Renegy Term Loans are repaid in full, (iv) in all cases, for
any Loan upon its conversion from one Type of Loan to another Type of Loan on the effective date
of such conversion, and (v) in all cases, upon repayment or prepayment (whether at stated
maturity or otherwise, and including any optional prepayments or Mandatory Prepayments) of any
Loan on the date of payment thereof in full.




          (d) LIBOR Loan Interest Periods.



               (i) The Interest Period selected by Borrowers for all LIBOR Loans shall be one, three or six
months. Notwithstanding anything to the contrary in the preceding sentence, (A) any Interest
Period which would otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in another calendar month, in which
case such Interest Period shall end on the immediately preceding Business Day; (B) any Interest
Period which begins on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest Period) shall end
on the last Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; (C) Borrowers may not select Interest Periods
which would leave a greater principal amount of Loans subject to Interest Periods ending after a
date upon which Loans are or may be required to be repaid (including the Construction Loan Maturity
Date, the Term Loan Maturity Date, and each Principal Repayment Date) than the principal amount of
Loans scheduled to be outstanding after such date; (D) unless Term-Conversion has occurred, any
Interest Period for a Construction Loan which would otherwise end after the Construction Loan
Maturity Date shall end on the Construction Loan Maturity Date; (E) any Interest Period for a Term
Loan which would otherwise end after the Term Loan Maturity Date shall end on the Term Loan
Maturity Date; (F) any Interest Period for a Revolving Loan which would otherwise end after the
Revolving Loan Maturity Date shall end on the Revolving Loan Maturity Date; (G) LIBOR Loans for
each Interest Period shall be in the minimum amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof; (H) Borrowers may not at any time have outstanding more than five
different Interest Period end-dates relating to LIBOR Loans; and (I) Borrowers shall select Types
and Interest Periods for Term Loans corresponding to the “types” and “interest periods” used for
floating rate payments in the Swap Agreement which hedge interest risk arising under the Term Loans
so as to create, to the greatest extent possible, a complete hedge.



               (ii) Borrowers may contact Administrative Agent at any time prior to the end of an Interest
Period for an indicative quotation of Interest Rates in effect at such time for given Interest
Periods and Administrative Agent shall promptly provide such quotation. Borrowers may, subject to
Section 2.1.8(c), select to continue any LIBOR Loan for any permissible Interest Period by
communicating such selection to Administrative Agent telephonically or by email within the time
periods required by Section 2.1.8, which selection shall be irrevocable. Borrowers shall confirm
such telephonic or email notice to Administrative Agent by facsimile on the day such notice is
given by delivery to Administrative Agent of a Notice of Interest Terms appropriately completed, in
accordance with the instructions contained in such form. Borrowers shall promptly deliver to
Administrative Agent the original of the Notice of Interest Terms initially delivered by facsimile.
If Borrowers fail to notify



7









 







Administrative Agent of the next Interest Period for any LIBOR Loans in accordance with this
Section 2.1.5(d)(ii), such Loans shall automatically convert to Base Rate Loans on the last day of
the current Interest Period therefor. Administrative Agent shall as soon as practicable (and, in
any case, within two Business Days after delivery of the Notice of Interest Terms) notify Borrowers
of each determination of the Interest Rate applicable to each Loan.




          (e) Interest Computations. All computations of interest based on the Base Rate
shall be based upon a year of 365 days or, in the case of a leap year, 366 days, shall be
payable for the actual days elapsed (including the first day but excluding the last day) in the
period for which such interest is payable, and shall be adjusted in accordance with any changes
in the Base Rate to take effect on the beginning of the day of such change in the Base Rate.
All computations of interest based on the LIBO Rate, Federal Funds Rate and of commitment fees
shall be based upon a year of 360 days and shall be payable for the actual days elapsed
(including the first day but excluding the last day) in the period for which such interest or
fees are payable. Borrowers agree that all computations by Administrative Agent of interest
shall be conclusive and binding in the absence of manifest error.



          2.1.6 Promissory Notes. The obligation of Borrowers to repay the Loans made by a Lender and
to pay interest thereon at the rates provided herein shall, upon the written request of such
Lender, be evidenced by promissory notes in the form of Exhibit B-1 (individually, a
“Construction Note” and, collectively, the “Construction Notes”), Exhibit
B-2 (individually, a “Term Note” and, collectively, the “Term Notes”),
Exhibit B-3 (individually, a “Renegy Term Note” and, collectively, the “Renegy
Term Notes”), Exhibit B-4 (individually, a “Revolving Note” and, collectively,
the “Revolving Notes”), and Exhibit B-5 (individually, a “LC Loan Note”
and, collectively, the “LC Loan Notes”) each payable to the order of such requesting Lender
and in the principal amount of such Lender’s Construction Loan Commitment, Term Loan Commitment,
Renegy Term Loan Commitment, Revolving Loan Commitment, and the principal component of the LC
Commitment respectively. Borrowers authorize each such requesting Lender to record on the schedule
annexed to such Lender’s Note or Notes, the date and amount of each Loan made by such requesting
Lender, and each payment or prepayment of principal thereunder and agree that all such notations
shall constitute prima facie evidence of the matters noted; provided, that in the event of
any inconsistency between the records or books of Administrative Agent and any Lender’s records or
Notes, the records of Administrative Agent shall be conclusive and binding in the absence of
manifest error. Borrowers further authorize each such requesting Lender to attach to and make a
part of such requesting Lender’s Note or Notes continuations of the schedule attached thereto as
necessary. No failure to make any such notations, nor any errors in making any such notations,
shall affect the validity of Borrowers’ obligations to repay the full unpaid principal amount of
the Loans or the duties of Borrowers hereunder or thereunder. Upon the payment in full in cash of
the aggregate principal amount of, and all accrued and unpaid interest on, the applicable Loans, or
in the case of Construction Notes, upon Term-Conversion, the Lenders holding Notes shall promptly
mark the applicable Notes cancelled and return such cancelled Notes to Borrowers.




          2.1.7 Loan Funding.





          (a) Notice to Lenders. Administrative Agent shall promptly notify each Lender of
the contents of each Notice of Borrowing, Notice of Renegy Term Loan



8









 






Borrowing, Notice of Term-Conversion and Notice of Interest Terms, and shall notify each
Revolving Lender of the contents of each Notice of Revolving Loan Borrowing.




          (b) Pro Rata Loans. All Loans shall be made on a pro rata basis by the Lenders in
accordance with their respective Proportionate Shares of such Loans, with each Borrowing to
consist collectively of the total of the Loans by each Lender equal to such Lender’s
Proportionate Share of such Loan.




          (c) Lender Funding. Each Lender shall, before 11:00 a.m., Denver time on the date
of each Borrowing of a Construction Loan, Renegy Term Loan or Revolving Loan, make available to
the account of Administrative Agent most recently designated by it for such purpose, by wire
transfer, immediately available funds in Dollars, such Lender’s Proportionate Share of the Loan
to be made on such date. The failure of any Lender to make the Loan to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation hereunder to make its Loan on
the date of such Loan. No Lender shall be responsible for the failure of any other Lender to
make the Loan to be made by such other Lender on the date of any Borrowing.




          (d) Failure of Lender to Fund. Unless Administrative Agent shall have been
notified by any Lender prior to the applicable date of a Borrowing that such Lender does not
intend to make available to Administrative Agent the amount of such Lender’s Proportionate Share
of the Loan requested on such date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such date in accordance with the prior
paragraph and Administrative Agent may, in its sole discretion and in reliance upon such
assumption, make available to Borrowers a corresponding amount on such date. If such
corresponding amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on demand (and, in
any event, within two Business Days from the applicable date of such Borrowing) from such Lender
together with interest thereon, for each day from the applicable date of such Borrowing until
the date such amount is paid to Administrative Agent, at the Federal Funds Rate for the first
two Business Days after such date. If such Lender pays such amount to Administrative Agent,
then such amount shall constitute such Lender’s Proportionate Share of such Loan included in
such Loan. If such Lender does not pay such corresponding amount forthwith upon Administrative
Agent’s demand therefor or within two Business Days from the applicable date of such Borrowing,
Administrative Agent shall promptly notify Borrowers and Borrowers shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for each day from
the applicable date of such Borrowing until the date such amount is paid to Administrative
Agent, at the rate then payable under this Agreement for Base Rate Loans. Nothing in this
Section 2.1.7(d) shall be deemed to relieve any Lender from its obligation to fulfill its
obligations hereunder or to prejudice any rights that Borrowers may have against any Lender as a
result of any default by such Lender hereunder.




          (e) Construction Account. No later than 2:00 p.m. Denver time on the date
specified in each Notice of Borrowing, if the applicable conditions precedent listed in Article 3 have been satisfied or waived in accordance with the terms thereof and, subject
to Section 2.1.7(d), to the extent Administrative Agent shall have received the appropriate
funds



9









 







from the Lenders, Administrative Agent shall make available the Construction Loans and
Renegy Term Loans requested in such Notice of Borrowing (or so much thereof as shall have been
determined pursuant to Section 3.6) in Dollars and in immediately available funds, and shall
deposit or cause to be deposited the proceeds of such Construction Loans and Renegy Term Loans
into the Construction Account.




          (f) Revolving Loan Proceeds. No later than 2:00 p.m. Denver time on the date
specified in each Notice of Revolving Loan Borrowing, if the applicable conditions precedent
listed in Article 3 have been satisfied or waived in accordance with the terms thereof and,
subject to Section 2.1.7(d), to the extent Administrative Agent shall have received the
appropriate funds from the Revolving Lenders, Administrative Agent shall make available the
Revolving Loans requested in such Notice of Revolving Loan Borrowing in Dollars and in
immediately available funds, and shall deposit or cause to be deposited the proceeds of such
Revolving Loans into the Revenue Account or one or more of the Checking Accounts, at Borrowers’
instruction.



          2.1.8 Conversion of Loan Type; Continuation of LIBOR Loans. Upon notice as provided in
Section 2.1.9, Borrowers may convert Loans from one Type of Loan to another Type of Loan or
continue a LIBOR Loan; provided, however, that





          (a) any conversion of LIBOR Loans into Base Rate Loans shall be made on, and only on, the
first day after the last day of an Interest Period for such LIBOR Loans;




          (b) any portion of a Loan maturing or required to be repaid in less than one month may not
be converted into or continued as a LIBOR Loan;




          (c) notwithstanding any contrary provision hereof, if an Event of Default has occurred and
is continuing, Administrative Agent or the Majority Lenders may require, by notice to Borrowers,
that (i) no outstanding Loan may be converted to or continued as a LIBOR Loan and (ii) unless
repaid, each LIBOR Loan shall be converted to a Base Rate Loan at the end of the Interest Period
applicable thereto; and




          (d) any portion of a LIBOR Loan that cannot be converted or continued as a LIBOR Loan, or
with respect to which Borrowers fail to give a timely Notice of Interest Terms, as appropriately
completed in accordance with the instructions contained in such form, shall be converted at the
end of an Interest Period then in effect for such LIBOR Loan into a Base Rate Loan.



          2.1.9 Notice of Conversion/Continuation of Loan Type. Borrowers shall request a Loan
conversion or continuation, as the case may be, by delivering to Administrative Agent a Notice of
Interest Terms. Borrowers shall deliver each Notice of Interest Terms at least with the applicable
Minimum Notice Period. Any Notice of Interest Terms shall be irrevocable.




10









 








          2.1.10 Prepayments.





          (a) Terms of All Prepayments.



               (i) Upon the prepayment of any Loan (whether such prepayment is an optional prepayment under
Section 2.1.10(b) or a Mandatory Prepayment), Borrowers shall pay to Administrative Agent for the
account of the Lender which made such Loan or Swap Bank, as applicable, (A) all accrued interest to
the date of such prepayment on the amount of such Loan prepaid, (B) all accrued fees to the date of
such prepayment relating to the amount of such Loan being prepaid, (C) to the extent required by
the terms of the applicable Swap Agreement, all Swap Breaking Fees owed by Borrowers to such Lender
or Swap Bank, as applicable, as a result of such prepayment, and (D) if such prepayment is the
prepayment of a LIBOR Loan on a day other than the last day of an Interest Period for such LIBOR
Loan, all LIBOR Breakage Costs incurred by such Lender as a result of such prepayment (pursuant to
the terms of Section 2.8.1.).



               (ii) Notwithstanding the foregoing, but only in respect of any Mandatory Prepayment, Borrowers
shall have the right, by giving five Business Days’ notice to Administrative Agent, in lieu of
prepaying a LIBOR Loan on a day other than the last day of an Interest Period for such LIBOR Loan,
to deposit or cause Administrative Agent to deposit into a dedicated account to be held by
Administrative Agent (which account shall be subjected to the Lien of the Collateral Documents in a
manner reasonably satisfactory to Administrative Agent) an amount equal to the LIBOR Loans to be
prepaid; such funds shall be held in such account until the expiration of the Interest Period
applicable to the LIBOR Loan to be prepaid at which time the amount deposited in such account shall
be used to prepay such LIBOR Loan and any interest accrued on such amount shall be deposited into
the Revenue Account. The deposit of amounts into such dedicated account shall be deemed to satisfy
Borrowers’ obligation to make the relevant Mandatory Prepayment on its due date, but shall not,
however, constitute a prepayment of Loans and all Loans to be prepaid using the proceeds from such
account shall continue to accrue interest at the then applicable interest rate for such Loans until
actually prepaid. All amounts in such account shall only be invested in Permitted Investments as
directed by and at the expense and risk of Borrowers.



               (iii) Except as otherwise specifically set forth herein, all prepayments of Term Loans shall
be applied to reduce the remaining payments required under Section 2.1.2(d) in inverse order of
maturity. Borrowers may not re-borrow the principal amount of any Construction Loan, Renegy Term
Loan or Term Loan which is prepaid. In connection with any optional prepayments or optional
redemption of Bonds, Borrowers shall terminate or partially terminate Swap Agreements such that the
notional amount under all of the Swap Agreements will not exceed, in the aggregate on any Payment
Date, the principal amount of Loans and Bonds outstanding on such Payment Date, after giving effect
to such prepayment or redemption.




          (b) Optional Prepayments. Subject to Section 2.1.10(a), Borrowers may, at their
option and without premium or penalty, other than applicable interest rate hedge breakage costs,
upon requisite notice to Administrative Agent, prepay (i) any Construction Loans in whole or from time to time in part in minimum principal amounts of $1,000,000 or a
multiple of $100,000 in excess thereof (provided, that such minimum amounts shall not



11









 







apply to a prepayment of all outstanding Construction Loans), (ii) any Revolving Loans in
whole or from time to time in part or (iii) any Renegy Term Loans in whole or from time to time
in part in any multiple of $100,000 (provided, that such minimum amounts shall not apply
to a prepayment of all outstanding Term Loans) or (iv) any Term Loans in whole or from time to
time in part in minimum principal amounts of $1,000,000 or a multiple of $100,000 in excess
thereof (provided, that such minimum amounts shall not apply to a prepayment of all
outstanding Term Loans).




          (c) Mandatory Prepayments. Borrowers shall prepay (or cause to be prepaid) Loans
to the extent (i) Borrowers receive any insurance proceeds or eminent domain proceeds in excess
of $100,000 and such proceeds are not used to rebuild or repair the Project in accordance with
the terms of the Credit Documents, (ii) required by Waterfall Level 9, Sections 7.5 and 7.6,
(iii) SWMP receives performance liquidated damages under the Boiler Purchase Contract or amounts
pursuant to Section 1(c) of the Sponsor Guaranty, and (iv) any other provision of the Credit
Documents requires such prepayment (each such prepayment, a “Mandatory Prepayment”).
Borrowers shall repay the entire principal amount of Revolving Loans at least once in each
calendar year, and upon such repayment, may not reborrow Revolving Loans for a 30-day period
thereafter (the “Clean-Up Period”).




          (d) Notice of Prepayment. Borrowers shall notify Administrative Agent by written
notice of any prepayment hereunder not later than 11:00 a.m., Denver time, 10 days before the
date of prepayment. Each such notice shall be irrevocable. Each such notice shall specify the
prepayment date and the principal amount of each Loan or portion thereof to be prepaid and, in
the case of a Mandatory Prepayment, a reasonably detailed calculation of the amount of such
prepayment. If any notice of prepayment is given, the amount specified in such notice shall be
due and payable on the date specified therefor, together with accrued interest to the payment
date on the principal amount to be prepaid. Upon receipt of any notice of prepayment,
Administrative Agent shall promptly advise the Lenders of the contents thereof.



          2.2 Letter of Credit Facility.




               2.2.1 The Letter of Credit Commitment. Subject to the terms and conditions set forth herein,
(a) LC Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.2, (i) on the Closing Date, to issue to the Trustee the Letter of Credit with an
expiration date of the LC Facility Expiration Date, in the form of Exhibit B-6 (the
“Letter of Credit”) for the account of SWMP in a stated amount equal to the Total LC
Commitment and to deliver the Letter of Credit to the Trustee, and (ii) to honor drafts under the
Letter of Credit; and (b) the Lenders severally agree to participate in the Letter of Credit issued
for the account of SWMP. Immediately upon the issuance of the Letter of Credit, each Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from LC Issuer a
participation in the Letter of Credit in an amount equal to the product of such Lender’s
Proportionate Share times the stated amount of the Letter of Credit. In their sole
discretion, LC Issuer and all of the Lenders may agree to extend the LC Facility Expiration Date
(and the Letter of Credit) for an additional two year period from the most recent calendar
anniversary of the Closing Date upon request of SWMP delivered to Administrative Agent annually on
or prior to December 15th of each calendar year.



12









 





               2.2.2 Drawings and Reimbursements; Funding of Participations. SWMP hereby agrees to reimburse
Administrative Agent for the account of LC Issuer and Administrative Agent agrees to pay such
amount to LC Issuer: (a) by the close of business on the Business Day that any payment by LC
Issuer is made with respect to any drawing other than a Tender Drawing upon the Letter of Credit or
Confirmation, the amount of such drawing; and (b) with respect to any Tender Drawing, through
repayment of the related LC Loan, at the time specified in Section 2.2.3(e).



               2.2.3 If SWMP fails to so reimburse Administrative Agent on the date of the drawing of the
Letter of Credit or Confirmation, Administrative Agent shall promptly notify each Lender of the
date of the drawing (the “Drawing Date”), the amount of the unreimbursed drawing (the
“Unreimbursed Amount”), and such Lender’s Proportionate Share thereof. In the case of a
Tender Drawing upon the Letter of Credit or Confirmation, SWMP shall be deemed to have requested a
Base Rate Loan to be disbursed on the Drawing Date in an amount equal to the Unreimbursed Amount
corresponding to the Tender Drawing (an “LC Loan”). LC Loans shall:




          (a) be made without regard to the minimum and multiples specified in Section 2.1.1(b)(ii)
or otherwise;




          (b) be subject to satisfaction of the conditions set forth in Section 3.2.2;




          (c) be made at any time whether before or after the Term-Conversion Date;




          (d) not be subject to conversion of Loan Type; and




          (e) be repayable upon the earliest to occur of (i) 366 days after the related Drawing Date,
(ii) the date on which the Bonds for which the related drawing was made are remarketed, and
(iii) the LC Facility Expiration Date.



               2.2.4 Each Lender shall upon any notice pursuant to Section 2.2.3 make a payment to
Administrative Agent for the account of LC Issuer, in an amount equal to its Proportionate Share of
the Unreimbursed Amount not later than 1:00 p.m., Denver time, on the Business Day specified in
such notice by Administrative Agent, whereupon each Lender that so makes funds available in respect
of a Tender Drawing shall be deemed to have made an LC Loan to SWMP in such amount. Administrative
Agent shall remit the funds so received to LC Issuer.



               2.2.5 With respect to any Unreimbursed Amount that is not refinanced by an LC Loan, such
Unreimbursed Amount shall be due and payable by SWMP on demand (together with interest) and shall
bear interest at the Default Rate for Base Rate Loans. In such event, each Lender’s payment to
Administrative Agent for the account of LC Issuer pursuant to Section 2.2.4 shall be deemed payment
in respect of its participation in such Unreimbursed Amount and shall constitute an LC Advance from
such Lender in satisfaction of its participation obligation under this Section 2.2.5.



13









 





               2.2.6 Until each Lender funds its LC Loan or LC Advance to reimburse LC Issuer for any amount
drawn under the Letter of Credit or Confirmation, interest in respect of such Lender’s
Proportionate Share of such amount shall be solely for the account of LC Issuer.



               2.2.7 Each Lender’s obligation to make LC Loans or LC Advances to reimburse LC Issuer for
amounts drawn under the Letter of Credit or Confirmation shall be absolute and unconditional and
shall not be affected by any circumstance, including (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against LC Issuer, SWMP or any other Person for
any reason whatsoever; (b) the occurrence or continuance of a Default or Event of Default, or (c)
any other occurrence, event or condition, whether or not similar to any of the foregoing. Any such
reimbursement shall not relieve or otherwise impair the obligation of SWMP to reimburse LC Issuer
pursuant to Section 2.2.2 for the amount of any payment made by LC Issuer with respect to any
drawing under the Letter of Credit or Confirmation, together with interest as provided herein.



               2.2.8 If any Lender fails to make available to Administrative Agent for the account of LC
Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.2 by the time specified in Section 2.2.4, LC Issuer shall be entitled to recover from
such Lender (acting through Administrative Agent), on demand, such amount with interest thereon for
the period from the date such payment is required to the date on which such payment is immediately
available to LC Issuer at a rate per annum equal to the Federal Funds Rate from time to time in
effect. A certificate of LC Issuer submitted to any Lender (through Administrative Agent) with
respect to any amounts owing under this Section 2.2 shall be conclusive absent manifest error.



               2.2.9 Pledged Bonds. As security for the payment of the obligations of the Borrowers in
respect of LC Loans, SWMP will pledge to Collateral Agent, and grant to Collateral Agent a security
interest in, its right, title and interest in and to Bonds delivered to the Trustee for the account
of the LC Issuer in connection with any Tender Drawing (herein called “Pledged Bonds”),
pursuant to a pledge agreement in the form of Exhibit D-4 (the “Bond Pledge
Agreement”). Any amounts from time to time outstanding in respect of LC Loans may be prepaid
(a) at any time by SWMP on one Business Day’s notice stating the amount to be prepaid (which shall
be $5,000 or a whole multiple thereof) and (b) at any time on behalf of SWMP on notice from the
Borrowers. Upon payment of the amount to be prepaid, together with accrued interest to the date of
such prepayment on the amount to be prepaid, the outstanding obligations of the Borrowers in
respect of LC Loans shall be reduced by the amount of such prepayment, interest shall cease to
accrue on the amount prepaid and Collateral Agent shall release from the pledge and security
interest created by the Bond Pledge Agreement a principal amount of Pledged Bonds equal to the
amount of such prepayment; provided, however, that prior to such release from the pledge and
security interest created by the Bond Pledge Agreement of Bonds delivered to or registered in the
name of Collateral Agent in connection with a Tender Drawing, the Borrowers shall have paid to
Administrative Agent for the account of the Lenders the amount owing in respect of the interest
Drawing, if any, made in conjunction with such Tender Drawing. Such Bonds shall be delivered to or
registered in the name of SWMP, in the event of a prepayment pursuant to clause (a) above, or the
new Bondholder(s) (as defined in the Indenture)



14









 







thereof pursuant to Section 6.11(d) of the Indenture, in the event of a prepayment pursuant to
clause (b) above, as appropriate.



               2.2.10 Credit for Amount Paid on Bonds. The Borrowers shall receive a credit against their
payment obligations in respect of interest on and principal of LC Loans to the extent of any
amounts actually paid to Administrative Agent or the Collateral Agent in respect of any interest or
principal due on any Pledged Bonds.



               2.2.11 Repayment of Participations.




          (a) At any time after LC Issuer has made a payment in respect of any drawing under the
Letter of Credit or Confirmation and has received from any Lender such Lender’s LC Advance or
funding of LC Loan in respect of such payment in accordance with Section 2.2.4, if
Administrative Agent receives for the account of LC Issuer any payment related to the Letter of
Credit or Confirmation (whether directly from SWMP or otherwise, including proceeds of cash
collateral applied thereto by Administrative Agent), or any payment of interest thereon,
Administrative Agent will distribute to such Lender its Proportionate Share thereof in the same
funds as those received by Administrative Agent.




          (b) If any payment received by Administrative Agent for the account of LC Issuer pursuant
to Section 2.2.2 is required to be returned, each Lender shall pay to Administrative Agent for
the account of LC Issuer its Proportionate Share thereof on demand of Administrative Agent, plus
interest thereon from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.



               2.2.12 Obligations Absolute. The obligation of SWMP to reimburse LC Issuer for each drawing
under the Letter of Credit or Confirmation, and to repay each drawing under the Letter of Credit or
Confirmation that is refinanced by LC Loans, shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all circumstances,
including the following:




          (a) any lack of validity or enforceability of the Letter of Credit, the Confirmation, this
Agreement, or any other agreement or instrument relating thereto;




          (b) the existence of any claim, counterclaim, set-off, defense or other right that SWMP may
have at any time against any beneficiary or any transferee of the Letter of Credit or
Confirmation (or any Person for whom any such beneficiary or any such transferee may be acting),
LC Issuer or any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the Letter of Credit or Confirmation or any agreement or instrument
relating thereto, or any unrelated transaction;




          (c) any draft, demand, certificate or other document presented under the Letter of Credit
or Confirmation proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under the Letter
of Credit or Confirmation;



15









 






          (d) any payment by LC Issuer under the Letter of Credit or by Confirming Bank under the
Confirmation against presentation of a draft or certificate that does not strictly comply with
the terms of the Letter of Credit or Confirmation; or any payment made by LC Issuer under the
Letter of Credit or by Confirming Bank under the Confirmation to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any transferee of the
Letter of Credit or Confirmation, including any arising in connection with any proceeding under
any Bankruptcy Law; or




          (e) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a defense available
to, or a discharge of, SWMP.



               2.2.13 Role of LC Issuer. Each Lender and SWMP agree that, in paying any drawing under the
Letter of Credit or Confirmation, LC Issuer and Confirming Bank shall not have any responsibility
to obtain any document (other than any sight draft, certificates and documents expressly required
by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such document. No Agent nor
any of the respective correspondents, participants or assignees of LC Issuer shall be liable to any
Lender for (a) any action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Majority Lenders or Required Lenders, as applicable; (b) any action
taken or omitted in the absence of gross negligence or willful misconduct; or (c) the due
execution, effectiveness, validity or enforceability of any document or instrument related to the
Letter of Credit. SWMP hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of the Letter of Credit or Confirmation; provided,
however, that this assumption is not intended to, and shall not, preclude SWMP from
pursuing such rights and remedies as it may have against the beneficiary or transferee at law or
under any other agreement. Administrative Agent shall not, nor shall any of the respective
correspondents, participants or assignees of LC Issuer, be liable or responsible for any of the
matters described in clauses (a) through (e) of Section 2.2.12; provided, however,
that anything in such clauses to the contrary notwithstanding, SWMP may have a claim against LC
Issuer, and LC Issuer may be liable to SWMP, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by SWMP which SWMP proves were caused by
LC Issuer’s willful misconduct or gross negligence or LC Issuer’s willful failure to pay under the
Letter of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, LC Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and LC Issuer shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to transfer or assign the
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.



               2.2.14 Draw Under Confirmation. For all purposes of this Section 2.2, a draw under the
Confirmation shall be treated as if a draw had been made under the Letter of Credit, whether or not
LC Issuer has reimbursed the Confirming Bank. Without limitation of the



16









 







foregoing, (a) in the event of a draw on the Confirmation, such draw shall for all purposes of
this Section 2.2 be treated as a draw under the Letter of Credit and the protections to LC Issuer
and acknowledgments of the Borrowers and Lenders in this Section 2.2 shall fully apply to a draw
under the Confirmation.



          2.3 Total Commitments.




               2.3.1 Loan Commitment Amounts.




          (a) Total Construction Loan Commitment. The aggregate principal amount of all
Construction Loans made by the Lenders shall not exceed $12,001,890 (the “Total Construction
Loan Commitment”).




          (b) Total Term Loan Commitment. The aggregate principal amount of all Term Loans
to be made by the Lenders shall not exceed the lesser of (i) the Total Construction Loan
Commitment, and (ii) the aggregate amount of Construction Loans outstanding on the Term-Period
Commencement Date after giving effect to any Final Construction Drawing (such amount, the
“Total Term Loan Commitment”).




          (c) Total Renegy Term Loan Commitment. The aggregate principal amount of the
Renegy Term Loan to be made by the Lenders shall not exceed $1,492,123 (such amount, the
“Total Renegy Term Loan Commitment”)




          (d) Total Revolving Loan Commitment. The aggregate principal amount of all
Revolving Loans made by the Lenders shall not exceed $500,000 (such amount, the “Total
Revolving Loan Commitment”).




          (e) Total LC Commitment. The “Total LC Commitment” shall be equal to
$40,161,891, of which the principal component is $39,250,000 and the interest component is
$911,891.



          2.4 Fees.




               2.4.1 Administrative Agent Fees. Borrowers shall pay to Administrative Agent solely for
Administrative Agent’s account the fees and other amounts described in the Fee Letter.



               2.4.2 Commitment Fees.




          (a) On the last Business Day in each calendar quarter and on the Construction Loan Maturity
Date (or, if the Total Construction Loan Commitment is canceled prior to such date, on the date
of such cancellation), Borrowers shall pay to Administrative Agent, for the benefit of the
Lenders, accruing from the date hereof or the first day of such quarter, as the case may be, a
commitment fee for such quarter (or portion thereof) then ending equal to the product of (a) the
daily average Available Construction Loan Commitment for such quarter (or portion thereof),
multiplied by (b) a fraction, the numerator of which is the number of days in such quarter (or
portion thereof) and the denominator of which is 360 days multiplied by (c) 0.50%.



17









 






          (b) On the last Business Day in each calendar quarter until the earlier of the Revolving
Loan Maturity Date or the date of cancellation of the Total Revolving Loan Commitment, Borrowers
shall pay to Administrative Agent, for the benefit of the Revolving Lenders, accruing from the
date hereof or the first day of such quarter, as the case may be, a commitment fee for such
quarter (or portion thereof) then ending equal to the product of (a) daily average unborrowed
Revolving Loan Commitment, multiplied by (b) a fraction, the numerator of which is the number of
days in such quarter (or portion thereof) and the denominator of which is 360 days multiplied by
(c) 0.50%.



               2.4.3 Arrangement Fees. Borrowers shall pay to the Lead Arranger, solely for the account of
such Person in such capacity, the fees as described and in the manner set forth in the Fee Letter.



               2.4.4 Letter of Credit Fees. Borrowers shall pay to Administrative Agent for the account of
each Lender in accordance with its Proportionate Share a Letter of Credit fee equal to (a) the Rate
Margin for LIBOR Loans multiplied by (b) the average daily maximum amount available to be drawn
under the Letter of Credit during the applicable quarter multiplied by (c) a fraction, the
numerator of which is the number of days in the applicable quarter (or portion thereof) and the
denominator of which is the number of days in that calendar year (365 or 366, as the case may be)
(“LC Fee”). Subject to the last sentence of Section 2.5.3, such fee shall be due and
payable on the last Business Day of each March, June, September and December, commencing with the
first such date to occur after the issuance of the Letter of Credit, and on the LC Facility
Expiration Date.



               2.4.5 Documentary and Processing Charges Payable to LC Issuer. Borrowers shall pay directly
to LC Issuer for its own account a fronting fee at the times and in the amounts as are set forth in
the Fee Letter, and the customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of LC Issuer relating to the Letter of Credit as from time to
time in effect. Such fees and charges are due and payable on demand and are nonrefundable.



               2.4.6 Upfront Fee. Borrowers shall pay to each Lender the upfront closing fee in the amount
set forth in the Fee Letter.



          2.5 Other Payment Terms.




               2.5.1 Place and Manner. Except as otherwise provided in the Fee Letter or any other provision
contained in any of the Credit Documents, Borrowers shall make all payments due hereunder to
Administrative Agent, to the account in the name of SWMP, Account No. 00041437, at CoBank, ACB,
Greenwood Village, Colorado, ABA No. 307088754, Account Reference: Snowflake White Mountain Power,
LLC, Attn: Syndication/Participation Servicing-Jana Ault, or such other account as Administrative
Agent shall notify Borrowers from time to time, in Dollars and in immediately available funds not
later than 12:00 noon, Denver time on the date on which such payment is due. Any payment made
after such time on any day shall be deemed received on the Business Day after such payment is
received. Administrative Agent shall distribute to each Secured Party each such payment received by Administrative Agent for
such Secured Party to be applied in accordance with the terms of this Agreement, such



18









 







disbursement to occur on the day such payment is received if received by 12:00 noon or if
otherwise reasonably possible, or otherwise on the next Business Day. Upon its acceptance and
recording in the Register of any Assignment and Assumption, from and after the effective date
specified therein, Administrative Agent shall make all the payments hereunder and under the Notes
in respect of the Credit Agreement interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Assumption shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.



               2.5.2 Date. Whenever any payment due hereunder shall fall due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such extension of time
shall be included in the computation of interest or fees, as the case may be, without duplication
of any interest or fees so paid in the next subsequent calculation of interest or fees payable;
provided, however, that, if such extension would cause payment of interest on or
principal of a LIBOR Loan to be made in the next succeeding calendar month, such payment shall be
made on the immediately preceding Business Day.



               2.5.3 Default Interest. Notwithstanding anything to the contrary herein, upon the occurrence
and during the continuation of any Event of Default, the outstanding principal amount of all Loans
and, to the extent permitted by applicable Legal Requirements, any accrued but unpaid interest
payments thereon and any accrued but unpaid fees and other amounts hereunder, shall thereafter bear
interest (including post-petition interest in any proceeding under applicable Bankruptcy Laws) from
the date of such Event of Default until the Event of Default is cured or waived, after as well as
before judgment, payable monthly and upon demand at a rate that is 2% per annum in excess of the
interest rate then otherwise payable under this Agreement for Base Rate Loans and the LC Fee rate
shall be increased by 2% (the “Default Rate”); provided, that, in the case of LIBOR
Loans, upon the expiration of the Interest Period in effect at the time any such increase in
interest rate is effective, such LIBOR Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate that is 2% per annum in excess of the
interest rate then otherwise payable under this Agreement for Base Rate Loans. Payment or
acceptance of the increased rates of interest and increased LC Fees provided for in this Section
2.5.3 is not a permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender. Notwithstanding any other provision of this Agreement, during such time as the Default
Rate applies, interest on the Loans and the LC Fees shall be payable on the last Business Day of
each month.



               2.5.4 Net of Taxes, Etc.




          (a) Taxes. Subject to each Lender’s compliance with Section 2.5.6, any and all
payments to or for the benefit of any Secured Party by Borrowers under any Credit Document shall
be made free and clear of and without deduction, set-off or counterclaim of any kind whatsoever
and in such amounts as may be necessary in order that all such payments, after deduction for or
on account of any present or future taxes, assessment, levies, imposts, duties, deductions,
charges or withholdings, and all liabilities with respect thereto (excluding income and
franchise taxes, which include taxes imposed on or measured by the net income, net profits or
capital of such Secured Party by any jurisdiction or any political



19









 







subdivision or taxing authority thereof or therein as a result of a connection between such
Secured Party and such jurisdiction or political subdivision, unless such connection results
solely from such Secured Party’s executing, delivering or performing its obligations or
receiving a payment under, or enforcing, this Agreement or any Note) (all such non-excluded
taxes, assessment, levies, imposts, duties, deductions, charges or withholdings and liabilities
being hereinafter referred to as “Taxes”), shall be equal to the amounts otherwise
specified to be paid under the Credit Documents. If Borrowers shall be required by applicable
Legal Requirements to withhold or deduct any Taxes from or in respect of any sum payable under
any Credit Document to any Secured Party, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.5.4), such Secured Party receives an amount equal
to the sum it would have received had no such deductions been made, (ii) Borrowers shall make
such deductions and (iii) Borrowers shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Legal Requirements. In addition,
Borrowers agree to pay any present or future stamp, recording or documentary taxes and any other
excise or property taxes, charges or similar levies (not including income or franchise taxes)
that arise under the laws of the United States of America, the State of New York or the Project
Jurisdiction from any payment made under any Credit Document or from the execution or delivery
or otherwise with respect to any Credit Document (hereinafter referred to as “Other
Taxes”).




          (b) Tax Indemnity. Borrowers shall indemnify each Secured Party and Confirming
Bank for and hold it harmless against the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.5.4)
paid by any Secured Party or Confirming Bank, or any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payments by Borrowers pursuant to this
indemnification shall be made within 30 days from the date such Secured Party or Confirming Bank
makes written demand therefor (submitted through Administrative Agent), which demand shall be
accompanied by a certificate describing in reasonable detail the basis thereof.




          (c) Notice. Within 30 days after the date of any payment of Taxes by Borrowers,
Borrowers shall furnish to Administrative Agent, at its address referred to in Section 12.1.1,
the original or a certified copy of a receipt evidencing payment thereof or, if such receipt is
not obtainable, other evidence of such payment by Borrowers reasonably satisfactory to
Administrative Agent. Borrowers shall compensate each Secured Party or Confirming Bank for all
reasonable losses and expenses sustained by such Secured Party or Confirming Bank as a result of
any failure by Borrowers to so furnish such copy of such receipt. In the event of any payment
hereunder (or under the Notes) by or on behalf of Borrowers through an account or branch outside
the United States or on behalf of Borrowers by a payor that is not a United States person, if
Borrowers determine that no Taxes are payable in respect thereof, Borrowers shall furnish, or
cause such payor to furnish, to Administrative Agent an opinion of counsel acceptable to
Administrative Agent stating that such payment is exempt from Taxes. For purposes of this
Section, the terms “United States”



20









 







and “United States person” have the respective meanings specified in Section 7701 of the
Code.




          (d) Conduit Financing. Notwithstanding anything to the contrary contained in this
Section 2.5.4, if a Lender is a conduit entity participating in a conduit financing arrangement
(as defined in Section 7701(l) of the Code and the Treasury Regulations issued thereunder) with
respect to any payments made by Borrowers under this Agreement and under any Note, Borrowers
shall not be obligated to pay additional amounts to such Lender pursuant to this Section 2.5.4
to the extent that the amount of United States Taxes exceeds the amount that would have
otherwise been payable were such Lender not a conduit entity participating in a conduit
financing arrangement.



               2.5.5 Application of Payments. Except as otherwise expressly provided in any Credit Document,
payments made under the Credit Documents and other amounts received by the Secured Parties under
the Credit Documents shall first be applied to any fees, costs, charges or expenses payable to the
Secured Parties under the Credit Documents, next to any accrued but unpaid interest then due and
owing, and then to outstanding principal then due and owing or otherwise to be prepaid (in each
case, such application to be made on a pro rata basis among such applicable Persons).



               2.5.6 Withholding Exemption Certificates. Administrative Agent on the Closing Date, each
Lender and LC Issuer upon becoming a Lender or LC Issuer and each Person to which any Lender grants
a participation (or otherwise transfers its interest in this Agreement) agree that they will
deliver to Administrative Agent and Borrowers either (a) if such Lender, LC Issuer or Person is a
corporation established under the laws of the United States or any political subdivision thereof,
an executed copy of a United States Internal Revenue Service Form W-9, or (b) if such Lender, LC
Issuer or Person is not a corporation established under the laws of the United States or any
political subdivision thereof two duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI or successor applicable form, as the case may be (certifying therein an
entitlement to a reduction in, or an exemption from, United States withholding taxes) and, in case
such Lender or LC Issuer is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
duly completed and executed non-bank certificate in the form of Exhibit J (the
“Non-Bank Certificate”). Each Lender or LC Issuer which delivers to Borrowers and
Administrative Agent a Form W-8BEN or W-8ECI pursuant to the preceding sentence further undertakes
to deliver to Borrowers and Administrative Agent further copies of the Form W-8BEN or W-8ECI, or
successor applicable forms, or other manner of certification or procedure, as the case may be, on
or before the date that any such form expires or becomes obsolete or within a reasonable time after
gaining knowledge of the occurrence of any event requiring a change in the most recent forms
previously delivered by it to Borrowers, and such extensions or renewals thereof as may reasonably
be requested by Borrowers, certifying in the case of a Form W-8BEN or W-8ECI that such Lender or LC
Issuer is entitled to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless in any such cases an event (including any change in
treaty, law or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would prevent a Lender or
LC Issuer from duly completing and delivering any such form with respect to it and such Lender or



21









 







LC Issuer advises Borrowers that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax, and in the case of Form W-8BEN or W-8ECI,
establishing an exemption from United States backup withholding tax. Notwithstanding any other
provision of this Section 2.5.6, a Lender or LC Issuer shall not be required to deliver any form
pursuant to this Section 2.5.6 that such Lender or LC Issuer is not legally able to deliver.
Borrowers shall not be obligated to pay any additional amounts in respect of United States federal
income tax pursuant to Section 2.5.4 (or make an indemnification payment pursuant to Section 2.5.4)
to any Lender (including any entity to which any Lender sells, assigns, grants a participation in,
or otherwise transfers its rights under this Agreement) or LC Issuer if the obligation to pay such
additional amounts (or such indemnification) would not have arisen but for a failure of such Lender
or LC Issuer to comply with its obligations under this Section 2.5.6. Administrative Agent will
cause Confirming Bank to comply with the provisions of this Section 2.5.6 and aside from such
compliance, the other terms of this Section 2.5.6 shall apply to Confirming Bank as if it were LC
Issuer.



               2.5.7 Administrative Agent Assumption. Unless Administrative Agent shall have been notified
by SWMP prior to the date on which any payment from Borrowers is due hereunder that Borrowers do
not intend to make such payment in full, Administrative Agent may assume that Borrowers have made
such payment in full to Administrative Agent on such date and Administrative Agent may, in its sole
discretion and in reliance upon such assumption, cause to be distributed to each Secured Party on
such due date an amount equal to the amount then due such Secured Party. If and to the extent
Borrowers shall not have so made such payment in full to Administrative Agent, each Secured Party
shall repay to Administrative Agent forthwith on demand such amount distributed to such Secured
Party together with interest thereon, for each day from the date such amount is distributed to such
Secured Party until the date such Secured Party repays such amount to Administrative Agent, at the
Federal Funds Rate.



          2.6 Pro Rata Treatment.




               2.6.1 Borrowings. Except as otherwise provided herein, (a) each LC Loan and each Borrowing
consisting of Construction Loans, Renegy Term Loans, Revolving Loans or Term Loans shall be made or
allocated among the Lenders pro rata according to their respective Proportionate Shares of such
Loans or Commitments, as the case may be, (b) each payment of principal of and interest on Loans
and each reimbursement of a drawing under the Letter of Credit shall be made or shared among the
Lenders holding such Loans pro rata according to their respective unpaid principal amounts of such
Loans held by such Lenders, and (c) each payment of Commitment Fees and LC Fees shall be shared
among the Lenders pro rata according to (i) their respective Proportionate Shares of the
Commitments to which such fees apply, and (ii) in the case of each Lender which becomes a party to
this Agreement hereunder after the Closing Date, the date upon which such Lender so became a party
hereunder.



               2.6.2 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on account of Loans or
Unreimbursed Amounts owed to it, in excess of its Proportionate Share of payments on account of
such Loans or Unreimbursed Amounts obtained by all Lenders entitled to such payments, such Lender
shall forthwith purchase from the other Lenders such participation in the Loans or Unreimbursed
Amounts as shall be necessary to cause such



22









 







purchasing Lender to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such Lender shall be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such other Lender’s Proportionate Share (according to the proportion of (a)
the amount of such other Lender’s required repayment to (b) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.6.2 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of Borrowers in the
amount of such participation.



          2.7 Change of Circumstances.




               2.7.1 Inability to Determine Rates. If, on or before the first day of any Interest Period for
any LIBOR Loans, (a) Administrative Agent determines that the Adjusted LIBO Rate for such Interest
Period cannot be adequately and reasonably determined due to the unavailability of funds in or
other circumstances affecting the London interbank market, or (b) Lenders holding aggregate
Proportionate Shares of 331/3% or more of the Commitments shall advise Administrative Agent that (i)
the rates of interest for such LIBOR Loans do not adequately and fairly reflect the cost to such
Lenders of making or maintaining such Loans or (ii) deposits in Dollars in the London interbank
market are not available to such Lenders (as conclusively certified by each such Lender in good
faith in writing to Administrative Agent and to Borrowers) in the ordinary course of business in
sufficient amounts to make and/or maintain their LIBOR Loans, then Administrative Agent shall
immediately give notice of such condition to Borrowers. After the giving of any such notice and
until Administrative Agent shall otherwise notify Borrowers that the circumstances giving rise to
such condition no longer exist, Borrowers’ right to request the making of or conversion to, and the
Lenders’ obligations to make or convert to, LIBOR Loans shall be suspended. Any LIBOR Loans
outstanding at the commencement of any such suspension shall be converted at the end of the then
current Interest Period for such Loans into Base Rate Loans unless such suspension has then ended.



               2.7.2 Illegality. If, after the date of this Agreement, the adoption of any Governmental
Rule, any change in any Governmental Rule or the application or requirements thereof (whether such
change occurs in accordance with the terms of such Governmental Rule as enacted, as a result of
amendment, or otherwise), any change in the interpretation or administration of any Governmental
Rule by any Governmental Authority, or compliance by any Lender or Borrowers with any request or
directive (whether or not having the force of law, but if not having the force of law, being of a
type with which a Lender customarily complies) of any Governmental Authority (a “Change of
Law”) shall make it unlawful or impossible for any Lender to make or maintain any LIBOR Loan,
then such Lender shall immediately notify Administrative Agent and Borrowers of such Change of Law.
Upon receipt of such notice, (a) Borrowers’ right to request the making of or conversion to, and
the Lender’s obligations to make or convert to, LIBOR Loans shall be suspended for so long as such
condition shall exist, and (b) Borrowers shall at their option, upon request of such Lender, either
(i) convert any then



23









 







outstanding LIBOR Loans into Base Rate Loans, in accordance with such request, immediately or
at the end of the current Interest Periods for such Loans, or (ii) prepay pursuant to Section
2.1.10 any then outstanding LIBOR Loans. Any conversion or prepayment of LIBOR Loans made pursuant
to the preceding sentence prior to the last day of an Interest Period for such Loans shall be
deemed a prepayment thereof for purposes of Section 2.8.



               2.7.3 Increased Costs. If, after the date of this Agreement, any Change of Law:




          (a) shall subject any Lender, LC Issuer or Confirming Bank to any tax, duty or other charge
with respect to any LIBOR Loan or Commitment in respect thereof, or the Letter of Credit or
Confirmation, or shall change the basis of taxation of payments by Borrowers to any Lender on
such a Loan or with respect to any such Commitment, Letter of Credit or Confirmation (except for
Taxes, Other Taxes or changes in the rate of taxation on the overall net income of any Lender);
or




          (b) shall impose, modify or hold applicable any reserve, special deposit or similar
requirement (without duplication of any reserve requirement included within the applicable
Interest Rate through the definition of “Reserve Requirement”) against assets held by,
deposits or other liabilities in or for the account of, advances or loans by, or any other
acquisition of funds by any Lender for any LIBOR Loan; or




          (c) shall impose on any Lender, LC Issuer or Confirming Bank any other condition directly
related to any LIBOR Loan or Commitment in respect thereof, or the Letter of Credit or
Confirmation;


and the effect of any of the foregoing is to increase the cost to such Lender, LC Issuer or
Confirming Bank of making, issuing, creating, renewing, participating in (subject to the
limitations in Section 12.17.3) or maintaining any such LIBOR Loan or Commitment in respect
thereof, Letter of Credit or Confirmation, or to reduce any amount receivable by such Lender, LC
Issuer or Confirming Bank hereunder or under the Confirmation Agreement, then Borrowers shall from
time to time, within 10 days after demand by such Lender, LC Issuer or Confirming Bank, pay to such
Lender, LC Issuer or Confirming Bank additional amounts sufficient to reimburse such Lender, LC
Issuer or Confirming Bank for such increased costs or to compensate such Lender, LC Issuer or
Confirming Bank for such reduced amounts. A certificate setting forth in reasonable detail the
amount of such increased costs or reduced amounts and the basis for determination of such amount,
submitted by such Lender, LC Issuer or Confirming Bank to Borrowers, shall, in the absence of
manifest error, be conclusive and binding on Borrowers for purposes of this Agreement.




               2.7.4 Capital Requirements. If any Lender, LC Issuer or Confirming Bank determines that (a)
the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender, LC Issuer or Confirming Bank
with any guideline, request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority has or



24









 







would have the effect of reducing the rate of return on the capital of such Lender, LC Issuer
or Confirming Bank or the Lending Office of such Lender, LC Issuer or Confirming Bank or any Person
controlling such Lender, LC Issuer or Confirming Bank (a “Capital Adequacy Requirement”) as
a consequence of, or with reference to, such Lender’s Loans or Commitments or Letter of Credit or
Confirmation or other obligations hereunder to a level below that which such Lender, LC Issuer,
Confirming Bank or such Person could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of such Lender, LC
Issuer, Confirming Bank or such controlling Person with regard to capital adequacy), and (b) the
amount of capital maintained by such Lender, LC Issuer, Confirming Bank or such Person which is
attributable to or based upon the Loans, the Commitments, the Letter of Credit, the Confirmation or
this Agreement must be increased as a result of such Capital Adequacy Requirement (taking into
account such Lender’s, LC Issuer’s, Confirming Bank’s or such Person’s policies with respect to
capital adequacy), then Borrowers shall pay to such Lender, LC Issuer, Confirming Bank or such
Person, within 10 days after delivery of demand, such amounts as such Lender, LC Issuer, Confirming
Bank or such Person shall reasonably determine are necessary to compensate such Lender, LC Issuer,
Confirming Bank or such Person for the increased costs to such Lender, LC Issuer, Confirming Bank
or such Person of such increased capital. A certificate of such Lender, LC Issuer, Confirming Bank
or such Person, setting forth in reasonable detail the computation of any such increased costs,
delivered to Borrowers shall, in the absence of manifest error, be conclusive and binding on
Borrowers for purposes of this Agreement.



               2.7.5 Notice. Each Lender or LC Issuer shall notify Borrowers of any event occurring after
the date of this Agreement that will entitle such Lender or LC Issuer to compensation pursuant to
this Section 2.7, as promptly as practicable, and in no event later than 90 days after the
principal officer of such Lender or LC Issuer responsible for administering this Agreement obtains
knowledge thereof; provided, that any Lender’s or LC Issuer’s failure to notify Borrowers
within such 90-day period shall not relieve Borrowers of their obligation under this Section 2.7
with respect to claims arising prior to the end of such period, but shall relieve Borrowers of
their obligations under this Section 2.7 with respect to the time between the end of such period
and such time as Borrowers receive notice from the indemnitee as provided herein. No Person
purchasing from a Lender a participation in any Commitment (as opposed to an assignment) shall be
entitled to any payment from or on behalf of Borrowers pursuant to Section 2.7.3 or Section 2.7.4
which would be in excess of the applicable proportionate amount (based on the portion of the
Commitment in which such Person is participating) which would then be payable to such Lender if
such Lender had not sold a participation in that portion of the Commitment. Administrative Agent
shall provide to Borrowers from Confirming Bank comparable notices as are to be delivered by
Lenders and LC Issuer under this Section 2.7.5.



          2.8 Funding Losses.




               2.8.1 LIBOR Funding Costs. If Borrowers shall (a) repay or prepay any LIBOR Loan on any day
other than the last day of an Interest Period for such Loan (whether an optional prepayment or a
Mandatory Prepayment), (b) fail to borrow any LIBOR Loan in accordance with a Notice of Borrowing
delivered to Administrative Agent (whether as a result of the failure to satisfy any applicable
conditions or otherwise), (c) fail to convert any Loan into a



25









 







LIBOR Loan in accordance with a Notice of Interest Terms delivered to Administrative Agent
(whether as a result of the failure to satisfy any applicable conditions or otherwise), (d) fail to
continue any LIBOR Loan in accordance with a Notice of Interest Terms delivered to Administrative
Agent, (e) fail to convert any Construction Loan into Term Loan in accordance with a Notice of
Term-Conversion delivered to Administrative Agent, (f) fail to make any prepayment in accordance
with any notice of prepayment delivered to Administrative Agent, or (g) fail to pay when due
principal amount of or interest on any LIBOR Loan, then Borrowers shall, within five days after
demand by any Lender, indemnify such Lender and hold it harmless from any and all costs, expenses,
losses and liabilities (collectively, the “LIBOR Breakage Costs”) incurred by such Lender
as a result of such repayment, prepayment or failure. Borrowers understand and agree that LIBOR
Breakage Costs may include costs, expenses, losses and liabilities and expenses incurred by a
Lender as a result of funding and other contracts entered into by such Lender to fund LIBOR Loans
or otherwise arising from the redeployment of funds obtained by it or from fees payable to
terminate the deposits from which such funds are obtained.



               2.8.2 Calculations of LIBOR Breakage Costs. Each Lender demanding payment under this Section
2.8 shall deliver to Borrowers a certificate setting forth in reasonable detail the basis for and
the amount of costs, expenses and losses for which the demand is made; such certificate so
delivered to Borrowers shall, in the absence of manifest error, be conclusive and binding as to the
amount payable for purposes of this Agreement. For the purpose of calculation of any LIBOR
Breakage Costs each Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the Adjusted LIBO Rate in an amount equal to the
amount of such LIBOR Loan and having a maturity comparable to the relevant Interest Period,
provided, however, that each Lender may fund each of its LIBOR Loans in any manner
it see fit, and the foregoing assumption shall be utilized only for the calculation of amounts
payable under Section 2.8.1.



          2.9 Alternate Office; Minimization of Costs.




               2.9.1 To the extent reasonably possible, each Lender shall designate an alternative Lending
Office with respect to its LIBOR Loans and otherwise take any reasonable actions to reduce any
liability of Borrowers to any Lender under Section 2.5.4, 2.7.3, 2.7.4 or 2.8, or to avoid the
unavailability of any Type of Loans under Section 2.7.2 so long as (in the case of the designation
of an alternative Lending Office) such Lender, in its sole discretion, determines that (a) such
designation is not disadvantageous to such Lender and (b) such actions would eliminate or reduce
liability to such Lender. Borrowers hereby agree to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or actions within 10 Business Days of demand
thereof to Borrowers.



               2.9.2 If and with respect to each occasion that a Lender either makes a demand for
compensation pursuant to Section 2.5.4, 2.7.3 or 2.7.4 or is unable for a period of three
consecutive months to fund LIBOR Loans pursuant to Section 2.7.2 or such Lender wrongfully fails to
fund a Loan, then Borrowers may, upon at least five Business Days’ prior irrevocable written notice
to each of such Lender and Administrative Agent, in whole permanently replace the Loans and
Commitments of such Lender; provided, that Borrowers shall replace such Loans and
Commitments with the Loans and Commitments of a commercial bank



26









 







reasonably satisfactory to Administrative Agent. Such replacement Lender shall upon the
effective date of replacement purchase the Obligations owed to such replaced Lender for the
aggregate amount thereof and shall thereupon for all purposes become a “Lender” or “LC Issuer”, as
the case may be, hereunder. Such notice from Borrowers shall specify an effective date for the
replacement of such Lender’s Loans and Commitments, which date shall not be later than the
14th day after the day such notice is given. On the effective date of any replacement
of such Lender’s Loans and Commitments pursuant to this Section 2.9.2, Borrowers shall pay to
Administrative Agent for the account of such Lender (a) any fees due to such Lender to the date of
such replacement, (b) the principal of and accrued interest on the principal amount of outstanding
Loans held by such Lender to the date of such replacement (such amount to be represented by the
purchase of the Obligations of such replaced Lender by the replacing Lender and not as a prepayment
of such Loans), and (c) the amount or amounts due to such Lender pursuant to each of Sections
2.5.4, 2.7.3 and 2.7.4, as applicable, and any other amount then payable hereunder to such Lender.
Borrowers will remain liable to such replaced Lender for any LIBOR Breakage Costs that such Lender
sustains or incurs as a consequence of the purchase of such Lender’s Loans (unless such Lender has
defaulted on its obligation to fund a Loan hereunder). Upon the effective date of the purchase of
any Lender’s Loans owed to such Lender and termination of such Lender’s Commitments pursuant to
this Section 2.9.2, such Lender shall cease to be a Lender hereunder. No such termination of any
such Lender’s Commitments and the purchase of such Lender’s Loans pursuant to this Section 2.9.2
shall affect (i) any liability or obligation of Borrowers or any other Lender to such terminated
Lender, or any liability or obligation of such terminated Lender to Borrowers or any other Lender,
which accrued on or prior to the date of such termination or (ii) such terminated Lender’s rights
hereunder in respect of any such liability or obligation.



               2.9.3 Upon written notice to Administrative Agent, any Lender may designate a Lending Office
other than the Lending Office most recently designated to Administrative Agent and may assign all
of its interests under the Credit Documents and its Notes (if any) to such Lending Office;
provided, that such designation and assignment do not at the time of such designation and
assignment increase the reasonably foreseeable liability of Borrowers under Section 2.5.4, 2.7.3 or
2.7.4 or make an Interest Rate option unavailable pursuant to Section 2.7.2.



     2.10 Register.



          Administrative Agent shall maintain a register (the “Register”) for the recordation
of certain information hereunder from time to time. The Register shall be available for inspection
by Borrowers or any Secured Party at any reasonable time and from time to time upon reasonable
prior notice. Administrative Agent shall record in the Register (a) the Commitments and the Loans
from time to time of each Lender, (b) the interest rates applicable to all Loans and the effective
dates of all changes thereto, (c) the Interest Period for each LIBOR Loan, (d) the date and amount
of any principal or interest due and payable or to become due and payable from Borrowers to each
Lender hereunder, (e) each repayment or prepayment in respect of the principal amount of the Loans
of each Lender and reimbursement of draws of the Letter of Credit, (f) the amount of any sum
received by Administrative Agent hereunder for the account of the Secured Parties and each Secured
Party’s share thereof, (g) a copy of each Assignment and Assumption entered into under Section 12.17.2, and (h) such other information as
Administrative Agent may determine is necessary for the administering of the Loans, the Letter of
Credit and




27









 







this Agreement. Any such recording shall be conclusive and binding in the absence of manifest
error; provided, that neither the failure to make any such recordation, nor any error in
such recordation, shall affect any Lender’s Commitment or the Obligations in respect of any
applicable Loans or the Letter of Credit or otherwise; and provided, further, that
in the event of any inconsistency between the Register and any Secured Party’s records, the
Register shall govern absent manifest error.




          2.11 Joint and Several Liability of Borrowers.




               2.11.1 Each of Borrowers is accepting joint and several liability hereunder and under the
other Credit Documents in consideration of the financial accommodations to be provided by Secured
Parties under this Agreement, for the mutual benefit, directly and indirectly, of each of Borrowers
and in consideration of the undertakings of the other Borrowers to accept joint and several
liability for the Obligations.



               2.11.2 Each of Borrowers, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the Obligations (including,
without limitation, any Obligations arising under this Section 2.11), it being the intention of the
parties hereto that all the Obligations shall be the joint and several obligations of each Borrower
without preferences or distinction among them.



               2.11.3 If and to the extent that any of Borrowers shall fail to make any payment with respect
to any of the Obligations as and when due or to perform any of the Obligations in accordance with
the terms thereof, then in each such event the other Persons composing Borrowers will make such
payment with respect to, or perform, such Obligation.



               2.11.4 The Obligations of each Borrower under the provisions of this Section 2.11 constitute
the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement or any other circumstances whatsoever.



               2.11.5 Except as otherwise expressly provided in this Agreement, each Borrower hereby waives
notice of acceptance of its joint and several liability, notice of any Loans or the Letter of
Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event
of Default, or of any demand for any payment under this Agreement, notice of any action at any time
taken or omitted by any Secured Party under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial
payment thereon, any waiver, consent or other action or acquiescence by any Secured Party at any
time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by any Secured Party in respect of any of



28









 







the Obligations, and the taking, addition, substitution or release, in whole or in part, at
any time or times, of any security for any of the Obligations or the addition, substitution or
release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing,
each Borrower assents to any other action or delay in acting or failure to act on the part any
Secured Party with respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently to assert any right
or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which
might, but for the provisions of this Section 2.11 afford grounds for terminating, discharging or
relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.11,
it being the intention of each Borrower that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of such Borrower under this Section 2.11 shall not be discharged
except by performance and then only to the extent of such performance. The Obligations of each
Borrower under this Section 2.11 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to
any other Borrower or Secured Party. The joint and several liability of the Borrowers hereunder
shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any
other change whatsoever in the name, constitution or place of formation of any of the Borrowers or
Secured Parties.



               2.11.6 Each Borrower represents and warrants to the Secured Parties that such Borrower is
currently informed of the financial condition of the other Borrowers and of all other circumstances
which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Borrower further represents and warrants to the Secured Parties that such
Borrower has read and understands the terms and conditions of the Credit Documents. Each Borrower
hereby covenants that such Borrower will continue to keep informed of the other Borrowers’
financial condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.



               2.11.7 The provisions of this Section 2.11 are made for the benefit of the Secured Parties and
their respective successors and assigns, and may be enforced by it or them from time to time
against any or all of the Borrowers as often as occasion therefor may arise and without requirement
on the part of any such Secured Party, successor or assign first to marshal any of its or their
claims or to exercise any of its or their rights against any of the other Borrowers or to exhaust
any remedies available to it or them against any of the other Borrowers or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 2.11 shall remain in effect until all of the Obligations
shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored
or returned by any Secured Party upon the insolvency, bankruptcy or reorganization of any of the
Borrowers, or otherwise, the provisions of this Section 2.11 will forthwith be reinstated in
effect, as though such payment had not been made.



               2.11.8 Each of the Borrowers hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the other Borrowers with respect to any liability incurred by
it hereunder or under any of the other Credit Documents, any payments made by it to



29









 







the Secured Parties with respect to any of the Obligations or any collateral security therefor
until such time as all of the Obligations have been paid in full in cash. Any claim which any
Borrower may have against any other Borrower with respect to any payments to any Secured Party
under any Credit Documents are hereby expressly made subordinate and junior in right of payment,
without limitation as to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary,
all such Obligations shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Borrower
therefor.



               2.11.9 Each of the Borrowers hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrence
and during the continuance of any Default or Event of Default, such Borrower will not demand, sue
for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower
until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee
for the Secured Parties, and such Borrower shall deliver any such amounts to Administrative Agent
for application to the Obligations.



               2.11.10 Each Borrower agrees that after the Closing Date, if any certificate is executed and
delivered by any one or more of the Borrowers, but not one or more of the other Borrowers, such
certificate may be relied upon by the Secured Parties, and shall bind all of the Borrowers, as if
it were executed by all of them. Any representation herein made “to Borrowers’ knowledge” or the
like, means to the knowledge of any, but not necessarily all, of the Borrowers.



ARTICLE 3

CONDITIONS PRECEDENT




          3.1 Conditions Precedent to the Closing Date.
The closing and effectiveness of this Agreement is subject to the prior satisfaction of each
of the following conditions unless waived in writing by Administrative Agent with the consent of
the Lenders (the date such conditions precedent are so satisfied or waived being referred to as the
“Closing Date”):




               3.1.1 Resolutions. Delivery to Administrative Agent of a copy of one or more resolutions or
other authorizations, in form and substance reasonably satisfactory to Administrative Agent, of
each Borrower and Pledgor as of the Closing Date certified by a Responsible Officer of each such
Sponsor Entity as being true, complete, in full force and effect on the Closing Date and not
amended, modified, revoked or rescinded, authorizing, as applicable and among other things, the Borrowings herein provided for, the granting of the Liens under
the Collateral Documents, the provision of the guaranties, the contribution of equity to the



30









 







Borrowers, and the execution, delivery and performance of this Agreement, the other Operative
Documents and any instruments or agreements required hereunder or thereunder to which such Sponsor
Entity is a party, provided, that Administrative Agent and each Lender may conclusively
rely on such certificate until it receives notice in writing from such Sponsor Entity to the
contrary.



               3.1.2 Incumbency. Delivery to Administrative Agent of a certificate, in form and substance
reasonably satisfactory to Administrative Agent, from each Borrower and Pledgor signed by the
appropriate authorized officer or manager of each such Person and dated as of the Closing Date, as
to the incumbency and specimen signature of each natural Person authorized to execute and deliver
this Agreement, the other Operative Documents and any instruments or agreements required hereunder
or thereunder to which each such Person is a party.



               3.1.3 Governing Documents. Delivery to Administrative Agent, in each case certified by a
Responsible Officer of each Borrower and Pledgor as being true, correct and complete on the Closing
Date, of (a) copies of the articles of incorporation, certificate of incorporation or formation,
charter or other state certified constituent documents of each Borrower and Pledgor, certified as
of a recent date by the secretary of state of such Person’s state of incorporation or formation, as
applicable, and (b) copies of the bylaws, limited liability company operating agreement,
partnership agreement or other comparable constituent documents, if applicable, of each Borrower
and Pledgor.



               3.1.4 Good Standing Certificates. Delivery to Administrative Agent of certificates (in
so-called “long-form” if available) issued by the secretary of state of the state in which each
Borrower and Pledgor is formed or incorporated, as applicable, in each case (a) dated a date
reasonably close to the Closing Date and (b) certifying that such Person is in good standing and is
qualified to do business in, and has paid all franchise taxes or similar taxes due to, such states.



               3.1.5 Third Party Approvals. Except for the Permits listed in Part II of the Permit Schedule,
Administrative Agent shall have received copies of all documents and copies of any approval by any
Person (including any Governmental Authority) reasonably required in connection with any
transaction contemplated in any Credit Document, which Administrative Agent may reasonably have
requested in connection herewith.



               3.1.6 Credit Documents, Project Documents and Bond Documents. Delivery to Administrative
Agent of (a) originals of each Bond Document and Credit Document other than those expressly
contemplated hereby to be executed and delivered after the Closing Date, all of which shall (i)
have been duly authorized, executed and delivered by the parties thereto and in form and substance
reasonably satisfactory to Administrative Agent and the Lenders, and (ii) be in full force and
effect and accompanied by a certificate of Borrowers certifying to the foregoing in accordance with
Section 3.1.7, provided, that each Note shall conform to all requirements hereof and be
delivered to Administrative Agent for the account of, and payable to, each Lender that has
requested such Note in accordance with Section 2.1.6, and (b) a certified list of, and true,
correct and complete copies of, each Project Document (other than any Project Document which is
only incidental to the development, construction, leasing,



31









 







ownership or operation of the Project) executed on or prior to the Closing Date, each in form
and substance reasonably satisfactory to Administrative Agent, all of which shall (x) have been
duly authorized, executed and delivered by the parties thereto, and (y) be certified by Borrowers
as being true, complete and correct and in full force and effect on the Closing Date in accordance
with Section 3.1.7.



               3.1.7 Certificate of Borrowers. Delivery to Administrative Agent of a certificate, dated as
of the Closing Date, duly executed by a Responsible Officer of each of Borrowers, in substantially
the form of Exhibit F-1 (the “Borrowers’ Closing Certificate”).



               3.1.8 Legal Opinions. Delivery to Administrative Agent of legal opinions with respect of the
transactions contemplated hereby of counsel to each Sponsor Entity, in each case addressed to the
Secured Parties and in form and substance reasonably satisfactory to Administrative Agent.



               3.1.9 Certificate and Report of Insurance Consultant. Delivery to Administrative Agent of the
Insurance Consultant’s certificate, dated as of the Closing Date and in substantially the form of
Exhibit F-2 (the “Insurance Consultant’s Certificate”), together with the Insurance
Consultant’s report, in form and substance reasonably satisfactory to Administrative Agent,
attached thereto.



               3.1.10 Insurance. Insurance complying with terms and conditions set forth in Exhibit
K (the “Insurance Requirements”) shall be in full force and effect and Administrative
Agent and the Insurance Consultant shall have received a certificate from Borrowers’ insurance
broker(s), dated as of the Closing Date and in form and substance reasonably satisfactory to
Administrative Agent, (a) identifying underwriters, type of insurance, insurance limits and policy
terms, (b) listing the special provisions required as set forth in Exhibit K, (c)
describing the insurance obtained and (d) stating that such insurance is in full force and effect
and that all premiums then due thereon have been paid and that, in the opinion of such broker(s),
such insurance complies with the terms and conditions set forth in Exhibit K.



               3.1.11 Certificate and Report of the Independent Engineer. Delivery to Administrative Agent
of the Independent Engineer’s certificate, dated as of the Closing Date and in substantially the
form of Exhibit F-3 (the “Independent Engineer’s Certificate”), together with the
Independent Engineer’s report, in form and substance reasonably satisfactory to Administrative
Agent, attached thereto.



               3.1.12 Environmental Report. Delivery to Administrative Agent of the Environmental Report
along with the corresponding reliance letters, each in form and substance reasonably satisfactory
to Administrative Agent.



               3.1.13 Certificate and Report of Fuel Consultant. Delivery to Administrative Agent of the
Fuel Consultant’s certificate, dated as of the Closing Date and in substantially the form of
Exhibit F-4, together with the Fuel Consultant’s report, in form and substance reasonably
satisfactory to Administrative Agent and the Lenders, attached thereto.




32












 





               3.1.14 Schedule of Applicable Permits and Applicable Third Party Permits.




          (a) Delivery to Administrative Agent of Exhibit G-1 (the “Permit
Schedule”), the schedule of Permits, in form and substance reasonably satisfactory to
Administrative Agent, of which (i) Part I(A) shall be Permits which are Applicable Permits as of
the Closing Date, (ii) Part I(B) shall be Permits which to Borrowers’ knowledge are Applicable
Third Party Permits as of the Closing Date, (iii) Part II(A) shall be Permits which are expected
to become Applicable Permits after the Closing Date, and (iv) Part II(B) shall be Permits which
are expected to become Applicable Third Party Permits after the Closing Date. Borrowers shall
also deliver to Administrative Agent copies of each Permit listed in Part I(A) and, to the
extent obtainable, Part I(B), in form and substance reasonably satisfactory to Administrative
Agent. The Permits listed in Part I(A) and Part I(B) shall in Administrative Agent’s reasonable
opinion comprise all of the Applicable Permits and Applicable Third Party Permits, respectively,
as of the Closing Date.




          (b) Except as disclosed in the Permit Schedule, each Permit listed in Part I(A) shall (i)
have been duly obtained or been assigned in a Borrower’s name, (ii) be in full force and effect,
(iii) not be subject to any current legal proceeding, and (iv) not be subject to any Unsatisfied
Condition that could reasonably be expected to result in material modification or revocation of
such Permit, and all applicable appeal periods with respect to each such Permit shall have
expired. Except as disclosed in the Permit Schedule, each Permit listed in Part I(B) shall (A)
have duly obtained or have been assigned in the name of the applicable Major Project
Participant, (B) be in full force and effect, (C) not be subject to any current legal proceeding
and (D) not be subject to any Unsatisfied Condition that could reasonably be expected to result
in material modification or revocation of such Permit, and all applicable appeal periods with
respect to each such Permit shall have expired.




          (c) The Permits listed in Part II of the Permit Schedule shall, in Administrative Agent’s
reasonable opinion, be timely obtainable (i) on or before the date Borrowers or the applicable
other Person (as identified in the Permit Schedule) requires such Permit, (ii) without delay
materially in excess of the time provided therefor in the Project Schedule (if applicable), and
(iii) without expense materially in excess of the amounts provided therefor in the Project
Budget by Borrowers or such other Person.




          (d) No Permit listed in Part I of the Permit Schedule shall be subject to any restriction,
condition, limitation or other provision which could reasonably be expected to have a Material
Adverse Effect or result in the Project being operated in a manner substantially inconsistent
with the assumptions underlying the Base Case Project Projections.



               3.1.15 Absence of Litigation. No action, suit, investigation, or legal or arbitral proceeding
shall have been instituted and be pending, or, to Borrowers’ knowledge threatened, against
Borrowers. No action, suit, proceeding or investigation shall have been instituted and be pending,
or, to Borrowers’ knowledge, threatened, against any other Major Project Participant that could
reasonably be expected (either individually or in the aggregate) to have a Material Adverse Effect.



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               3.1.16 Payment of Fees. All taxes, fees and other costs payable in connection with the
execution, delivery, recordation and filing of the documents and instruments referred to in this
Section 3.1 and due on the Closing Date shall have been paid in full or, if and in the manner
specifically approved by the Lenders, provided for. Borrowers shall have paid (or caused to be
paid) or shall have made arrangements in the manner reasonably satisfactory to the payee for the
payment from the proceeds of the initial disbursement of the Loans of all outstanding amounts due,
as of the Closing Date, and owing to (a) the Secured Parties under any fee or other letter or
otherwise pursuant to Section 2.4, and (b) the Secured Parties’ attorneys and consultants
(including the Independent Consultants) and the Title Insurer for all services rendered and billed
prior to the Closing Date.



               3.1.17 Financial Statements. Delivery to Administrative Agent of accurate and complete copies
of the most recent (a) unaudited annual financial statements of each Sponsor Entity for the year
ended December 31, 2005 and (b) unaudited quarterly financial statements of each Sponsor Entity for
the fiscal quarter ended on June 30, 2006, together with, in the case of Borrowers, a certificate
from the appropriate Responsible Officer thereof, dated as of the Closing Date and in substantially
the form of Exhibit F-1, stating that no material adverse change in the consolidated
assets, liabilities, operations or financial condition of such Person has occurred from those set
forth in the most recent financial statements provided to Administrative Agent.



               3.1.18 Collateral Requirements. Delivery to Administrative Agent of evidence reasonably
satisfactory to Administrative Agent that Borrowers or other applicable Lien grantor has taken or
caused to be taken all such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be made all such filings and
recordings that may be necessary or, in the opinion of Administrative Agent, desirable in order to
create in favor of Collateral Agent a valid and (upon such filing and recording) perfected first
priority Lien in the Collateral. Such actions shall include delivery to Administrative Agent of:




          (a) all pledged securities, including all certificates, agreements or instruments
representing or evidencing the accompanied by instruments of transfer and stock powers undated
and endorsed in blank;




          (b) all promissory notes or other instruments (duly endorsed, where appropriate, in a
manner reasonably satisfactory to Administrative Agent) evidencing any Collateral;




          (c) all other certificates, agreements, including control agreements, or instruments
necessary to perfect Collateral Agent’s security interest in all Chattel Paper, all Instruments,
all Deposit Accounts and all Investment Property of Borrowers (as each such term is defined in
the Security Agreement and to the extent required by the Security Agreement);




          (d) (i) a UCC report of a date no less recent than 10 Business Days before the Closing Date
for each of the jurisdictions in which the UCC-1 financing statements and the fixture filings
are intended to be filed in respect of the Collateral, showing that upon due



34









 







filing or recordation (assuming such filing or recordation occurred on the date of such
respective reports), as the case may be, the security interests created under the Collateral
Documents, with respect to the Collateral, will be prior to all other financing statements,
fixture filings or other security documents wherein the security interest is perfected by filing
or recording in respect of the Collateral, and (ii) UCC termination statements duly executed (if
required) by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements, fixture filings or other security
documents disclosed in such search (other than any such financing statements, fixture filings or
other security documents in respect of any Liens on the Real Property which are exceptions to
title in the Title Policy);




          (e) UCC financing statements in appropriate form for filing under the UCC, filings with the
United States Patent and Trademark Office and United States Copyright Office and, where
appropriate, fixture filings or consignment filings, as the case may be, and such other
documents under applicable Legal Requirements in each jurisdiction as may be necessary or
appropriate or, in the opinion of Administrative Agent, desirable to perfect the first priority
Liens created, or purported to be created, by the Collateral Documents and, with respect to all
UCC financing statements required to be filed pursuant to the Credit Documents, evidence
satisfactory to Administrative Agent that Borrowers have retained, at their sole cost and
expense, a service provider acceptable to Administrative Agent for the tracking of all such
financing statements and notification to Administrative Agent of, among other things, the
upcoming lapse or expiration thereof;




          (f) certified copies of UCC, United States Patent and Trademark Office and United States
Copyright Office, tax and judgment lien searches, bankruptcy and pending lawsuit searches or
equivalent reports or searches, each of a recent date listing all effective financing
statements, lien notices or comparable documents that name Borrowers as debtor and that are
filed in those state and county jurisdictions in which any property of Borrowers are located and
the state and county jurisdictions in which Borrowers are organized or maintains their principal
place of business and such other searches that Administrative Agent deems necessary or
appropriate, none of which encumber the Collateral covered or intended to be covered by the
Collateral Documents (other than Permitted Liens or any other Liens acceptable to Administrative
Agent);




          (g) an opinion of counsel (which counsel shall be reasonably satisfactory to Administrative
Agent) under the laws of the jurisdiction of organization of Borrowers and each other applicable
grantor under a Collateral Document with respect to the perfection of the security interests in
favor of Collateral Agent in personal or mixed property Collateral and such other matters
governed by the laws of such jurisdiction regarding such security interests as Collateral Agent
may reasonably request, in each case in form and substance reasonably satisfactory to
Administrative Agent; and




          (h) evidence reasonably satisfactory to Administrative Agent of payment or arrangements for
payment by Borrowers of all applicable recording taxes, registration fees or charges, filing
costs and other similar expenses, if any, required to be paid in connection with the execution,
delivery, filing, or perfection of any Operative Document or otherwise in connection with the
Collateral, except to the extent that Borrowers have provided



35









 







Administrative Agent with reasonably satisfactory assurances that such duties, fees, costs
and charges, if any, will be paid in full from the proceeds of the initial Loan disbursement.



               3.1.19 Project Budget. Delivery to Administrative Agent of a budget in substantially the form
of Exhibit G-2 (the “Project Budget”) for all anticipated costs to be incurred in
connection with the development, construction, installation, timing and start-up of the Project,
which Project Budget shall be satisfactory to Administrative Agent and the Lenders.



               3.1.20 Base Case Project Projections. Delivery to Administrative Agent of a projection of
operating results for the Project over a period commencing on January 1, 2008 and ending on
December 31, 2027, (a) showing at a minimum (i) Borrowers’ reasonable good faith estimates, as of
the Closing Date, of revenues, operating expenses, the Debt Service Coverage Ratio (which Debt
Service Coverage Ratio shall be calculated on an annual basis, assuming a mortgage-style
amortization of the Term Loans, with the first Payment Date after Term-Conversion occurring on
April 1, 2008, and the final Payment Date occurring on January 1, 2026), (ii) that the average
projected annual Debt Service Coverage Ratio is not less than the Target Average DSCR over the
period covered, (iii) that the projected minimum Debt Service Coverage Ratio is not less than the
Target Minimum DSCR for any year in such period, and (b) otherwise in form and substance
satisfactory to Administrative Agent and the Lenders, which projection is attached as Exhibit
G-3 (the “Base Case Project Projections”).



               3.1.21 Fuel. Delivery to Administrative Agent of the Fuel Supply Plan; and Renegy shall have
entered into sufficient type and quantity of fuel procurement agreements to ensure that the Fuel
Stockpile will be in place by the Term-Conversion Date.



               3.1.22 No Material Adverse Change. Administrative Agent shall have received a certificate
from a Responsible Officer of Borrowers stating that since June 30, 2006, no event, circumstance or
condition shall have occurred and be continuing (and the Lenders shall have become aware of no such
facts or conditions not previously known) that constitutes or could reasonably be expected to
result in a Material Adverse Effect.



               3.1.23 Surveys. Administrative Agent shall have received surveys of the Site (which surveys
shall be reasonably current and in form and substance reasonably satisfactory to Administrative
Agent and the Title Insurer), certified to Borrowers, Administrative Agent and the Title Insurer by
a licensed surveyor reasonably satisfactory to Administrative Agent, showing such matters as shall
be necessary for the Title Insurer to issue to the Secured Parties the Title Policy described in
Section 3.1.24 (the “Site Survey”).



               3.1.24 Title Policy. Delivery to Administrative Agent of a lender’s A.L.T.A. extended
coverage policy of title insurance (with any standard coverage exception reasonably acceptable to
Administrative Agent but without a mechanics’ and materialmen’s exception included therein, except
where applicable Governmental Rules prevent the deletion of such exception, in which case the
Sponsor shall provide the Title Insurer with any affidavits or indemnities (with respect to which
Borrowers shall have no reimbursement obligations) necessary to cause the Title Insurer to issue
affirmative coverage for mechanics’ and materialmens’ liens in form and substance reasonably
satisfactory to Administrative Agent)), together with such endorsements thereto as shall be
reasonably required by Administrative



36









 







Agent, or the unconditional and irrevocable commitment of the Title Insurer to issue such a
policy, dated as of the Closing Date, in an amount equal to $52,997,983 (with such reinsurance as
is reasonably satisfactory to Administrative Agent) issued by the Title Insurer in form and
substance satisfactory to Administrative Agent.



               3.1.25 Real Estate Requirements. Delivery to Administrative Agent of:




          (a) The Mortgage encumbering the Mortgaged Property in favor of Collateral Agent, duly
executed and acknowledged by Borrowers, and otherwise in form for recording in the recording
office of each applicable political subdivision where the Real Property is situated, together
with such certificates, affidavits, questionnaires or returns as shall be required by such
political subdivision in connection with the recording or filing thereof to create a lien under
applicable law, and such financing statements and any other instruments necessary to grant a
mortgage lien under the laws of any applicable jurisdiction;




          (b) with respect to the Mortgaged Property, such consents, approvals, amendments,
supplements, estoppels, tenant subordination agreements or other instruments as necessary to
consummate the transactions hereunder contemplated or as shall reasonably be deemed necessary by
Administrative Agent in order for the owner or holder of the fee or leasehold interest
constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect
to such Mortgaged Property;




          (c) with respect to the Mortgaged Property, such affidavits, certificates, information
(including financial data) as shall be required to induce the Title Company to issue the Title
Policy (or commitment) and endorsements contemplated above;




          (d) evidence reasonably acceptable to Administrative Agent of payment by Borrowers of all
Title Policy premiums, search and examination charges, and related charges, mortgage recording
taxes, fees, charges, costs and expenses required for the recording of the Mortgages and
issuance of the Title Policies referred to above;




          (e) with respect to any Real Property in which Borrowers hold possession by lease, both (i)
any agreement by the fee owner to obtain a nondisturbance agreement from each lienholder against
the fee interest in such Real Property, and (ii) a nondisturbance agreement from any such
existing lienholder, in each case in form and substance reasonably satisfactory to
Administrative Agent; and




          (f) evidence reasonably acceptable to Administrative Agent that Borrowers and each other
Major Project Participant have obtained and hold all easements or other possessory rights in
real estate, together with necessary real property permits and crossing rights (collectively,
“Rights of Way”) necessary for (i) performance in full of each such Person’s obligations
under the Operative Documents to which such Person is a party and each Permit to which such
Person or its assets is bound by, and (ii) the development, leasing, construction and operation
the Project in accordance with the Base Case Project Projections. The use of such Rights of Way
shall not encroach on or interfere with property adjacent to such Rights of Way or existing
easements or other rights (whether on, above or



37









 







below ground) (unless permitted pursuant to the terms of the Rights of Way) and the full
length of the Rights of Way shall be continuous, without break, gap or interruption.



               3.1.26 Regulatory Status. Delivery to Administrative Agent of all necessary approvals from
any Governmental Authority in respect of each of the PPAs, to the extent applicable.



               3.1.27 Construction Arrangements. All contracts necessary for construction of the Project
shall be in place in full force and effect, and all applicable contractors shall have been given an
unconditional notice to proceed, in each case other than as set forth on Exhibit G-7.



               3.1.28 Establishment of Accounts. The Accounts required to be established as of the Closing
Date for the Project under Article 7 shall have been established to the satisfaction of
Administrative Agent.



               3.1.29 Representations and Warranties. Each representation and warranty of Borrowers and each
other Sponsor Entity under the Credit Documents shall be true and correct as of the Closing Date.



               3.1.30 No Default. Borrowers and each other Sponsor Entity shall be in compliance in all
material respects with all the terms and provisions set forth in each Credit Document and Major
Project Document on its part to be observed or performed, and no Event of Default or Default shall
have occurred and be continuing as of the Closing Date.



               3.1.31 Utilities. Delivery to Administrative Agent of reasonably satisfactory evidence that
all potable water, sewer, telephone, electric and all other utility services necessary for the
development, construction, ownership and operation of the Project are either contracted for, or
readily available on commercially reasonable terms, at the Project.



               3.1.32 Project Schedule. Delivery to Administrative Agent of the Project Schedule in
substantially the form of Exhibit G-4 (the “Project Schedule”), which shall be
reasonably satisfactory to Administrative Agent.



               3.1.33 Consents. Delivery to Administrative Agent of executed Consents from each of the
Persons set forth on Exhibit E-2 (the “Schedule of Closing Date Consents”), in form
and substance reasonably satisfactory to Administrative Agent.



               3.1.34 Due Diligence. The Lenders shall have completed a due diligence investigation of
Borrowers in scope, and with results, satisfactory to the Lenders.



               3.1.35 Other Documents. Delivery to Administrative Agent of such other documents as
Administrative Agent or any Lender may reasonably request.



               3.1.36 Completion of Proceedings. All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Administrative Agent, acting on behalf of the Lenders, and its
counsel shall be reasonably satisfactory in form and substance to



38









 







Administrative Agent and such counsel, and Administrative Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.



               3.1.37 Anti-Terrorism Compliance. At least two Business Days prior to the Closing Date,
Administrative Agent shall have received all documentation and other information requested by
Administrative Agent, which is required by bank regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the U.S.A. Patriot Act.



               3.1.38 Swap Agreements. SWMP shall have entered into the Swap Agreements.



               3.1.39 Bank Equity Interest. The Borrowers shall have acquired $1,000 of Bank Equity
Interest.



          3.2
Conditions Precedent to Each Credit Event. The obligation of each Lender to allow
any Credit Event is subject to the occurrence of the Closing Date and prior satisfaction (or
written waiver by Administrative Agent with the consent of the Majority Lenders) of each of the
following conditions:



               3.2.1 Representations and Warranties.




          (a) Each representation and warranty of Borrowers and each other Sponsor Entity in any of
the Credit Documents shall be true and correct in all material respects (except that any
representation and warranty that is qualified as to “materiality” or “Material Adverse Effect”
shall be true and correct in all respects) on and as of the date of such Credit Event, before
and after giving effect to the applicable Borrowing, with the same effect as though made on and
as of such date, unless such representation or warranty expressly relates solely to an earlier
date.




          (b) Each representation and warranty of each Major Project Participant contained in the
Operative Documents (other than this Agreement) shall be true and correct in all material
respects (except that any representation and warranty that is qualified as to “materiality” or
“Material Adverse Effect” or the like shall be true and correct in all respects) on and as of
the date of such Credit Event, before and after giving effect to the Credit Event, with the same
effect as though made on and as of such date, unless such representation and warranty expressly
relates solely to an earlier date.



               3.2.2 No Default. No Event of Default or Default shall have occurred and be continuing or
will result from the relevant Credit Event.



               3.2.3 No Material Adverse Effect. Since the Closing Date, no event, circumstance or condition
shall have occurred and be continuing (and the Lenders shall have become aware of no such facts or
conditions not previously known) that constitutes or could reasonably be expected to result in a
Material Adverse Effect.



39









 





               3.2.4 Additional Documentation. With respect to Additional Project Documents entered into or
obtained, transferred or required (whether because of the status of the development, construction
or operation of the Project or otherwise) since the date of the most recent Credit Event, there
shall be (a) redelivery of such matters as are described in Section 3.1.6(b) to the extent
applicable to such Additional Project Documents, and (b) if reasonably requested by Administrative
Agent, delivery of such matters as are described in Sections 3.1.1, 3.1.8 and 3.1.18 from Borrowers
and any other applicable Sponsor Entity; provided, that references to such matters being
satisfactory to Administrative Agent shall, for purposes of this Section 3.2.4, be deemed to be
references to such matters being reasonably satisfactory to Administrative Agent.



               3.2.5 Pro Forma Financial Statements. Within 30 days after the Closing Date, delivery to
Administrative Agent of unaudited pro forma income statement, balance sheet, cash flow statement
and reconciliation of net worth of Borrowers as of the Closing Date.



          3.3 Conditions Precedent to Each Construction Credit Event. The obligation of each
Lender to make each Construction Loan (including the first Construction Loan and the Final
Construction Drawing) on the occasion of each Borrowing and each withdrawal of funds from the
Construction Fund (each such Borrowing of Construction Loans and withdrawal of funds, a
“Construction Credit Event”), is subject to the occurrence of the Closing Date and prior
satisfaction (or written waiver by Administrative Agent with the consent of the Majority Lenders)
of each of the following conditions:



               3.3.1 Notice of Borrowing; Calculations. If the Construction Credit Event is a Construction
Loan, SWMP shall have delivered a Notice of Borrowing to Administrative Agent in accordance with
the procedures specified in Section 2.1.1(b).



               3.3.2 Drawdown Certificate and Independent Engineer’s Drawdown Certificate.




          (a) At least six Business Days prior to each Construction Credit Event, Borrowers shall
have provided Administrative Agent and the Independent Engineer with a duly executed copy of the
Drawdown Certificate, dated the date of delivery of such certificate, setting forth the date of
the proposed occurrence of such Construction Credit Event and signed by a Responsible Officer of
Borrowers.




          (b) At least four Business Days prior to each Construction Credit Event, the Independent
Engineer shall have provided Administrative Agent with a certificate of the Independent
Engineer, dated the date of delivery of such certificate, setting forth the date of the proposed
occurrence of such Construction Credit Event and signed by an authorized representative of the
Independent Engineer, substantially in the form of Exhibit C-5 (the “Independent
Engineer’s Drawdown Certificate”).




          (c) Borrowers shall use all reasonable efforts to provide Administrative Agent and the
Independent Engineer with drafts of any certificates and other materials to be
delivered pursuant to this Section 3.3.2 in advance of the time frames listed above as
reasonably requested in writing by Administrative Agent.



40









 





               3.3.3 Amount. The making of each applicable Construction Credit Event shall be in such
amounts as shall ensure that (a) uncommitted funds remaining in the Construction Account shall be
disbursed to the greatest extent possible, subject to the requirements of Section 2.1.1(b)(ii) and
(b) equity contributions to Project Costs shall be not less than 15% of Project Costs to-date.



               3.3.4 Title Policy Endorsements. Borrowers shall provide, or Administrative Agent shall be
adequately assured, that the Title Insurer is committed at the time of each Construction Credit
Event to issue to Administrative Agent, a date-down endorsement of the Title Policy dated as of the
date of Borrowing of such Construction Credit Event, insuring the continuing first priority of the
Mortgage (subject only to (a) the exceptions to title contained in the title policy delivered
pursuant to Section 3.1.25, (b) Permitted Liens described in clause (a) or (b) of the definition
thereof (to the extent the same are afforded priority over the Lien of the Mortgage by operation of
law) and (c) any other exceptions to title as are reasonably acceptable to Administrative Agent)
and otherwise in form and substance reasonably satisfactory to Administrative Agent.



               3.3.5 Lien Releases. Subject to Borrowers’ right to contest liens as described in the
definition of “Permitted Liens”, Borrowers shall have delivered to Administrative Agent duly
executed acknowledgments of payments and releases of mechanics’ and materialmen’s liens, sufficient
to cause the Title Insurer to issue a “date-down” mechanics lien endorsement insuring the priority
of the Mortgage over all mechanics liens; provided, however, that such releases may
be conditioned upon receipt of payment with respect to work, services and materials to be paid for
with the proceeds of the requested Construction Credit Event or disbursement of non-Loan proceeds,
as applicable.



               3.3.6 Acceptable Work; No Liens. All work that has been done on the Project has been done in
a good and workmanlike manner and in accordance with each Construction Contract, and there shall
not have been filed against any of the Collateral or otherwise filed with or served upon Borrowers
with respect to the Project or any part thereof, notice of any Lien, claim of Lien or attachment
upon or claim affecting the right to receive payment of any of the moneys payable to any of the
Persons named on such request which has not been released by payment or bonding or otherwise or
which will not be released with the payment of such obligation out of such Construction Loan or
non-Loan proceeds, other than Permitted Liens.



               3.3.7 Available Construction Funds. After taking into consideration the making of the
applicable Construction Credit Event, Administrative Agent (based on consultation with the
Independent Engineer) shall have reasonably determined that Available Construction Funds shall not
be less than the aggregate unpaid amount required to cause the Completion Date to occur in
accordance with all Legal Requirements, the Construction Contracts, each other Project Document
pursuant to which construction work with respect to the Project is being performed and the Credit
Documents prior to the Date Certain and to pay or
provide for all anticipated non-construction Project Costs, all as set forth in the
then-current Project Budget.



41









 





               3.3.8 Use of Equity. With respect to Credit Events occurring after the Closing Date and first
Borrowing, delivery to Administrative Agent within 10 Business Days after the Closing Date of
reasonably satisfactory evidence that $14,566,559 has been contributed to payment of Project Costs
by Sponsor or any Pledgor.



          3.4 Conditions Precedent to Term-Conversion. No Construction Loans shall Term-Convert
unless the following conditions shall have been satisfied or waived in writing by Administrative
Agent with consent of the Majority Lenders (the date such conditions are so satisfied or waived
being referred to as the “Term-Conversion Date”):



               3.4.1 Operative Documents. Each Credit Document and Major Project Document (including each
Major Project Document with warranty or indemnification obligations then in effect), shall remain
in full force and effect in accordance with its terms (except for any Major Project Document that
has expired or been terminated in accordance with the terms thereof) and, if applicable, the terms
of the relevant Consent.



               3.4.2 Payment of Obligations. Borrowers shall have paid to Administrative Agent the principal
amount of the Construction Loans outstanding which will not be Term-Converted to Term Loans as
provided in Section 2.1.2, plus all interest due and owing through such date on such Construction
Loans and all other Obligations of Borrowers due and owing through such date to the Secured Parties
under the Credit Documents.



               3.4.3 Final Construction Drawing.




          (a) Prior to Term-Conversion, Borrowers shall have, subject to satisfaction of the
conditions set forth in Sections 3.2 and 3.2.5, made a drawing up to any then-remaining
Available Construction Loan Commitment (the “Final Construction Drawing”) in an amount
equal to, when aggregated with any amounts then on deposit (or being simultaneously deposited)
in the Construction Account immediately prior to such Final Construction Drawing, the amount
necessary to fund in full the payments for Punchlist and other items necessary to achieve Final
Completion.




          (b) If, after giving effect to the making of the Final Construction Drawing, the Debt to
Equity ratio is less than 85:15, then, subject to satisfaction of the conditions set forth in
Section 3.2 and 3.3, Borrower may draw an additional Construction Loan in an amount up to the
lesser of (i) the amount of the then-remaining Available Construction Loan Commitment and (ii)
an amount which, after giving effect to the making of such additional drawing, yields a Debt to
Equity ratio of 85:15. For purpose of the foregoing sentence, “Debt” means the principal
component of the Letter of Credit, the principal amount of all Construction Loans and the
principal amount of all Renegy Term Loans; and “Equity” means all equity funds applied to the
payment of Project Costs, but not including pre-Term-
Conversion revenues. The proceeds of such Construction Loan may be paid directly to the
Sponsor.



               3.4.4 Notice of Completion. Borrowers shall have delivered to Administrative Agent, in form
and substance reasonably satisfactory to Administrative Agent:



42









 






          (a) evidence that (i) all work with respect to the Project requiring inspection by
municipal and other Governmental Authorities having jurisdiction has been duly inspected and
approved by such authorities to the extent required by applicable Legal Requirements (other than
with respect to violations of the Original Air Permit solely to the extent addressed by the
Major Source Permit); (ii) to the extent required by applicable Legal Requirements, Borrowers
have duly recorded a notice of completion for the Project and all parties performing such work
have been or will be paid for such work (other than with respect to disputed amounts which,
should resolution fall in favor of the party performing such work, Sponsor shall pay pursuant to
the Sponsor Guaranty and with respect to violations of the Original Air Permit solely to the
extent addressed by the Major Source Permit); and (iii) no mechanics’ and/or materialmen’s liens
or application therefor have been filed and all applicable filing periods for any such
mechanics’ and/or materialmen’s liens have expired; provided, however, that in
the event (A) Borrowers deliver to Administrative Agent either (1) a policy of title insurance
or endorsement thereto, in form and substance satisfactory to Administrative Agent, insuring
against loss arising by reason of any mechanics’ or materialmen’s lien gaining priority over the
Mortgage, if any, (2) a bond, in form and substance satisfactory to Administrative Agent, in the
amount of all payments owed to such contractor, subcontractor or other Person performing work on
the Project pursuant to a Project Document as to whom the filing periods for mechanics’ and
materialmen’s liens have not expired, and covering Borrowers’ liability to such contractors,
subcontractors and other Persons, or (3) all such contractors, subcontractors and other Persons
have signed lien releases in the form attached to the relevant Project Document or otherwise in
form and substance reasonably acceptable to Administrative Agent, or (B) Sponsor provides
written confirmation to Administrative Agent that funds are available pursuant to the Sponsor
Guaranty for payment of all disputed amounts in connection with such mechanics’ or materialmen’s
liens, then Administrative Agent shall waive the conditions referred to in clause (iii) above;




          (b) a certification by SWMP, confirmed by the Independent Engineer, that Commercial
Operation and Completion have occurred; and




          (c) other certifications and confirmations by the Independent Engineer as reasonably
requested by the Administrative Agent.



               3.4.5 Commercial Operation; Boiler Performance. Commercial Operation shall have occurred and
either the boilers shall have passed the boiler performance guaranties set forth in the Boiler
Purchase Contract or B&W shall have paid the performance liquidated damages required by the Boiler
Purchase Contract and such liquidated damages, together with amounts payable pursuant to Section
1(c) of the Sponsor Guaranty shall have been applied to the repayment of Construction Loans.



               3.4.6 Annual Budget. Administrative Agent shall have received the Annual Operating Budget as
required under Section 5.15.3 for the period from the Term-Conversion Date through the end of the
calendar year in which Term-Conversion is to occur; provided, that if such period is less
than three months, Administrative Agent shall have also received the Annual Operating Budget for
the first full calendar year thereafter. In the event that such Annual Operating Budget does not,
in Administrative Agent’s reasonable opinion acting in



43









 





consultation with the Independent Engineer,
properly reflect the operation of the Project during such calendar year as a result of the actual
date of Term-Conversion being different from the date anticipated therefor and set forth in such
Annual Operating Budget, Administrative Agent shall have received an amendment to such Annual
Operating Budget properly reflecting the actual date of Term-Conversion upon written request to
Borrowers for the same.



               3.4.7 Regulatory Status. Delivery to Administrative Agent of (a) an order issued by FERC
confirming that the Project is an Eligible Facility and that SWMP is an Exempt Wholesale Generator,
(b) an order issued by FERC authorizing SWMP to sell electricity at market-based rates, and (c) all
necessary approvals from any Governmental Authority in respect of the Interconnection Agreement and
each of the PPAs, to the extent applicable.



               3.4.8 Insurance. Insurance complying with the requirements of Section 5.17 shall be in full
force and effect and, upon the request of Administrative Agent, evidence thereof shall be provided
to Administrative Agent (which evidence shall be reasonably satisfactory to Administrative Agent).



               3.4.9 DSR Account Funded. The amount on deposit in the DSR Account shall be not less than the
DSR Requirement.



               3.4.10 Permits.




          (a) Each Applicable Permit and Applicable Third Party Permit shall have been duly obtained
or been assigned in Borrowers’ or the applicable third party’s name, shall be in full force and
effect, shall not be subject to any current legal proceeding, and shall not be subject to any
Unsatisfied Condition that could reasonably be expected to result in material modification or
revocation of such Applicable Permit and Applicable Third Party Permit (other than with respect
to violations of the Original Air Permit solely to the extent addressed by the Major Source
Permit), and all applicable appeal periods with respect to such Applicable Permit and Applicable
Third Party Permit shall have expired.




          (b) Except as disclosed in the Permit Schedule, the Permits which have been obtained by
Borrowers or any other Person as identified in the Permit Schedule shall not be subject to any
restriction, condition, limitation or other provision that could reasonably be expected to have
a Material Adverse Effect (other than with respect to violations of the Original Air Permit
solely to the extent addressed by the Major Source Permit).



               3.4.11 Term Notes. Borrowers shall have delivered duly executed Term Notes to each Lender, if
any, that shall have requested such Term Notes pursuant to Section 2.1.6 or Section 12.17.2(f).



               3.4.12 Surveys. Administrative Agent shall have received an update to the Site Survey
constituting an as-built survey reflecting all improvements to the Real Property in connection with
the construction of the Project, and otherwise meeting all of the requirements of the Site Survey.



               3.4.13 Fuel Stockpile. The Fuel Stockpile shall be in place.



44









 





               3.4.14 Term Title Policy. Administrative Agent shall have received such endorsements to the
Title Policy as it shall reasonably require (such endorsements being collectively referred to as
the “Term Title Policy”), insuring the continued first priority Lien on the Mortgaged
Property evidenced by the Mortgage (without a mechanics’ and materialmen’s exception included in
such title policy), and such other matters as Administrative Agent may reasonably request.



               3.4.15 Proceeds from Tax Equity Investment. As repayment of certain Project Costs that were
paid by Project Revenues prior to Term-Conversion (rather than by Sponsor pursuant to Section 1(a)
of the Sponsor Guaranty), Renegy Holdings shall have deposited or shall have caused a deposit of
$1,742,269.56 into the Revenue Account.



               3.4.16 Settlement Agreement. Borrowers shall have (i) provided Administrative Agent with a
copy of that certain Amendment No. 4 to Lease between SWMP and Catalyst and that certain Settlement
Agreement and (ii) paid Catalyst the outstanding settlement amount in accordance with the
Settlement Agreement.



          3.5 No Approval of Work. The making of any Loan hereunder shall in no event be deemed an
approval or acceptance by any Secured Party of any work, labor, supplies, materials or equipment
furnished or supplied with respect to the Project.



          3.6 Adjustment of Drawdown Requests. In the event Administrative Agent determines that
an item or items listed in a Drawdown Certificate as a Project Cost is or are not properly included
in such Drawdown Certificate, Administrative Agent may in its reasonable discretion cause to be
made a Loan or Loans in the amount requested in such Drawdown Certificate less the amount of such
item or items or may reduce the amount of Loans made pursuant to any subsequent Drawdown
Certificate. In the event that Borrowers prevail in any dispute as to whether such Project Costs
were properly included in such Drawdown Certificate, Loans in the amount requested but not
initially made shall forthwith be made.



          3.7 Determinations Under Section 3.1. For purposes of determining satisfaction of the
conditions set forth in Section 3.1, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless Administrative Agent shall
have received notice
from such Lender prior to the contemplated Closing Date, as notified by Borrowers to the
Lenders, specifying its objection thereto, Administrative Agent shall promptly notify the Lenders
of the actual occurrence of the Closing Date.



ARTICLE 4

REPRESENTATIONS AND WARRANTIES




          Borrowers make the following representations and warranties to and in favor of the Secured
Parties as of the Closing Date (unless such representation and warranty expressly relates solely to
another time) and, to the extent set forth in Article 3, as of the date of each Credit Event, all
of which shall survive the execution and delivery of this Agreement, the Closing Date and the
making of the Loans:



45









 





          4.1 Organization. Each of Borrowers is (a) a limited liability company duly organized,
validly existing and in good standing (to the extent such concept is applicable in the applicable
jurisdiction) under the laws of Arizona and (b) is duly qualified as a foreign limited liability
company, and is in good standing, in each jurisdiction in which such qualification is required by
law. Each of Borrowers has all requisite power and authority to (i) own or hold under lease and
operate the property it purports to own or hold under lease, (ii) carry on its business as now
being conducted and as now proposed to be conducted in respect of the Project, (iii) execute,
deliver and perform each Operative Document to which it is a party and (iv) take each action as may
be necessary to consummate the transactions contemplated hereunder and thereunder.



          4.2 Authorization; No Conflict. The execution, delivery and performance by Borrowers of
the Operative Documents to which each of the Borrowers is a party are within each of the Borrower’s
power, authority and legal right and have been duly authorized by all necessary action. Each of
Borrowers has duly executed and delivered each Operative Document to which Borrowers are a party
(or such Operative Documents have been duly and validly assigned to Borrowers and Borrowers have
authorized the assumption thereof, and has assumed the obligations of the assignor thereunder) and
neither Borrowers’ execution and delivery thereof nor their consummation of the transactions
contemplated thereby nor their compliance with the terms thereof (a) does or will contravene the
Governing Documents or any other Legal Requirement applicable to or binding on Borrowers or any of
their properties, (b) does or will contravene or result in any breach of or constitute any default
under, or result in or require the creation of any Lien (other than Permitted Liens) upon any of
their property under, any agreement or instrument to which any of them is a party or by which they
or any of their properties may be bound or affected, (c) does or will violate or result in a
default under any indenture, credit agreement, loan, lease or other agreement or instrument binding
upon Borrowers or their properties, or (d) does or will require the consent or approval of any
Person, and with respect to any Governmental Authority, does or will require any registration with,
or notice to, or any other action of, with or by any applicable Governmental Authority, in each
case which has not already been obtained and disclosed in writing to Administrative Agent (except
as set forth in Part II(A) of the Permit Schedule or otherwise provided in Sections 4.9.1 and
4.9.2).



          4.3 Enforceability. As of each date on which this representation and warranty is made or
deemed made, each of the Operative Documents to which Borrowers are a party is a legal, valid and
binding obligation of Borrowers, enforceable against Borrowers in accordance with its terms. None
of the Operative Documents to which Borrowers are a party has been amended or modified after the
Closing Date except in accordance with this Agreement.



          4.4 Compliance with Law. There are no material violations by Borrowers or, to Borrowers’
knowledge, any Sponsor Entity, of any Legal Requirement. Except as otherwise have been delivered
to Administrative Agent, no notices of any material violation of any Legal Requirement relating to
the Project or the Site have been issued, entered or received by Borrowers or, to Borrowers’
knowledge, any Sponsor Entity.



46









 






          4.5 Single Purpose, Debt, Contracts, Joint Ventures, Proceeds, Etc.



               4.5.1 Borrowers have not conducted any business other than the business contemplated by the
Operative Documents, do not have any outstanding Debt or other material liabilities other than
pursuant to or allowed by the Operative Documents, and Borrowers are not a party to or bound by any
material contract other than the Credit Documents and the Major Project Documents to which they are
a party.



               4.5.2 Borrowers are not a general partner or a limited partner in any general or limited
partnership or a joint venturer in any joint venture.



               4.5.3 Borrowers do not have any Subsidiaries.



               4.5.4 The proceeds of each Loan received by Borrowers prior to, or concurrently with, the date
on which this representation and warranty is made or deemed made has been or will be used solely in
accordance with, and solely for the purposes contemplated by, Section 5.1.



               4.5.5 Borrowers have no obligation to any Person in respect of any finder’s, broker’s or
investment banking fee with respect to the Operative Documents or the transactions contemplated
thereby or under any other agreement, document or instrument with any Person, other than fees
payable under this Agreement.



               4.5.6 No proceeds of any Loan will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Exchange Act.



          4.6 Adverse Change.



               4.6.1 As of the Closing Date, there is no fact known to Borrowers which has had or could
reasonably be expected to have a Material Adverse Effect which has not been disclosed in writing to
Administrative Agent or the Lenders (as of such date )by or on behalf of
Borrowers on or prior to the Closing Date in connection with the transactions contemplated
hereby.



               4.6.2 Since the Closing Date, there has occurred no material adverse change in the Project
Schedule or in the economics or feasibility of developing, constructing, owning or operating the
Project. Since the Closing Date, no event, circumstance or condition shall have occurred and be
continuing that constitutes or could reasonably be expected to result in a Material Adverse Effect.



          4.7 Investment Company Act. None of Borrowers nor any other Sponsor Entity is an
“investment company” or a company “controlled by” an “investment company”, each within the meaning
of, or subject to regulation under, the Investment Company Act of 1940, as amended.



          4.8 ERISA. There are not and have never been any ERISA Plans or Multiemployer Plans for
any Sponsor Entity or any ERISA Affiliate.



47









 





          4.9 Permits.



               4.9.1 There are no Permits under existing Legal Requirements with respect to the Project as it
is currently designed that are or will become Applicable Permits other than the Permits listed in
the Permit Schedule (as such Exhibit may be supplemented by Borrowers to reflect any Change of Law
or the issuance or modification of any Permit after the Closing Date). All Permits which are
Applicable Permits or Applicable Third Party Permits have been issued and are in full force and
effect and not subject to current legal proceedings or to any Unsatisfied Condition that could
reasonably be expected to result in material modification or revocation, all applicable appeal
periods with respect thereto have expired, and the permittee thereunder is in compliance therewith
in all material respects; provided that, for so long as the Borrowers are in
compliance with Section 5.25, the violations of the Original Air Permit solely to the extent
addressed by the Major Source Permit shall not render this Section 4.9 false or incorrect in any
respect.



               4.9.2 With respect to any of the Permits (other than the Major Source Permit) which are not
yet Applicable Permits, no fact or circumstance exists, and with respect to Applicable Third Party
Permits, to Borrower’s knowledge, no fact or circumstance exists, which makes is likely that any
such Permit will not be timely obtainable by Borrowers or the applicable Person identified in the
Permit Schedule (i) prior to the time that it becomes an Applicable Permit or Applicable Third
Party Permit, as applicable, (ii) without delay materially in excess of the time periods thereof in
the Project Schedule (if applicable) and (iii) without expense materially in excess of the amounts
provided therefor in the then-current Project Budget.



               4.9.3 Except as disclosed in the Permit Schedule, the Permits which have been obtained by
Borrowers or, to Borrowers’ knowledge, any other person identified in the Permit Schedule shall not
be subject to any restriction, condition, limitation or other provision
that could reasonably be expected to have a Material Adverse Effect (other with respect to
limitations under the Original Air Permit solely to the extent addressed by the Major Source
Permit).



          4.10 Hazardous Substances.



               4.10.1 Except as set forth in Exhibit G-6 (the “Hazardous Substances
Disclosure”): (a) Borrowers, with respect to Real Property, are not and have not in the past
been in violation of any Hazardous Substance Law which violation could reasonably be expected (i)
to result in a material liability to, or material Environmental Claims against, Borrowers or their
properties and assets, (ii) result in an inability of Borrowers to perform their obligations under
the Operative Documents, (iii) interfere with the continuing operation of the Project, or (iv)
impair the fair market value of any Mortgaged Property; (b) none of Borrowers nor, to Borrowers’
knowledge, any other Person has used, Released, threatened to Release, generated, manufactured,
produced or stored in, on, under, or about the Real Property, or transported thereto or therefrom,
any Hazardous Substances that could reasonably be expected to subject any Secured Party to
liability, or Borrowers to material liability, under any Hazardous Substance Law; (c) there are no
underground tanks, whether operative or temporarily or permanently closed, located on the Real
Property; (d) there are no Hazardous Substances used, stored or present at or on the Real Property,
except in compliance with Hazardous Substance Laws and



48









 





other Legal Requirements or as disclosed in
the Environmental Report, or as may be naturally-occurring; (e) there are no Hazardous Substances
that could reasonably be expected to migrate onto the Real Property, except in compliance with
Hazardous Substance Laws and other Legal Requirements, as disclosed in the Environmental Report, or
as may be naturally-occurring; and (f) there neither is nor has been any condition, circumstance,
action, activity or event that could reasonably be expected to be, or result in, a material
violation by Borrowers of any Hazardous Substance Law, or to result in liability to any Secured
Party or material liability to Borrowers under any Hazardous Substance Law or any other material
Environmental Claims against Borrowers or any Secured Party.



               4.10.2 Except as set forth on Exhibit G-5 (the “Pending Litigation”) or
Exhibit G-6, with respect to the Real Property, there is no pending or, to Borrowers’
knowledge, threatened in writing action, suit or proceeding under any Hazardous Substance Law by
any Governmental Authority or any other Person which is not a Governmental Authority to which
Borrowers are or will be named as a party.



               4.10.3 With respect to the Real Property, (a) except as set forth in the Environmental Report,
there is no consent or other decree, consent order, administrative or other order, or other
comparable administrative or judicial directive outstanding under any Hazardous Substance Law, and
(b) Borrowers have not received or are aware of any claim or notice of violation, alleged
violation, non-compliance, liability or potential liability, nor do Borrowers have knowledge or
reason to believe that any such action is being contemplated, considered or threatened.



               4.10.4 Except as set forth in the Environmental Report, there are no past violations that have
not been finally resolved or existing violations of any Hazardous Substances Laws by any Person
affecting the Real Property, which violations could reasonably be expected




to result in a material liability to Borrowers. Borrowers have not assumed any liability of
any Person under any Hazardous Substance Law.



               4.10.5 As of the Closing Date, there are no environmental reports, investigations, studies,
audits, reviews or other analyses conducted by or which are in the possession of or known to
Borrowers in relation to the Project other than the Environmental Report.



          4.11 Litigation.



               4.11.1 As of the Closing Date, no action, litigation, suit, proceeding or investigation before
or by any court, arbitrator or other Governmental Authority is pending or, to Borrowers’ knowledge,
threatened in writing by or against Borrowers or any of its properties or revenues (including the
Project Revenues) (i) with respect to the Project, this Agreement, the Notes or any transaction
contemplated hereby or (ii) which could reasonably be expected to have a Material Adverse Effect.



               4.11.2 As of the Closing Date, Borrowers have no knowledge of (i) any action, litigation,
suit, proceeding or investigation before or by any court, arbitrator or other Governmental
Authority pending or threatened in writing by or against any Major Project



49









 





Participant, or by which
any of them or their properties are bound, which if adversely determined would have a Material
Adverse Effect, or (ii) any order, judgment or decree has been issued or proposed to be issued by
any Governmental Authority that, as a result of the construction, development, ownership or
operation of the Project by Borrowers, the sale of electricity therefrom by Borrowers or the
entering into of any Operative Document or any transaction contemplated hereby or thereby, could
reasonably be expected to cause or deem any Secured Party or Borrowers or any Affiliate of any of
them to be subject to, or not exempted from, regulation under PUHCA, or treated as a public utility
under the laws of the Project Jurisdiction as presently constituted and as construed by the courts
of the Project Jurisdiction, respecting the rates or the financial or organizational regulation of
electric utilities.



               4.11.3 As of the Closing Date, no action, litigation, suit, proceeding or investigation before
or by any court, arbitrator or other Governmental Authority is pending to which any Sponsor Entity
that is a party to an Operative Document as of the Closing Date is a party or to which its
business, assets or property is subject that could reasonably be expected to have a Material
Adverse Effect and, to Borrowers’ knowledge, no such action, litigation, suit, proceeding (arbitral
or otherwise) or investigation is threatened to which any such Sponsor Entity or its business,
assets or property would be subject that, in either case, questions the validity of any of the
Operative Documents.



               4.11.4 After the Closing Date, there are no pending or, to Borrowers’ knowledge, threatened
action, litigation, suit, proceeding or investigation of any kind, including actions or proceedings
of or before any Governmental Authority or arbitrator, to which any Sponsor Entity is a party or is
subject, or by which any of them or any of their properties are bound that could reasonably be
expected to have a Material Adverse Effect, which have not been disclosed by Borrowers to
Administrative Agent in accordance with, and to the extent required by, Section 5.4.



          4.12 No Labor Disputes; Acts of God; Force Majeure. Neither the business nor the
properties of Borrowers or, to Borrowers’ knowledge, any other Major Project Participant are
currently affected by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which could reasonably be expected to have a Material
Adverse Effect. Neither Borrowers nor, to Borrowers’ knowledge, any other Major Project
Participant has either given a notice of “force majeure” in respect of any event, condition or
circumstance or received such notice from any other Person that could reasonably be expected to
entitle Borrowers or such notifying Person to excuse, defer or suspend the performance of any of
the obligations of Borrowers or such notifying Person under any Operative Document to which it is a
party on the basis of “force majeure”.



          4.13 Operative Documents.



               4.13.1 As of the Closing Date, copies of all of the Project Documents (other than any Project
Document which is only incidental to the development, construction, leasing, ownership or operation
of the Project) and after the Closing Date, copies of all Additional Project Documents (except
those Project Documents which Administrative Agent indicated in writing were not required to be
delivered), executed on or prior to such date have



50









 







been delivered to Administrative Agent by
Borrowers. Since the Closing Date, except as has been disclosed to Administrative Agent in writing
and as permitted hereunder, as of such date, none of such Project Documents has been amended,
modified or terminated (other than expiration thereof in accordance with its terms and the Credit
Documents).



               4.13.2 To Borrowers’ knowledge, except as disclosed to Administrative Agent in writing at or
prior to the time the representation and warranty in this Section 4.13.2 is being made, the
representations and warranties of the Major Project Participants contained in the Operative
Documents (other than this Agreement) are true and correct in all material respects.



          4.14 Disclosure. The information regarding the Project and any Sponsor Entity included in
this Agreement and the reports, financial statements, certificates, Notices of Borrowing, exhibits,
schedules and other documents furnished to any Secured Party, or to any consultant submitting a
report contemplated by Section 3.1 to any Secured Party, by or, to Borrowers’ knowledge, on behalf
of Borrowers, taken as a whole, did not contain and do not contain any material misstatement of
fact or omitted or omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were or are made, not misleading as of the date
such information is dated or certified; provided, that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes a forecast or
projection, Borrowers represent only that they acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report, financial statement,
exhibit or schedule.



          4.15 Private Offering by Borrowers. Assuming that each Lender is acquiring its Notes for investment purposes only, and not for
purposes of resale or distribution thereof except for participations or assignments as provided in
Sections 12.17.2 and 12.17.3 respectively, no registration of such Notes under the Securities Act,
or under the securities laws of the Project Jurisdiction, the state(s) of Borrowers’ formation or
the State of New York is required in connection with the offering, issuance and sale of such Notes
hereunder. Neither Borrowers nor anyone acting on their behalf has taken, or will take, any action
which would subject the issuance or sale of any Notes to Section 5 of the Securities Act.



          4.16 Taxes.



               4.16.1 Borrowers have timely filed, or caused to be filed, all federal, state and local tax
returns, information statements and reports that they are required to file, have paid or caused to
be paid all taxes, material assessments, utility charges, fees and other governmental charges they
are required to pay to the extent due (other than those taxes, if any, that they are contesting in
good faith and by appropriate proceedings in accordance with the requirements of Section 5.18).
Borrowers knows of no proposed tax assessment against any Sponsor Entity which could reasonably be
expected to have a Material Adverse Effect (other than those proposed tax assessments that
Borrowers are contesting in good faith and by appropriate proceedings in accordance with the
requirements of Section 5.18). In either case, to the extent such taxes, assessments, charges and
fees are not due, Borrowers or the applicable Sponsor Entity have established reserves that are
adequate for the payment thereof in conformity with GAAP.



51









 





               4.16.2 At all times since its formation, each Borrower has been an entity with a single owner
that is disregarded as separate from its owner for federal tax purposes. No Form 8832 has ever
been filed with respect to any Borrower as other than a disregarded entity and no such election
shall have been made.



               4.16.3 Borrowers have no liability for the taxes of any Person (other than Borrowers) (a)
under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign
law), (b) as a transferee or successor, (c) by contract, or (d) otherwise.



               4.16.4 Borrowers do not intend to treat the Loans (including the incurrence thereof) as being
a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4).



          4.17 Governmental Regulation. None of the Sponsor Entities or any Secured Party, nor any
Affiliate of any of them will, solely as a result of the construction, ownership, leasing or
operation of the Project, the sale of electricity, capacity or ancillary services therefrom or the
entering into any Operative Document in respect of the Project or any transaction contemplated
hereby or thereby, be subject to, or not exempt from, regulation under the FPA or PUHCA or under
state laws and regulations respecting the rates or the financial or organizational regulation of
electric utilities, except that (a) Borrowers will be subject to the compliance requirements under
PUHCA applicable to an Exempt Wholesale Generator and an owner of an Eligible Facility, (b)
Borrowers will be a
“public utility” under the FPA with authority to sell at wholesale electric power at
market-based rates and with all waivers of regulations and blanket authorizations as are
customarily granted by FERC to a “public utility” that sells at wholesale electric power and
ancillary services at market-based rates and (c) the exercise of remedies, as provided for under
the Collateral Documents, may be subject to Section 203 of the FPA. Except to the extent provided
in the first sentence of this Section 4.17, Borrowers will not be deemed by any Governmental
Authority having jurisdiction to be subject to, financial, organizational or rate regulation as an
“electric utility”, “electric corporation”, “electrical company”, “public utility”, or “public
utility holding company” or any similar Person under any applicable Governmental Rule then in
effect.



          4.18 Regulation U, Etc. Borrowers are not engaged principally, or as one of their
principal or important activities, in the business of extending credit for the purpose of “buying”,
“carrying” or “purchasing” any “margin stock” (each as defined in Regulations T, U or X of the
Federal Reserve Board, each as now and from time to time hereafter in effect), and no part of the
proceeds of the Loans or the Project Revenues will be used whether directly or indirectly, and
whether immediately, incidentally or ultimately, for the purpose of “buying”, “carrying” or
“purchasing” any such margin stock or for any other purpose that entails a violation of, or that is
inconsistent with, the provisions of the regulations of the Federal Reserve Board, including
Regulation T, U or X.



          4.19 Budgets; Projections. Borrowers have prepared the Project Budget, the Annual
Operating Budget and the Base Case Project Projections, have prepared them in good faith, and are
responsible for developing the assumptions on which such Project Budget, Annual Operating Budget
and the Base Case Project Projections are based; and such Project Budget, Annual Operating Budget
and the Base Case Project Projections (a) as of the date delivered,



52









 







updated or supplemented are
based on reasonable assumptions (including as to all legal and factual matters material to the
estimates set forth therein), (b) as of the date delivered, updated or supplemented are consistent
in all material respects with the provisions of the Project Documents executed on or prior to such
date, and (c) as of the date delivered, updated or supplemented indicate that the estimated
aggregate Project Costs will not exceed Available Construction Funds.



          4.20 Financial Statements.



               4.20.1 Financial Statements. In the case of each financial statement of Borrowers or the
Sponsor (other than the financial statements delivered by Borrowers pursuant to Section 3.1.18(d)
— which have been prepared in good faith) and accompanying information delivered by Borrowers
under the Credit Documents (insofar as financial statements relate to Borrowers), each such
financial statement and information has been prepared in conformity with GAAP applied consistently
throughout the relevant periods (except as otherwise approved and disclosed therein), is complete
and correct and fairly presents, in all material respects, the financial position (on a
consolidated and, where applicable, consolidating basis) of Borrowers or the Sponsor, as the case
may be, described in such financial statements as at the respective dates thereof and the results
of operations and cash flows (on a consolidated and, where applicable,
consolidating basis) of Borrowers or the Sponsor, as the case may be, described therein for
each of the periods then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments and the absence of footnote
disclosure.



               4.20.2 No Contingent Obligations. Except for the obligations under the Operative Documents to
which it is a party, Borrowers do not (and will not following the funding of the initial Loans)
have any Contingent Obligations, unmatured liabilities, contingent liability or liability for
taxes, long-term lease or forward or long-term commitment (including any interest rate or foreign
currency swap or exchange transaction or other financial derivative) required to be shown under
GAAP that is not reflected in the foregoing financial statements or the notes thereto and which in
any such case is material in relation to the business, results of operations, properties, financial
condition or prospects of Borrowers.



               4.20.3 No Sales. There has been no sale, transfer or other disposition by Borrowers of any
material part of their business or property, including the Project, and no purchase or other
acquisition of any material business or property (including capital stock of any Person).



          4.21 No Default. No Event of Default or Default which has not been disclosed to
Administrative Agent in writing has occurred and is continuing. Borrowers are not in default under
or with respect to any of their contractual obligations in any respect which could reasonably be
expected to have a Material Adverse Effect.



          4.22 Organizational ID Number; Location of Tangible Collateral.



               4.22.1 The Borrowers’ organizational identification numbers are L-1073395-9 for SWMP,
L-1172503-8 for Renegy, and L-1203036-0 for Renegy Trucking.



53









 





               4.22.2 All of the tangible Collateral is, or when installed pursuant to the Project Documents
will be, located on the Site or at Borrowers’ address set forth in Section 12.1.1;
provided, that certain equipment may be temporarily removed from the Site from time to time
in the ordinary course of business.



          4.23 Title and Liens. Borrowers have (a) good, indefeasible and insurable (i) leasehold
interest in the Site, and (ii) easement interest in the Easements, and (b) good, legal and valid
title to all other Collateral, in each case free and clear of all Liens other than Permitted Liens.



          4.24 Intellectual Property. Except as disclosed in Exhibit G-5:




          (a) Borrowers own or possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights
thereto, that are necessary for the operation of their business, without known conflict
with the rights of others;




          (b) to the knowledge of Borrowers, no product of Borrowers infringes in any material
respect any license, permit, franchise, authorization, patent, copyright, service mark,
trademark, trade name or other right owned by any other Person;




          (c) to the knowledge of Borrowers, there is no violation by any Person of any right of
Borrowers with respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by Borrowers; and




          (d) to the knowledge of Borrowers, there exists no pending or threatened claim or
litigation against or affecting Borrowers contesting their right to sell or use any such
product, process, method, substance, part or other material.



          4.25 Collateral. The respective liens and security interests granted to Collateral Agent
pursuant to the Collateral Documents (a) constitute as to personal property included in the
Collateral a valid security interest and (b) constitute as to the Mortgaged Property included in
the Collateral a valid lien and security interest in the Mortgaged Property. The security interest
granted to Collateral Agent pursuant to the Collateral Documents in the Collateral consisting of
personal property will be perfected (i) with respect to any property that can be perfected by
filing, upon the filing of financing statements in the filing offices identified in Exhibit
D-6 (the “Schedule of Security Filings”), and (ii) with respect to any property (if
any) that can be perfected by possession, upon Collateral Agent receiving possession thereof, and
in each case such security interest will be, as to Collateral perfected under the UCC or otherwise
as aforesaid, superior and prior to the rights of all third Persons now existing or hereafter
arising whether by way of mortgage, lien, security interests, encumbrance, assignment or otherwise,
except Permitted Liens. Except to the extent possession of portions of the Collateral is required
for perfection, all such action as is necessary has been taken to establish and perfect Collateral
Agent’s rights in and to the Collateral in existence on such date to the extent Collateral Agent’s
security interest can be perfected by filing, including any recording, filing, registration, giving
of notice or other similar action. As of the Closing Date, no filing, recordation, re-filing or
re-recording other than those listed on the Schedule of Security Filings is necessary to perfect
and



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maintain the perfection of the interest, title or Liens of the Collateral Documents, and on the
Closing Date all such filings or recordings will have been made to the extent Collateral Agent’s
security interest can be perfected by filing. Borrowers have properly delivered or caused to be
delivered, or provided control, to Collateral Agent all Collateral that permits perfection of the
Lien and security interest described above by possession or control.



          4.26 Sufficiency of Project Documents.



               4.26.1 Other than those that can be reasonably expected to be commercially available when and
as required, the services to be performed, the materials to be supplied and the real property
interests, the Easements and other rights granted, or to be granted, pursuant to the Project
Documents in effect as of such date:




          (a) comprise all of the property interests necessary to secure any right material to the
acquisition, leasing, development, construction, installation, completion, operation and
maintenance of the Project in accordance with all Legal Requirements and in accordance with the
Project Schedule, all without reference to any proprietary information not owned by or available
to Borrowers;




          (b) are sufficient to enable the Project to be located, constructed, developed, owned,
occupied, operated, maintained and used on the Site and the Easements; and




          (c) provide adequate ingress and egress from the Site for any reasonable purpose in
connection with the construction and operation of the Project.



               4.26.2 There are no services, materials or rights required for the construction or operation
of the Project in accordance with the Construction Contracts, the other Major Project Documents and
the assumptions that form the basis of Base Case Project Projections, other than those (a) to be
provided under the Project Documents or (b) that can reasonably be expected to be commercially
available at or for delivery to the Site on commercially reasonable terms consistent with the
then-current Project Budget, the then-current Annual Operating Budget and the Base Case Project
Projections.



          4.27 Utilities. All utility services necessary for the construction and the operation of
the Project for its intended purposes are available at the Project or can reasonably be expected to
be so available as and when required upon commercially reasonable terms consistent with the
then-current Project Budget, the Project Schedule, the then-current Annual Operating Budget and the
Base Case Project Projections.



          4.28 Other Facilities.



               4.28.1 All roads necessary for the construction and full utilization of the Project for its
intended purposes have either been completed or Borrowers possesses the necessary rights of way
therefor, other than rights of way that can reasonably be expected to be available on commercially
reasonable terms as and when needed.




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               4.28.2 Borrowers possess, or the counterparties to the Major Project Documents pursuant to
which interconnection facilities will be constructed and, if applicable, operated for the benefit
of the Project, possess and are obligated, except for restrictions or limitations contained in the
applicable Project Documents, to provide or make available to Borrowers, all necessary easements,
rights of way, licenses, agreements and other rights for the construction, interconnection and
utilization of the interconnection facilities (including fuel, water, wastewater and electrical).



          4.29 Insurance. All insurance policies then required to be maintained by Borrowers pursuant to the terms of
any Operative Document are in full force and effect, and all premiums then due and payable have
been paid.




          4.30 Anti-Terrorism Law. None of the Borrowers nor, to the best knowledge of Borrowers any other Sponsor Entity
or any Affiliate, is in violation of (a) any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto, (b) Executive Order No. 13,224, 66 Fed. Reg.
49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the
“Executive Order”) or (c) the anti-money laundering provisions of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(USA Patriot Act) Act of 2001, Public Law 107-56 (October 26, 2001) amending the Bank Secrecy Act,
31 U.S.C. Section 5311 et seq. (“U.S.A. Patriot Act”) and any other laws relating to
terrorism or money laundering (collectively, “Anti-Terrorism Laws”).




               4.30.2 To the knowledge of Borrowers, none of the Affiliates, brokers or other agents of any
Sponsor Entity acting or benefiting in any capacity in connection with the Loans is any of the
following: (a) a Person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order; (b) a Person owned or controlled by, or acting for or on behalf of, any
person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive
Order; (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law; (d) a Person that commits, threatens or conspires to commit
or supports “terrorism” as defined in the Executive Order; or (e) a Person that is named as a
“specially designated national and blocked person” on the most current list published by OFAC at
its official website or any replacement website or other replacement official publication of such
list.



               4.30.3 To the knowledge of Borrowers, no broker or other agent of any Sponsor Entity acting in
any capacity in connection with the Loans (a) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any person
described in Section 4.30.2, (ii) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order, or (iii)
engages in or conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.



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          4.31 Construction Loan Borrowings.
Each of the giving of the applicable Notice of Borrowing and the acceptance by Borrowers of
the proceeds of the related Borrowing shall constitute a representation and warranty by Borrowers
that on the date of such Borrowing the conditions set forth in Sections 3.2 and 3.2.5 have each
been satisfied.




          4.32 No Recordation, Etc.
Each Operative Document is in proper legal form under the respective governing laws selected
in such Operative Document for the enforcement thereof in such jurisdictions against Borrowers and
each other party thereto without any further action on the part of Administrative Agent or other
Secured Parties, and (b) to ensure the legality, validity, enforceability, priority or
admissibility in evidence of any such document it is not necessary that such document or any other
document be filed, registered or recorded with, or executed or notarized before, any court or other
authority in such jurisdiction or that any registration charge or stamp or similar tax be paid on
or in respect of any such document.




ARTICLE 5

AFFIRMATIVE COVENANTS




          5.1 Use of Proceeds, Equity Contributions and Project Revenues.




               5.1.1 Proceeds and Equity Contributions. Unless otherwise applied by Administrative Agent
pursuant to any Credit Document, (i) Borrowers shall deposit the proceeds of the Construction Loans
and any cash equity contributions in the Construction Account, and (ii) use them and the proceeds
of the Bonds solely to pay Project Costs or, subject to the conditions set forth in Section
3.4.3(b), paid to the Sponsor.



               5.1.2 Revenues. Unless otherwise applied by Administrative Agent or Collateral Agent pursuant
to any Credit Document, Borrowers shall apply any Project Revenues, payments SWMP receives under
any Swap Agreement, equity contributions, Loan proceeds, Insurance Proceeds, Eminent Domain
Proceeds and damage payments solely for the purpose, and in the order and manner, provided for in
Section 7.2.



          5.2 Payment.




               5.2.1 Credit Documents. Borrowers shall pay all sums due under the Credit Documents to which
they are a party according to the terms hereof and thereof.



               5.2.2 Bonds. Borrower shall take such actions as are required under the Indenture to
optionally redeem Bonds in accordance with the schedule set forth on Exhibit I-3, and pay
any associated Swap Breaking Fees.



               5.2.3 Other Obligations. Borrowers shall pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all of their obligations under the
Project Documents and all of their other obligations of whatever nature and howsoever arising,
except (a) such as may be contested in good faith or as to which a bona fide dispute may exist,
provided, that adequate cash reserves have been established in conformity with GAAP, or
Administrative Agent is satisfied in its reasonable discretion that non-payment of such obligation
pending the resolution of such contest or dispute will not in any way endanger



57









 







the Project or
result in a Material Adverse Effect or that provision is made to the satisfaction of Administrative
Agent in its reasonable discretion for the posting of security (other than the Collateral) for or
the bonding of such obligations or the prompt payment thereof in the event that such obligation is
payable and (b) Borrowers’ trade payables which shall be paid in the ordinary course of business.



          5.3 Maintenance of Property.
Borrowers shall maintain (a) good, indefeasible and insurable (i) leasehold interest in the
Site, (ii) easement interest in the Easements, and (b) good, legal and valid title to all of its
other material properties and assets (other than properties and assets disposed of in the ordinary
course of business or otherwise disposed of in accordance with Section 6.4), in each case free and
clear of all Liens other than Permitted Liens. Generally, Borrowers shall keep all material
property useful and necessary in their business in good working order and condition.




          5.4 Notices.
Promptly upon acquiring notice or giving notice (except as otherwise specified below), as the
case may be, or obtaining knowledge thereof, Borrowers shall give written notice (with copies of
any underlying notices, papers, files or related documentation) to Administrative Agent,
accompanied by a statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Borrowers proposes to take with respect thereto, of:




               5.4.1 any litigation pending or, to Borrowers’ knowledge, threatened in writing against
Borrowers involving claims against Borrowers or the Project in excess of $100,000 individually or
$200,000 in the aggregate per calendar year or involving any injunctive, declaratory or other
equitable relief, such notice to include, if requested in writing by Administrative Agent, copies
of all papers filed in such litigation and to be given monthly if any such papers have been filed
since the last notice given;



               5.4.2 any dispute or disputes for which written notice has been received by Borrowers which
may exist between Borrowers or any holder of an Applicable Third Party Permit and any Governmental
Authority and which involve (a) claims against Borrowers which exceed $100,000 individually or
$200,000 in the aggregate per calendar year, (b) injunctive or declaratory relief, or (c)
revocation, modification, failure to renew or the like of any Applicable Permit or Applicable Third
Party Permit;



               5.4.3 as soon as possible and in any event within five days after the occurrence thereof, any
Event of Default or Default;



               5.4.4 any casualty, damage or loss, whether or not insured, through fire, theft, other hazard
or casualty, or any act or omission of (a) Borrowers, their employees, agents, contractors,
consultants or representatives in excess of $100,000 for any one casualty or loss or $200,000 in
the aggregate in any calendar year, or (b) to Borrowers’ knowledge, any other Person if such
casualty, damage or loss could reasonably be expected to have a Material Adverse Effect;



               5.4.5 any cancellation, suspension or material change in the terms, coverage or amounts of any
insurance described in Exhibit K;



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               5.4.6 any contractual obligations incurred by Borrowers exceeding $100,000 per year in the
aggregate for the Project, not including any obligations incurred pursuant to the Credit Documents
or the Project Documents or any obligation contemplated in the then-current Project Budget or the
then-current Annual Operating Budget;



               5.4.7 any intentional withholding of compensation to, or any right to withhold compensation
claimed by, any Major Project Participant or pursuant to any Major Project Document, other than
retention provided by the express terms of any such contracts;



               5.4.8 any (a) termination (other than expiration in accordance with its terms and any
applicable Consent) of or material default of which Borrowers have knowledge or written notice
under any Major Project Document, (b) material Project Document Modification (with copies of all
such Project Document Modifications whether or not requiring approval of Administrative Agent or
the Required Lenders pursuant to Section 6.12) and (c) without duplication, any material dispute,
relating to the Project, between Borrowers and any Major Project Participant;



               5.4.9 any written claim of events of force majeure, change orders in excess of $100,000, or
Borrowers caused delay under any Major Project Document (including claims therefor regardless of
whether Borrowers believe such claim has merit) and, to the extent requested in writing by
Administrative Agent, copies of invoices or statements which are reasonably available to Borrowers
under any Major Project Document, certified by an authorized representative of Borrowers, together
with a copy of any supporting documentation, schedule, data or affidavit delivered under such Major
Project Document;



               5.4.10 any (a) material noncompliance with any Hazardous Substance Law or any material
Release, or material threat of Release, of Hazardous Substances on or from the Real Property that
has resulted or could reasonably be expected to result in personal injury or material property
damage or to have a Material Adverse Effect or is required to be reported to any Governmental
Authority under any Hazardous Substance Law, (b) pending or, to Borrowers’ knowledge, threatened in
writing, Environmental Claim against Borrowers or, to Borrowers’ knowledge, any of their
Affiliates, contractors, lessees or any other Persons, arising in connection with their occupying
or conducting operations on or at the Real Property which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect, (c) any condition, circumstance,
occurrence or event that could reasonably be expected to result in a material liability under
Hazardous Substance Laws or in the imposition of any Lien or any other restriction on the title,
ownership or transferability of any Real Property, or (d) existence of any
underground tank, whether operative or temporarily or permanently closed, discovered to be
located on the Real Property, in all of the foregoing cases, other than Permitted Liens existing as
of the Closing Date;



               5.4.11 promptly, but in no event later than 30 days prior to the time any Person will become a
member of any of the Borrowers or the occurrence of any other change in or transfer of ownership
interests in any of the Borrowers or the Project, notice thereof, which notice shall identify such
Person and such Person’s interest in any of the Borrowers or shall describe, in reasonable detail,
such other change or transfer;



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               5.4.12 any material written notices, reports or information (including any notice that the
Project has achieved “mechanical completion,” “commercial operation,” “substantial completion”,
“final completion” or the like under and as defined in any Major Project Document;



               5.4.13 any proceeding or legislation by any Governmental Authority to confiscate, condemn,
expropriate, nationalize or otherwise acquire compulsorily any Borrower, all or any material
portion of the Project or the Real Property (whether or not constituting an Event of Default);



               5.4.14 promptly, but in no event later than 30 days after the receipt thereof by Borrowers,
copies of (a) all Applicable Permits obtained by Borrowers after the Closing Date, (b) any
amendment, supplement or other modification to any Applicable Permit received by Borrowers after
the Closing Date and (c) all material notices relating to the Project received by Borrowers from,
or delivered by Borrowers to, any Governmental Authority;



               5.4.15 promptly, but in no event later than five days after occurrence thereof, (a) the
scheduling of any outage with an anticipated duration in excess of five days and (b) any outage
(scheduled or otherwise) with a duration in excess of five days;



               5.4.16 any default or event of default under any contractual obligations of Borrowers, which
if not cured would have a Material Adverse Effect;



               5.4.17 any Lien (other than a Permitted Lien) being granted or established or becoming
enforceable over any portion of Collateral;



               5.4.18 the occurrence of any event, condition, circumstance or change that has caused or
evidences, individually or in the aggregate, the occurrence of any event having, a Material Adverse
Effect; and



          5.5 Financial Reporting.




               5.5.1 Financial Statements. Borrowers shall deliver or cause to be delivered to
Administrative Agent, in form and detail reasonably satisfactory to Administrative Agent (except
where GAAP is specifically required):




          (a) as soon as practicable and in any event within 90 days after the close of each
applicable fiscal year beginning fiscal year 2006, audited financial statements of
Borrowers, APS, SRP and B&W (until expiration of the warranties in the Boiler Purchase
Contract) and financial statements of Sponsor prepared in accordance with agreed-upon procedures
(until expiration or termination of the Sponsor Guaranty). Such financial statements shall
include a statement of equity, a balance sheet as of the close of such year, an income and
expense statement, reconciliation of capital accounts (where applicable), a statement of cash
flow and summary results of hedging and trading activities (in the case of Borrowers only), all
prepared in accordance with GAAP (except in the case of the Sponsor financials) consistently
applied reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, and certified by an



60









 







independent certified
public accountant of nationally recognized standing selected by the Person whose financial
statements are being prepared and, for Borrowers, by an independent certified public accountants
of nationally recognized standing acceptable to Administrative Agent. Such certificate shall
not be qualified or limited because of restricted or limited examination by such accountant of
any material portion of the records of the applicable Person. The relevant accountants shall
also certify that in making the examination necessary for reporting on the foregoing financial
statements no knowledge was obtained of any Event of Default or Default, except as disclosed in
such certificate; and




          (b) as soon as practicable and in any event within 45 days after the end of the first,
second and third quarterly accounting periods of its fiscal year (commencing with the fiscal
quarter ending September 30, 2006), unaudited quarterly financial statements of Borrowers, the
Sponsor (until expiration of the Sponsor Guaranty) and B&W (until expiration of the warranties
in the Boiler Purchase Contract) as of the last day of such quarterly period and the related
statements of income, cash flow, and shareholders’ or members’ equity (as applicable) for such
quarterly period and (in the case of second and third quarterly periods) for the portion of the
fiscal year ending with the last day of such quarterly period, setting forth in each case in
comparative form corresponding unaudited figures from the preceding fiscal year, all prepared in
accordance with GAAP consistently applied (subject to changes resulting from audit and normal
year-end adjustments and the absence of footnote disclosure).



               5.5.2 Certification. Borrowers shall cause to be delivered, along with any financial
statements of Borrowers or the Sponsor, a certificate signed by a Responsible Officer of Borrowers
or the Sponsor, as applicable, certifying that (a) such Responsible Officer has made or caused to
be made a review of the transactions and financial condition of such Person during the relevant
fiscal period and that such review has not, to such Responsible Officer’s knowledge, disclosed the
existence of any event or condition which constitutes an Event of Default or Default, or if any
such event or condition existed or exists, the nature thereof and the corrective actions that such
Person has taken or proposes to take with respect thereto, (b) such Person is in compliance with
all applicable material provisions of each Operative Document to which such Person is a party or,
if such is not the case, stating the nature of such non-compliance and the corrective actions which
such Person has taken or proposes to take with respect thereto, (c) such financial statements are
true and correct in all material respects and that no material adverse change in the consolidated
assets, liabilities, operations, or financial condition of such Person has occurred since the date
of the immediately preceding financial statements provided to Administrative Agent or, if a
material adverse change has occurred, the
nature of such change, and (d) upon the delivery of annual financial statements only, during
the fiscal year reported in the financial statements, the Revolving Loan balance was zero for a
period of at least 30 days and providing the first and last day of such period.



          5.6 Books, Records, Access.




               5.6.1 Borrowers shall maintain, or cause to be maintained, adequate books, accounts and
records with respect to Borrowers and the Project, in which full and correct entries shall be made
of all financial transactions and the assets and business of Borrowers, and prepare all financial
statements required hereunder, in each case in accordance with GAAP



61









 







(subject, in the case of
unaudited financial statements, to changes resulting from audit and normal year-end adjustments and
the absence of footnote disclosure) and in compliance with the regulations of any Governmental
Authority having jurisdiction thereof.



               5.6.2 Subject to requirements of Governmental Rules, safety requirements and existing
confidentiality restrictions imposed upon Borrowers by any other Person, Borrowers shall permit
employees or agents of Administrative Agent and Independent Engineer at any reasonable times and
upon reasonable prior notice to Borrowers, (a) to inspect all of Borrowers’ properties, including
the Site, (b) to examine or audit all of Borrowers’ books, accounts and records and make copies and
memoranda thereof, (c) to communicate with Borrowers’ auditors outside the presence of Borrowers,
(d) to discuss the business, operations, properties and financial and other conditions of Borrowers
with officers and employees of Borrowers and with their independent certified public accountants,
and (e) to witness any Performance Tests.



          5.7 Compliance with Laws, Instruments, Applicable Permits, Etc.
Borrowers shall promptly comply, or cause compliance, in all material respects with all Legal
Requirements (including Legal Requirements and Applicable Permits relating to pollution control,
environmental protection, equal employment opportunity or employee benefit plans, and employee
safety, with respect to Borrowers or the Project), and make such alterations to the Project and the
Site as may be required for such compliance.




          5.8 Reports.




               5.8.1 Construction Progress Reports. Borrowers shall:




          (a) Promptly after receipt thereof, deliver to Administrative Agent copies of all progress
reports of the construction of the Project issued by any Construction Contractor under a Major
Construction Contract and received by Borrowers, supplementing such reports in reasonable detail
with material information not already included therein, detailing the progress of the
development and construction of the Project since the last prior report hereunder (including any
change orders then requested by Borrowers or such Construction Contractor).




          (b) Deliver to Administrative Agent as soon as available, but in no event later than 30
days after the end of each month prior to Completion, a summary of
construction on the Project during such quarter, describing, to the extent not included in
the reports described in Section 5.8.1(a), (i) physical progress and expenditures, (ii)
cumulative expenditure through the end of the quarter, (iii) any material variations from the
then-current Project Budget, and (iv) any fact, event or occurrence of which Borrowers are aware
that (A) may increase the total capital costs of the Project above those provided in the Project
Budget, delay Completion or Commercial Operation beyond the then-estimated dates therefor or
otherwise have a Material Adverse Effect, or (B) may render unreasonable or inappropriate any
material assumption on which the Project Budget was based, and the anticipated manner and timing
of actions proposed to be taken by Borrowers in reaction to any such fact, event or occurrence,
together with an estimate (if available) of the costs associated with the taking of such
actions.



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               5.8.2 Operating Report. Deliver to Administrative Agent within 30 days of the end of each
fiscal quarter after the date of Commercial Operation, a summary operating report with respect to
the Project, which shall include, with respect to the period most recently ended, (a) a monthly and
year-to-date numerical and narrative assessment of (i) the Project’s compliance with each material
category in the then-current Annual Operating Budget, (ii) electrical production and delivery,
(iii) fuel deliveries and contracts for fuel procurement, (iv) plant and unit availability,
including trips and scheduled and unscheduled outages, (v) cash receipts and disbursements and cash
balances, including distributions to the Sponsor or any Pledgor, debt service payments and balances
in the Accounts, (vi) maintenance activity, (vii) replacement of equipment of value in excess of
$100,000, (viii) transactions involving the provision of electrical products under each of the PPAs
from sources other than the Project and (ix) material unresolved disputes with contractors,
materialmen, suppliers or others and any related claims against Borrowers; and (b) to the extent
applicable, a comparison of year-to-date figures to corresponding figures provided in the prior
year.



               5.8.3 Insurance. Within 30 days after each annual policy renewal date, deliver to
Administrative Agent a certificate, substantially in the form of Exhibit L (the “Annual
Insurance Certificate”), and otherwise in form and substance reasonably satisfactory to
Administrative Agent in consultation with the Insurance Consultant, certifying that the insurance
requirements of Exhibit K (the “Insurance Requirements”) have been implemented and
are being complied with in all material respects.



               5.8.4 Performance Tests. Within one Business Day after any Borrower receives notice pursuant
to any Major Project Document of the proposed conduct of Performance Tests for the Project or
material portion thereof and promptly prior to the proposed conduct of any subsequent Performance
Tests, written notice of such proposed Performance Tests.



               5.8.5 Collateral Updates. Concurrently with any delivery of financial statements under
Section 5.5.1, provide to Administrative Agent a certificate of a Responsible Officer updating, as
relevant, all information required pursuant to the Collateral Documents regarding perfection of
Collateral or confirming that there has been no change in such information since the last prior
date on which such information was provided.



               5.8.6 Management Letters. Promptly after the receipt thereof by Borrowers, a copy of any
“management letter” received by it from its certified public accountants and the management’s
responses thereto.



               5.8.7 Governing Documents. Promptly provide copies of any Governing Documents (delivered
pursuant to Section 3.1.3) that have been amended or modified in accordance with the terms hereof
and deliver a copy of any notice of default given or received by any applicable Borrower or Sponsor
Entity under any organizational document within 10 days after such Person gives or receives such
notice.



               5.8.8 Fuel Status. Within two weeks of the beginning of each calendar quarter, provide to
Administrative Agent a report describing (a) the status of compliance with, and any updates to, the
Fuel Supply Plan and (b) the quantity and quality of fuel stored on the



63









 







Site, and certifying that
either (i) the Fuel Stockpile is in place or (ii) if the circumstances set forth in Section 8.1.18
are extant, the Alternate Fuel Stockpile is in place.



               5.8.9 Additional Information. Provide to Administrative Agent promptly upon request such
reports, statements, lists of property, accounts, budgets, forecasts and other information
concerning Borrowers and the Project and, to the extent reasonably available, the Major Project
Participants and at such times as Administrative Agent shall reasonably require, including such
reports and information as are reasonably required by the Independent Consultants.



          5.9 Existence, Conduct of Banking, Properties, Etc.
Except as otherwise expressly permitted under this Agreement, Borrowers shall (a) maintain and
preserve each Borrower’s existence as an Arizona limited liability company and all material rights,
privileges and franchises necessary in the conduct of its business, (b) subject to Section 5.2.2,
perform (to the extent not excused by force majeure events or the nonperformance of the other party
and not subject to a good faith dispute) all of each Borrower’s material contractual obligations
under the Project Documents to which it is party or by which it is bound, (c) maintain all
Applicable Permits (other than with respect to violations of the Original Air Permit solely to the
extent addressed by the Major Source Permit) and use all reasonable efforts to cause all Major
Project Participants to maintain all Applicable Third Party Permits, except to the extent that any
such failure to maintain could not reasonably be expected to have a Material Adverse Effect, (d) at
or before the time that any Permit becomes an Applicable Permit, obtain such Permit and (e)
otherwise, continue to engage in business of the same general type as now conducted by the
Borrowers.




          5.10 Debt Service Coverage Ratio.
Following Term-Conversion, but in no event later than 10 days after each Payment Date
following Term-Conversion, Borrowers shall calculate and deliver to Administrative Agent the Debt
Service Coverage Ratio for the Calculation Period for such Payment Date. The calculations of the
Debt Service Coverage Ratios hereunder shall be used in determining the application and
distribution of funds pursuant to Section 6.6.




          5.11 Indemnification.




               5.11.1 Borrowers shall indemnify, defend and hold harmless the Secured Parties and the
Confirming Bank, in their respective capacities, their respective Related Parties (collectively,
the “Indemnitees”) from and against, and indemnify and reimburse the Indemnitees for:




          (a) any and all claims, obligations, liabilities, losses, damages, injuries (to Person,
property, or natural resources), penalties, stamp or other similar taxes, actions, suits,
judgments, costs and expenses (including reasonable attorney’s fees) of whatever kind or nature,
whether or not well founded, meritorious or unmeritorious, that may be incurred by, or demanded,
asserted, claimed or awarded against any such Indemnitee (collectively, “Subject
Claims”) in any way relating to, or arising out of or in connection with (i) any Operative
Documents to which it is a party, (ii) the performance by the parties hereto of their



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respective
obligations under the Credit Documents or the consummation of the transactions contemplated
hereby or thereby, and (iii) any Loan or the use of the proceeds therefrom;




          (b) any and all Subject Claims arising in connection with any Environmental Claims, whether
foreseeable or unforeseeable, including all costs of removal, investigation, remediation and
disposal of any Hazardous Substances, together with all reasonable costs required to be incurred
in (i) determining whether the Project is in compliance and (ii) causing the Project to be in
compliance, with all applicable Legal Requirements, all reasonable costs associated with claims
for damages to Persons or property, reasonable attorneys’ and consultants’ fees, investigation
and laboratory fees, response costs and court costs; and




          (c) any and all Subject Claims in any way relating to, or arising out of or in connection
with any claims, suits or liabilities against Borrowers or any of their Affiliates to the extent
related to the Project or the transactions contemplated by the Operative Documents.



               5.11.2 The foregoing indemnities shall not apply with respect to an Indemnitee, to the extent
determined by final and non-appealable judgment of a court of competent jurisdiction to have arisen
as a result of the gross negligence or willful misconduct of such Indemnitee, but shall continue to
apply to other Indemnitees and to any Indemnitee to the extent arising from legal proceedings
commenced against such Person by any holder of any securities of such Person or any creditor of
such Person arising out of and based solely upon rights afforded any such holder of securities or
creditor in such capacity.



               5.11.3 The provisions of this Section 5.11 shall survive the termination of this Agreement,
the foreclosure of the Collateral Documents and satisfaction or discharge of the Obligations, and
shall be in addition to any other rights and remedies of any Indemnitee.



               5.11.4 In case any action, suit or proceeding shall be brought against any Indemnitee, such
Indemnitee shall notify Borrowers of the commencement thereof, and Borrowers shall be entitled, at
their expense, acting through counsel reasonably acceptable to such Indemnitee, to participate in,
and, to the extent that Borrowers desire, to assume and control
the defense thereof. Such Indemnitee shall be entitled, at its expense, to participate in any
action, suit or proceeding the defense of which has been assumed by Borrowers. Notwithstanding the
foregoing, Borrowers shall not be entitled to assume and control the defenses of any such action,
suit or proceedings if and to the extent that, in the reasonable opinion of such Indemnitee and its
counsel, such action, suit or proceeding involves the potential imposition of criminal liability
upon such Indemnitee or a conflict of interest between such Indemnitee and Borrowers or between
such Indemnitee and another Indemnitee (unless such conflict of interest is waived in writing by
the affected Indemnitees), and in such event (other than with respect to disputes between such
Indemnitee and another Indemnitee) Borrowers shall pay the reasonable expenses of such Indemnitee
in such defense.



               5.11.5 If Borrowers have assumed the defense of any action, suit or proceeding pursuant to
Section 5.11.4, Borrowers shall promptly report to such Indemnitee on the status of such action,
suit or proceeding as material developments shall occur and from time



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to time as requested by such
Indemnitee (but not more frequently than every 60 days). Borrowers shall deliver to such
Indemnitee a copy of each document filed or served on any party in such action, suit or proceeding,
and each material document which Borrowers possess relating to such action, suit or proceeding.



               5.11.6 Notwithstanding Borrowers’ rights hereunder to control certain actions, suits or
proceedings:




          (a) if any Indemnitee reasonably determines that failure to compromise or settle any
Subject Claim made against such Indemnitee is reasonably likely to subject such Indemnitee to
civil, criminal or administrative penalties, to result in the loss, suspension or impairment of
a license or Permit held by such Indemnitee or to cause material damage to such Indemnitee’s
reputation, such Indemnitee shall be entitled to compromise or settle such Subject Claim; and




          (b) if the Majority Lenders reasonably determine that failure to compromise or settle any
Subject Claim made against such Indemnitee is reasonably likely to have a Material Adverse
Effect, Administrative Agent shall provide Borrowers with written notice of a proposed
compromise or settlement of such claim specifying in detail the nature and amount of such
proposed settlement or compromise. Borrowers (and any other relevant Sponsor Entity) shall be
deemed to have approved such proposed compromise or settlement unless, within 30 days after the
date Borrowers receive such notice of intended compromise or settlement, Borrowers provide the
Lenders with a written legal analysis from counsel reasonably acceptable to Administrative Agent
reasonably concluding that, based on the magnitude of the Subject Claim, the legal basis for
such Subject Claim, the cost of defending such Subject Claim or the amount of such proposed
settlement or compromise is not within a reasonable range of settlements or compromises for such
Subject Claim, and indicating, based on such factors, such counsel’s view as to the appropriate
amount of a reasonable settlement or compromise for such Subject Claim (the “Settlement
Amount”). If the Lenders receive such legal analysis required by this Section 5.11.6 within
such 30-day period, then (i) the Majority Lenders may elect to settle or compromise such Subject
Claim and Borrowers shall be responsible for the payment of all amounts of such compromise or
settlement up to 125% of the Settlement Amount, (ii) such Indemnitee shall be responsible for
payment of all
amounts of such compromise or settlement in excess of such 125% limit and (iii) such
compromise or settlement shall be binding upon Borrowers. If Borrowers do not provide such
legal analysis within such period, or if such legal analysis is not reasonable, in the
determination of the Majority Lenders, then such Indemnitee may settle or compromise such
Subject Claim (and Borrowers shall cause any other relevant Sponsor Entity to agree to the same)
and shall be fully indemnified by Borrowers therefor. The Lenders shall not otherwise settle or
compromise any such Subject Claim other than at their own expense.



               5.11.7 Upon payment of any Subject Claim by Borrowers pursuant to this Section 5.11 or other
similar indemnity provisions contained herein to or on behalf of an Indemnitee, Borrowers, without
any further action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto, and such Indemnitee shall cooperate with Borrowers and Borrowers’ insurance
carrier and give such further assurances as are necessary or advisable to enable Borrowers
vigorously to pursue such claims.



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               5.11.8 Any amounts payable by Borrowers pursuant to this Section 5.11 shall be regularly
payable within 30 days after Borrowers receive an invoice for such amounts from any applicable
Indemnitee, and if not paid within such 30-day period shall bear interest at the Default Rate.



               5.11.9 Notwithstanding anything to the contrary set forth herein, Borrowers shall not, in
connection with any one legal proceeding or claim, or separate but related proceedings or claims
arising out of the same general allegations or circumstances, in which the interests of the
Indemnitees do not materially differ, be liable to the Indemnitees (or any of them) under any of
the provisions set forth in this Section 5.11 for the fees and expenses of more than one separate
firm of attorneys (which firm shall be selected by the affected Indemnitees, or upon failure to so
select, by Administrative Agent).



               5.11.10 Subject to the provisions of this Section 5.11, any of Borrowers’ indemnification
obligations pursuant to Section 5.11.1 that arise out of or in connection with or by reason of, or
in connection with a preparation of a defense of, any investigation, litigation or proceeding shall
be, in each case, binding upon Borrowers regardless of whether such investigation, litigation or
proceeding is brought by Borrowers, any other Sponsor Entity, or their respective directors,
officers, shareholders or creditors or any Indemnitee or whether any Indemnitee or any other Person
is otherwise a party thereto.



               5.11.11 If, for any reason whatsoever, the indemnification provided under this Section 5.11 is
unavailable to any Indemnitee or is insufficient to hold it harmless to the extent provided in this
Section 5.11, then provided such payment is not prohibited by or contrary to any applicable Legal
Requirement or public policy, Borrowers shall contribute to the amount paid or payable by such
Indemnitee as a result of the Subject Claim in such proportion as is appropriate to reflect the
relative economic interests of Borrowers and its Affiliates on the one hand, and such Indemnitee on
the other hand, in the matters contemplated by this Agreement as well as the relative fault of
Borrowers (and their Affiliates) and such Indemnitee with respect to such Subject Claim, and any
other relevant equitable considerations.



               5.11.12 Nothing in this Section 5.11 shall constitute a release by Borrowers of any claims
that they have as a result of a breach or a default by any of the Secured Parties of their
respective obligations under any Credit Document.



          5.12 Exemption from Regulation.
Borrowers shall take or cause to be taken all necessary or appropriate actions so that (a) (i)
SWMP will be an Exempt Wholesale Generator and (ii) the Project will be an Eligible Facility at all
times hereunder or (b) SWMP and the Project shall not be subject to, or shall be exempt from,
financial or organizational regulation as a “public utility company” or “public utility holding
company” under PUHCA or financial, organizational or rate regulation as a public utility under the
laws of the Project Jurisdiction and the state of SWMP’s formation as presently constituted and as
construed by the courts of the Project Jurisdiction and the state of SWMP’s formation, and (c) SWMP
will be authorized to sell at wholesale electricity at market-based rates. Borrowers shall obtain
FERC orders as to the matters set forth in clauses (a) and (c) above by the earlier of (A) such
time as SWMP generates electricity and (B) October 1, 2007.




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          5.13 Construction of the Project.
Borrowers shall cause the Project to be designed, engineered, constructed, developed,
installed, equipped, maintained and operated in a good and workmanlike manner with due diligence,
and substantially in accordance with (a) the Plans and Specifications, (b) the then-current Project
Budget, (c) the Project Schedule, (d) the Major Project Documents, as any of the same may be
amended from time to time in accordance with Section 6.12, and in material compliance with all
applicable Legal Requirements, Permits and good industry practices.




          5.14 Completion.
Borrowers shall achieve Completion and Final Completion in a timely and diligent manner
substantially in accordance with the Project Schedule, the then-current Project Budget (as
supplemented by any equity contributions made available to Borrowers), the Plans and
Specifications, the Major Project Documents, as any of the same may be amended from time to time
pursuant to Section 6.12 and, in the case of Completion, in no event later than the Date Certain.




          5.15 Operation and Maintenance of Project; Operating Budget.
Borrowers shall:




               5.15.1 Keep the Project, or cause the same to be kept, in good operating condition consistent
with the standard of care set forth in the Ground Lease, and in compliance with all Applicable
Permits and Applicable Third Party Permits, Legal Requirements and the Operative Documents, and
make or cause to be made all repairs (structural and non-structural, extraordinary or ordinary)
necessary to keep the Project in such condition.



               5.15.2 Operate the Project, or cause the same to be operated, in a manner consistent with
Prudent Utility Practices and in compliance with the terms of each of the PPAs.



               5.15.3 On or before the date that is 60 days prior to the anticipated date of Commercial
Operation and thereafter 60 days prior to the beginning of each subsequent calendar year, submit an
operating plan and a budget, detailed by month, of anticipated revenues and anticipated
expenditures under all Waterfall Levels, and anticipated expenditures from the Major Maintenance
Account, such budget to include Debt Service, proposed dividend payments or other distributions,
Major Maintenance, reserves and all anticipated O&M Costs (including reasonable allowance for
contingencies) applicable to the Project for the ensuing calendar year (or, in the case of the
initial Annual Operating Budget, partial calendar year) and, in the case of Major Maintenance in
accordance with Section 5.15.5, to the conclusion of the second full calendar year thereafter (each
such annual operating plan and budget, including the initial Annual Operating Budget, an
“Annual Operating Budget”). Each Annual Operating Budget shall be subject to the
reasonable approval of Administrative Agent acting in consultation with the Independent Engineer,
such approval not to be unreasonably withheld. Failure by Administrative Agent to approve or
disapprove such draft Annual Operating Budget within 30 days after receipt thereof shall be deemed
to be an approval by Administrative Agent of such draft as the final Annual Operating Budget.
Borrowers shall consider in good faith Administrative Agent’s suggestions in preparation of a final
Annual Operating Budget. Borrowers shall prepare a final Annual Operating Budget no less than 30
days in advance of the anticipated date of commencement of Commercial Operation and each subsequent
calendar year. The O&M Costs in each Annual Operating Budget which are subject to escalation
limitations in



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the Project Documents shall not, absent extraordinary circumstances, be increased by
more than the amounts provided in such Project Documents.



               5.15.4 SWMP shall operate and maintain the Project, or cause the Project to be operated and
maintained, within amounts for (a) any Operating Budget Category not to exceed 110% (on a
year-to-date basis) and (b) for all Operating Budget Categories not to exceed 105% (on a
year-to-date basis), in each case of the amounts budgeted therefor as set forth in the then-current
Annual Operating Budget as approved or deemed approved by Administrative Agent; provided, however,
that subject to Section 6.12, Borrowers may propose an amendment to the Annual Operating Budget for
Administrative Agent’s approval if at any time Borrowers cannot comply with clause (a) or (b) above
(and Administrative Agent shall consider each such amendment in good faith and shall not
unreasonably withhold its consent to the approval of any such amendment). Pending approval of any
Annual Operating Budget or amendment thereto in accordance with the terms of this Section 5.15.4,
Borrowers shall use all reasonable efforts to operate and maintain the Project, or cause the
Project to be operated and maintained, within the then-current Annual Operating Budget (it being
acknowledged that if a particular calendar year’s Annual Operating Budget has not been approved by
the time periods provided in Section 5.15.3, then the then-current Annual Operating Budget shall be
deemed to be the Annual Operating Budget in effect prior to the delivery of the proposed final
Annual Operating Budget pursuant to Section 5.15.3); provided, that the amounts specified
therein shall be increased to the extent specified in the Project Documents.



               5.15.5 In connection with the adoption of each Annual Operating Budget pursuant to Section
5.15.3, Borrowers shall also propose the amount which should be reserved in the Major Maintenance
Account for the period of such Annual Operating Budget to pay for anticipated Major Maintenance, as
determined by reference to the Major Maintenance Plan (as
agreed to and modified pursuant to the terms hereof, the “Major Maintenance Reserve
Requirement”). Each such proposed Major Maintenance Reserve Requirement shall be subject to
the reasonable approval of Administrative Agent (acting in consultation with the Independent
Engineer), such approval not to be unreasonably withheld. Borrowers shall also include in each
Annual Operating Budget a re-assessment of (a) the anticipated scheduling, probable cost and a
reasonably detailed description of each anticipated item of Major Maintenance (the “Major
Maintenance Plan”) and (b) the anticipated amounts which will be on deposit in the Major
Maintenance Account during the applicable fiscal year and the following fiscal year in accordance
with the then-applicable Major Maintenance Reserve Requirement, in each case as contemplated in the
Major Maintenance Plan. Borrowers shall perform all Major Maintenance substantially in accordance
with the then-current Major Maintenance Plan and in all material respects in accordance with the
provisions of the Operative Documents. From time to time, to the extent that Administrative Agent,
in consultation with Borrowers and the Independent Engineer, reasonably determines that the
anticipated cost of Major Maintenance during the ensuing two fiscal years of Borrowers is higher
than that reflected in the then-current Annual Operating Budget, the amounts specified in the
then-current Annual Operating Budget with respect to Major Maintenance may be modified by
Administrative Agent. The Major Maintenance Reserve Requirement shall be modified accordingly.



          5.16 Preservation of Rights; Further Assurances.
Borrowers shall:




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               5.16.1 Major Project Documents. Maintain in full force and effect, perform (subject to
Section 5.2) the obligations of Borrowers under, preserve, protect and defend the material rights
of Borrowers under and, subject to Section 5.13(b), take all reasonable action necessary to prevent
termination (except by expiration in accordance with its terms) of each and every Major Project
Document, including (where Borrowers in the exercise of their business judgment deem it proper)
prosecution of suits to enforce any material right of Borrowers thereunder and enforcement of any
material claims with respect thereto; provided, however, that upon the occurrence
and during the continuance of an Event of Default or, with respect to any Project Document between
Borrowers and any Affiliate, when such Affiliate has acted or failed to act in a manner that with
the giving of notice by Borrowers or the passage of time, an event of default will occur under such
Project Document, if Administrative Agent requests that certain actions be taken and Borrowers fail
to take the requested actions within five Business Days, Administrative Agent or Collateral Agent
(as applicable) may enforce in its own name or in Borrowers’ name, such rights of Borrowers, in
addition to such rights as may be more particularly provided in the Security Agreement and the
other Credit Documents.



               5.16.2 Preservation of Collateral. From time to time promptly, upon the reasonable request of
Administrative Agent, Collateral Agent or any Lender, execute, acknowledge or deliver, or cause the
execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be
registered, filed or recorded in an appropriate governmental office, all such notices, statements,
instruments and other documents (including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or estoppel certificate) supplemental to or
confirmatory of the Security Documents, relating to the Loans, stating the interest and charges
then due and any known
Events of Default or Defaults, and take such other steps as may be deemed by Administrative
Agent necessary or advisable to render fully valid and enforceable under all applicable laws the
rights, liens and priorities of the Secured Parties with respect to all Collateral and other
security from time to time furnished under the Credit Documents or intended to be so furnished, or
for the continued validity, perfection and priority of the Liens on the Collateral covered thereby
subject to no other Liens except as permitted by the applicable Security Document, or obtain any
consents or waivers as may be necessary or appropriate in connection therewith, in each case in
such form and at such times as shall be reasonably requested by Administrative Agent or Collateral
Agent, and pay all reasonable fees and expenses (including reasonable attorneys’ fees) incident to
compliance with this Section 5.16.2. Upon the exercise by Administrative Agent, Collateral Agent
or any Lender of any power, right, privilege or remedy pursuant to any Credit Document which
requires any consent, approval, registration, qualification or authorization of any Governmental
Authority, Borrowers shall execute and deliver all applications, certifications, instruments and
other documents and papers that Administrative Agent, Collateral Agent or such Lender may require.
If Administrative Agent, Collateral Agent or the Majority Lenders determine that they are required
by law or regulation to have appraisals prepared in respect of the Real Property, Borrowers shall
provide to Administrative Agent appraisals that satisfy the applicable requirements of the Real
Estate Appraisal Reform Amendments of FIRREA and are otherwise in form and substance satisfactory
to Administrative Agent.



               5.16.3 Additional Collateral. If Borrowers shall at any time acquire any real property or
leasehold or other interest in real property not covered by the Mortgage, then



70









 







promptly upon such
acquisition, execute, deliver and record a supplement to the Mortgage, reasonably satisfactory in
form and substance to Administrative Agent, subjecting the real property or leasehold or other
interests to the Lien and security interest created by the Mortgage. If reasonably requested by
Administrative Agent, Borrowers shall obtain an appropriate endorsement or supplement to, as
applicable, the Title Policy or the Term Title Policy insuring the Lien of the Secured Parties in
such additional property, subject only to Permitted Liens and other exceptions to title approved by
Administrative Agent.



               5.16.4 Further Assurances. Upon the request of Administrative Agent or Collateral Agent,
execute and deliver all documents as shall be necessary or that Administrative Agent or Collateral
Agent (as the case may be) shall reasonably request in connection with the rights and remedies of
Administrative Agent or Collateral Agent (as the case may be) and the Lenders under the Operative
Documents, and perform, such other reasonable acts as may be necessary to carry out the intent of
the Credit Documents.



          5.17 Maintenance of Insurance.
Without cost to the Secured Parties, Borrowers shall maintain or cause to be maintained in
effect at all times the types of insurance required pursuant to Exhibit K, in the amounts
and on the terms and conditions specified therein, from the quality of insurers specified in such
Exhibit or other insurance companies of recognized responsibility reasonably satisfactory to
Administrative Agent.



          5.18 Taxes, Other Government Charges and Utility Charges.
Subject to the second sentence of this Section 5.18, Borrowers shall timely file all tax
returns and pay, or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be lawfully assessed or
levied against or with respect to Borrowers or the Project, including sales and use taxes and real
estate taxes, all utility and other charges incurred in the operation, maintenance, use, occupancy
and upkeep of the Project, and all assessments and charges lawfully made by any Governmental
Authority for public improvements that may be secured by a Lien on the Project. Borrowers may
contest in good faith any such taxes, assessments and other charges and, in such event, may permit
the taxes, assessments or other charges so contested to remain unpaid during any period, including
appeals, when Borrowers are in good faith contesting the same, so long as (a) reserves to the
extent required by GAAP have been established in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall have been made and
maintained at all times during such contest, (b) enforcement of the contested tax, assessment or
other charge is effectively stayed for the entire duration of such contest, and (c) any tax,
assessment or other charge determined to be due, together with any interest or penalties thereon,
is promptly paid after resolution of such contest.



          5.19 Event of Eminent Domain.
If an Event of Eminent Domain shall occur with respect to any Collateral, Borrowers shall (a)
diligently pursue all of their rights to compensation against the relevant Governmental Authority
in respect of such Event of Eminent Domain, (b) not, without the written consent of the Majority
Lenders (which consent shall not be unreasonably withheld or delayed), compromise or settle any
claim against such Governmental Authority, and (c) pay or apply all Eminent Domain Proceeds in
accordance with Section 7.6. Borrowers consent to, and agree not to object to or otherwise impede
or impair, the participation



71









 







of Administrative Agent and/or Collateral Agent in any eminent domain
proceedings, and Borrowers shall from time to time deliver to Administrative Agent and Collateral
Agent all documents and instruments requested by it to permit such participation.



          5.20 Interest Rate Protection.



               5.20.1 Compliance With Swap Agreements. SWMP shall at all times comply with and maintain in
full force and effect through the end of such applicable periods such Swap Agreements.



               5.20.2 Swap Breaking Fees. To the extent required pursuant to the terms of the Swap
Agreements, Borrowers shall pay all costs, fees and expenses incurred by SWMP in connection with
any unwinding, breach or termination of such Swap Agreement (“Swap Breaking Fees”), all to
the extent provided in and as calculated pursuant to the applicable Swap Agreements.



               5.20.3 Security. Borrowers hereby grant to Collateral Agent for the benefit of the Swap Bank
a security interest in all Collateral, to secure any Obligations of SWMP under any Swap Agreement
the Swap Bank provides and all applicable Swap Breaking Fees, all on the terms of the Collateral
Documents and pari passu with the Loans. The parties hereto
agree that, for purposes of any sharing of Collateral under the Collateral Documents, the Swap
Bank, in its capacity as a counterparty to the Swap Agreements, shall be deemed to have made a Loan
to Borrowers in an amount equal to the unpaid amount of any Swap Breaking Fees owed by SWMP to the
Swap Bank, under any such Swap Agreement on the date that an Early Termination Date (as defined in
the applicable Swap Agreement) occurs. For purposes of any such Collateral sharing, and for
purposes of voting on matters under this Agreement to the extent specified in the definition of
“Proportionate Share,” the Swap Bank shall be deemed a Lender under the Collateral Documents to the
extent of such Loan.



          5.21 Environmental Laws.
Borrowers shall (a) comply in all material respects with all applicable Hazardous Substance
Laws and obtain and comply in all material respects with, and maintain, all Permits required by
applicable Hazardous Substance Laws; (b) conduct and complete, or cause to be conducted and
completed, all investigations, studies, sampling and testing, and all clean-up, remedial, removal,
recovery and other actions as and to the extent required of Borrowers pursuant to Hazardous
Substance Laws or otherwise as necessary to prevent themselves, any other Sponsor Entity or any
Secured Party from incurring any material liability; (c) promptly comply in all material respects
with all orders and directives of all Governmental Authorities in respect of Hazardous Substance
Laws, except to the extent that the same are being contested in good faith by appropriate
proceedings; (d) exercise care, custody and control over the Site and the Project in such manner as
not to pose a material or unreasonable hazard to the environment, health or safety in general; and
(e) give (and shall cause the Construction Contractors, to the extent applicable, to give) due
attention to the protection and conservation of the environment in the implementation of each
aspect of the Project, all in accordance with applicable Hazardous Substance Laws, Permits and
Legal Requirements, and good industry practices.



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          5.22 Fuel Supply Plan.
Borrowers shall at all times maintain a written and current plan whose goal is to cause SWMP
to always have the Fuel Stockpile in place, or if the circumstances described in Section 8.1.18 are
extant, to always have the Alternate Fuel Stockpile in place (“Fuel Supply Plan”). The
Fuel Supply Plan will include discussion of fuel procurement, transportation, processing, labor,
contingency plans, storage, moisture content, Catalyst relations and other matters consistent with
the goal stated above. From and after the Term-Conversion Date, Borrowers shall always have either
the Fuel Stockpile in place, or if the circumstances described in Section 8.1.18 are extant, shall
always have the Alternate Fuel Stockpile in place.



          5.23 Independent Consultants.
Borrowers shall (a) cooperate in all reasonable respects with the Independent Consultants and
(b) ensure that each Independent Consultant will be provided with all information reasonably
requested by such consultant with respect to the financing, construction or operation of the
Project and will exercise due care to ensure that any factual information which it may supply to
such consultant is materially accurate in all respects, and not, by omission of information or
otherwise, misleading in any material respect at the time such information is
provided, to the extent that such consultant relied or will rely on such information in
preparing its report.



          5.24 Renegy Revenues and Costs. Borrowers shall deliver or cause to be delivered to
Administrative Agent, in form and detail reasonably satisfactory to Administrative Agent as soon as
practicable and in any event within 30 days after the end of each month, reconciliation reports
that detail inflows and outflows from Renegy.



          5.25 Major Source Permit. Borrowers shall take or cause to be taken all
necessary or appropriate actions in order to receive the Major Source Permit from ADEQ on or prior
to March 31, 2010 (a copy of which shall be provided to Administrative Agent upon receipt),
including, but not limited to, the following:




          (a) On or prior to December 6, 2008, Renegy Holdings or any Borrower shall (i) submit
documentation to ADEQ evidencing SWMP’s plan to submit Part 1 of the Major Source Permit
application in accordance with the requirements of 40 CFR 63.52(a) and (ii) provide
Administrative Agent with a copy of such documentation as submitted;




          (b) On or prior to January 5, 2009, Renegy Holdings or any Borrower shall (i) submit
documentation to ADEQ evidencing SWMP’s plan to submit Part 2 of the Major Source Permit
application in accordance with the requirements of 40 CFR 63.52(a) and (ii) provide
Administrative Agent with a copy of such documentation as submitted;




          (c) On or prior to January 30, 2009, Renegy Holdings or any Borrower shall (i) submit Part
I of the Major Source Permit application and (ii) provide Administrative Agent with a copy of
such documentation as submitted; and




          (d) On or prior to March 31, 2009, Renegy Holdings or any Borrower shall (i) submit Part II
of the Major Source Permit application and (ii) provide Administrative Agent with a copy of such
documentation as submitted;



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provided that with respect to clauses (c) and (d) above, Borrowers shall provide any
additional submittals as may be required to provide a complete application within 90 days of such
initial submittal of Part I and Part II, as applicable; provided, further, that
Borrowers may extend the deadline for receiving the Major Source Permit from ADEQ beyond March 31,
2010, pending completion of review by ADEQ, if the steps provided in clauses (a) through (d) have
been completed by Borrower prior to such date and if ADEQ has not taken any action which has, or
reasonably could be expected to have, a Material Adverse Effect.




ARTICLE 6

NEGATIVE COVENANTS




          6.1 Contingent Liabilities.
Except as provided in the Credit Documents, no Borrower shall become liable as a surety,
guarantor, accommodation endorser or otherwise, for or upon the obligation of any
other Person or incur any Contingent Obligations; provided, however, that this
Section 6.1 shall not be deemed to prohibit or otherwise limit the occurrence of Permitted Debt.



          6.2 Limitations on Liens.
No Borrower shall create, assume or suffer to exist any Lien, except Permitted Liens, securing
a charge or obligation on the Project or on or with respect to any of the Collateral or any of its
other properties, real or personal, whether now owned or hereafter acquired, or assign any right to
receive income.



          6.3 Indebtedness.
No Borrower shall incur, create, assume or permit to exist, directly or indirectly, any Debt
except Permitted Debt.



          6.4 Sale or Lease of Assets.
No Borrower shall sell, lease, assign, transfer or otherwise dispose of assets, whether now
owned or hereafter acquired, except (a) in the ordinary course of its business, as contemplated by
the Operative Documents, and at fair market value, (b) to the extent that such asset is
unnecessary, worn out or no longer useful or usable in connection with the operation or maintenance
of the Project, at fair market value, (c) the sale, transfer or release, with or without
consideration, of real property or interests in real property related to the Project to the extent
that such real property or interests in real property is only incidental to the development,
construction, leasing, ownership or operation of the Project, or (d) the granting of easements or
other interests in real property related to the Project to other Persons if Administrative Agent
has determined that such grant could not reasonably be expected to have a Material Adverse Effect.
Upon any such sale, lease, assignment, transfer or other disposition of any such assets, all Liens
in favor of any Secured Party relating to such asset shall be released as contemplated by Section
10.9.



          6.5 Changes.
(a) No Borrower shall change the nature of its business or expand its business beyond the
business contemplated in the Operative Documents or activities incidental thereto or take any
action, whether by acquisition or otherwise, which would constitute or result in any material
alteration to the nature of such business; (b) establish, create or acquire any Subsidiaries; or
(c) directly or indirectly, change its legal form or any of its Governing Documents (including by
the filing or modification of any certificate of designation) or any agreement to which it is a
party with respect to its limited liability company interest or otherwise terminate, amend or
modify any such Governing Document or agreement or any



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provision thereof, or enter into any new
agreement with respect to its limited liability company interest, other than any such amendments,
modifications or changes or such new agreements to which the prior written consent of
Administrative Agent and Collateral Agent (if appropriate) has been obtained.



          6.6 Restricted Payments.



               6.6.1 Pre-Initial Principal Repayment Date. Prior to the first Principal Repayment
Date, directly or indirectly, make or declare any dividend payment or other distribution (in cash,
assets, property, rights, obligations or securities) on, or other payment on account of, any
interest in Borrowers.



               6.6.2 Post-Initial Principal Repayment Date. From and after the first Principal Repayment
Date, directly or indirectly, make or declare any dividend payment or other distribution (in cash,
property or obligation) on, or other payment on account of, any interest in Borrowers, unless the
following conditions have been satisfied (the “Restricted Payment Conditions”):




          (a) such dividend payment or distribution is on a date occurring within 45 days after a
Payment Date;




          (b) no Event of Default or Default has occurred and is continuing as of the date of such
applicable dividend payment or distribution, and such dividend payment or distribution would not
cause an Event of Default or Default;




          (c) the Debt Service Coverage Ratio for the (i) Calculation Period relating to the Payment
Date immediately preceding the proposed date of such dividend payment or distribution is greater
than or equal to 1.30:1, and (ii) 24-month period after the Payment Date immediately following
the proposed date of such dividend payment or distribution is greater than or equal to 1.50:1.
Such calculations shall be based on updated Base Case Project Projections which shall be (i)
prepared by Borrowers in substantially the same form as the Base Case Project Projections and
delivered to Administrative Agent concurrently with the calculations contemplated to be
delivered by Section 5.10 and (ii) accompanied by a certificate, in form and substance
reasonably satisfactory to Administrative Agent, duly executed by a Responsible Officer of
Borrowers, stating, among other things, that such updated Base Case Project Projections have
been prepared in good faith and are based on reasonable assumptions;




          (d) no Material Adverse Effect shall have occurred and be continuing as of the date of the
applicable dividend payment or distribution or would result from the making of such dividend
payment or distribution;




          (e) the funds necessary to make any such dividend payment or distribution are on deposit in
the Revenue Account as of the Payment Date to which the applicable dividend payment or
distribution relates;



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          (f) (i) the amounts on deposit in, or credited to, the Major Maintenance Account as of the
date of the applicable dividend payment or distribution equal or exceed the amount necessary to
fund in full the then-required Major Maintenance Reserve Requirement, (ii) the amounts on
deposit in, or credited to, the DSR Account as of the date of the applicable dividend payment or
distribution equal or exceed, in the aggregate, the DSR Requirement;




          (g) The long-term unsecured senior debt of the Utilities shall be rated at least Ba2 by
Moody’s and BB by S&P (and such debt obligations shall have not been placed in any “credit-watch
with negative implications” or similar type of category by S&P or Moody’s); and




          (h) The Fuel Stockpile is in place, or if the circumstances described in Section 8.1.18 are
extant, the Alternate Fuel Stockpile is in place, and Borrowers shall have certified to such
effect.



               6.6.3 Notwithstanding the foregoing, in no event may Renegy or Renegy Trucking make any
dividend under any circumstances while the Obligations remain outstanding.




          6.7 Investments.
No Borrower shall (a) make any investments (whether by purchase of stocks, bonds, notes,
obligations or other securities, loan, extension of credit, advance or otherwise) other than
Permitted Investments or make any capital contribution to any Person; or (b) own any equity
interest in, lend money, extend credit or make advances to, or make deposits with (other than as
provided in Project Documents approved by the Lenders (or Administrative Agent or any subset of the
Lenders as provided herein), including deposits or advances in relation to the payment for services
in the ordinary course of business), any Person other than Collateral Agent.



          6.8 Transactions With Affiliates.
No Borrower shall directly or indirectly enter into any transaction or series of transactions
relating to the Project with or for the benefit of an Affiliate without the prior written approval
of Administrative Agent, except for (a) the Project Documents in effect on the Closing Date, and
the transactions permitted thereby, (b) transactions that contain terms that are fair and
reasonable and no less favorable to such Borrower than would be included in an arm’s-length
transaction entered into by a prudent Person with a non-Affiliated third party, (c) any employment,
non-competition or confidentiality agreement entered into by a Borrower with any of its employees,
officers or directors in the ordinary course of business, and (d) as otherwise expressly permitted
or contemplated by the Credit Documents.



          6.9 Margin Loan Regulations.
No Borrower shall directly or indirectly apply any part of the proceeds of any Loan, any cash
equity contributions received by such Borrower or other funds or revenues to the “buying”,
“carrying” or “purchasing” of any margin stock within the meaning of Regulations T, U or X of the
Federal Reserve Board, or any regulations, interpretations or rulings thereunder.



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          6.10 Partnerships, etc.
No Borrower shall become a general or limited partner in any partnership or a joint venturer
in any joint venture or create and hold stock in any subsidiary.



          6.11 Dissolution; Merger.
No Borrower shall (a) wind up, liquidate or dissolve its affairs, (b) combine, merge or
consolidate with or into any other entity, or (c) purchase or otherwise acquire all or
substantially all of the assets of any Person.



          6.12 Amendments; Change Orders; Completion.
No Borrower shall:



               6.12.1 directly or indirectly, amend, modify, supplement or waive, accept, or permit or
consent to the termination, amendment, modification, supplement or waiver (including any waiver (or
refund) of damages (liquidated or otherwise) payable by any contractor under any Major Project
Document) of, any of the material provisions of, or give any material consent (each such
termination, amendment, modification, supplement, waiver or consent, inclusive of any applicable
change orders, being referred to herein as a “Project Document Modification”) under (a) any
of the Project Documents which could reasonably be expected to have a Material Adverse Effect or
(b) any of the Major Project Documents, except (i) as otherwise permitted by this Section 6.12 or
(ii) as may otherwise be approved by the Majority Lenders; provided, that the extension of
the term of a Major Project Document on substantially the same terms and conditions then in effect
shall not require the consent or approval of Administrative Agent or the Lenders.



               6.12.2 without the prior written consent of Administrative Agent (which consent shall not be
unreasonably withheld or delayed), in consultation with the Independent Engineer and acting at the
direction of the Majority Lenders, direct or consent to any Project Document Modification, unless
such Project Document Modification:




          (a) will not increase or decrease the Project Costs by more than $250,000 individually or,
together with all previous Project Document Modifications issued after the Closing Date, by more
than $1,000,000 in the aggregate (exclusive of increases reimbursed by insurance awards,
condemnation awards or contractual damage awards);




          (b) is certified by Borrowers in writing to Administrative Agent and the Lenders, and
confirmed and countersigned by the Independent Engineer, as (i) being technically feasible in
light of the Plans and Specifications and the overall design of the Project and (ii) not
reasonably likely to delay Completion materially or in any event beyond the Date Certain;




          (c) will not alter any guaranty, liquidated damages provision or the standards for any of
the Performance Tests;




          (d) is not reasonably likely to result in any adverse modification or impair the
enforceability of any warranty under any Major Project Document;



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          (e) is not reasonably likely to materially impair or reduce the maximum capacity,
efficiency, output, performance, reliability, durability or availability of the Project,
materially increase O&M Costs, or materially decrease Project Revenues;




          (f) is permitted under the applicable Project Document and could not reasonably be expected
to (i) materially diminish any obligation of any Major Project Participant or (ii) materially
increase any obligation of Borrowers under any Major Project Document;




          (g) is not reasonably likely to present a significant risk of the revocation or material
modification of any Applicable Permit or Applicable Third Party Permit or jeopardize the
Project’s status as an Exempt Wholesale Generator or Borrowers’ authority to sell at wholesale
electric power at market-based rates;




          (h) will not eliminate, modify or impair any consent, verification or approval rights
afforded to Administrative Agent, the Lenders or the Independent Engineer under any Major
Project Document;




          (i) could not reasonably be expected to cause the Project not to comply with Legal
Requirements;




          (j) is not an amendment, modification, supplement, termination, waiver or consent thereto
of either of the PPAs; or




          (k) will not obligate Borrowers to arrange or procure electrical transmission services.



               6.12.3 (a) approve the successful completion of any Performance Test; (b) approve, modify or
amend the testing protocols under the Construction Contracts; or (c) agree to accept any facilities
being constructed under any other Major Project Document as “commercially operational”,
“mechanically complete”, “substantially complete” or “complete” (however defined therein), in each
case without the approval of Administrative Agent acting in consultation with the Independent
Engineer, or use the proceeds of any Loan to make any payment under any Construction Contract all
or any portion of which payment the Independent Engineer has given Borrowers written notice (prior
to the due date thereof) that it disputes is then due, without the written approval of
Administrative Agent acting in consultation with the Independent Engineer, which approval, if
given, shall not be unreasonably delayed or withheld, taking into account applicable time
limitations imposed by the terms of the applicable Project Document.



               6.12.4 agree on any Punchlist with respect to any Project work without the written approval of
Administrative Agent acting in consultation with the Independent Engineer, which approval, if
given, shall not be unreasonably delayed or withheld, taking into account applicable time
limitations imposed by the terms of any Construction Contract.



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               6.12.5 consent, without Administrative Agent’s prior written approval, to any action to
materially modify the Plans and Specifications or the contracting plan for engineering, procurement
and construction of the Project in place on the Closing Date.



               6.12.6 Direct suspension of any construction activities without Administrative Agent’s prior
written consent, except to avoid immediate danger to Persons or property.



               6.12.7 Construct, install, or permit the construction or installation of, shared or joint
facilities between the Project and any plants, facilities, generating stations or other
improvements (including any such plants, facilities, generating stations or other improvements
owned by the Utilities), except as contemplated by the Ground Lease.



               6.12.8 Accept any letter of credit, bond or other form of credit support in lieu of retainage
under any Project Document not in form and substance reasonably satisfactory to Administrative
Agent.



               6.12.9 Without the prior written consent of Administrative Agent, submit any notice or
certificate to the Utilities declaring or acknowledging the occurrence of the “Commercial Operation
Date” under the APS PPA or the “Delivery Commencement Date” under the SRP PPA.



          Administrative Agent shall use reasonable efforts to respond to each request for a Project
Document Modification pursuant to this Section 6.12 as soon as possible and in all events within 30
days of its receipt of written notification thereof. No Project Document Modification requiring
approval by Administrative Agent hereunder shall be deemed approved by Administrative Agent until
expressly approved.



          6.13 Name and Location; Fiscal Year.
Unless consented to in writing by Administrative Agent, no Borrower shall change its name, its
jurisdiction of organization, the location of its principal place of business, its organization
identification number, its fiscal year or, except as required by GAAP, its accounting policies or
reporting practices.



          6.14 Use of Site.
No Borrower shall use, maintain, operate or occupy, or allow the use, maintenance, operation
or occupancy of, any portion of the Project or the Site for any purpose (a) which may (i)
constitute a public or private nuisance or (ii) make void, voidable, or cancelable, or materially
increase the premium of, any insurance policies then in force with respect to all or a portion of
the Project, or (b) other than for the construction, operation and maintenance of the Project as
contemplated by the Operative Documents that could reasonably be expected to have a Material
Adverse Effect.



          6.15 Assignment.
No Borrower shall assign its rights or obligations under any Credit Document or any Major
Project Document to any Person, except as specifically permitted by the Credit Documents.



          6.16 Accounts.
The Borrowers shall not maintain, establish or use any account (other than the Accounts and
the Checking Accounts).



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          6.17 Hazardous Substances.
The Borrowers shall not release into the environment any Hazardous Substances in violation of
any Hazardous Substance Laws, Legal Requirements or Applicable Permits, except for (a) temporary
unplanned exceedences not allowed under the Project’s Permits, which temporary unplanned
exceedences could not reasonably be expected to have a Material Adverse Effect and which Borrowers
are diligently and in good faith attempting to correct and (b) unintentional violations with
respect to which (i) the Release is not continuing or reasonably likely to re-occur and is not
reasonably susceptible to prevention or cure, (ii) there are no unsatisfied reporting and/or
remediation requirements under applicable Hazardous Substance Laws, Legal Requirements or
Applicable Permits, (iii) no non-monetary penalties or sanctions have been imposed or are
reasonably likely to be imposed (except for the remediation of such violation) under applicable
Hazardous Substance Laws, Legal Requirements or Applicable Permits, and (iv) the Release could not
reasonably be expected to materially impair the value of the Site or any other Collateral, and
could not otherwise reasonably be expected to have a Material Adverse Effect.



          6.18 Additional Project Documents.
No Borrower shall enter into, or become a party to any Additional Project Document without
obtaining (a) consent from Administrative Agent for Additional Project Documents of aggregate value
less than $500,000 and consent from the Majority Lenders for all other Additional Project
Documents, (b) obtaining from its counterparty a consent in the form of Exhibit E-1, and
(c) providing an executed copy thereof to Administrative Agent within five Business Days after
execution.



          6.19 Project Budget Amendments.
The Borrowers shall not amend, allocate, re-allocate or modify the Project Budget to increase
the aggregate amount payable thereunder, unless such amendment, allocation, re-allocation or
modification is (a) a necessary conforming change related to an amendment to a Project Document
permitted by Section 6.12 and (b) concurrent and consistent with cash equity contributions made
available to Borrowers which were not theretofore contemplated in the Project Budget (including
liquidated damages being applied to obligations hereunder and proceeds of insurance and proceeds of
refunds applied in accordance with the terms of this Agreement); provided, that the
foregoing shall not prevent Borrowers from applying identified cost savings in a budget category
(after completing each of the items to which such category relates), as confirmed by the
Independent Engineer, to cost overruns in another budget category (as confirmed by the Independent
Engineer) without increasing the aggregate amount payable under the Project Budget;
provided, however, that Borrowers shall not apply identified cost savings in any
budget category to cost overruns in any budget category relating to management expenses or
development fees payable to any Person or any other fees and costs payable to any Affiliate of the
Sponsor.



          6.20 Assignment By Third Parties.
Without prior written consent of the Majority Lenders or unless provided in a Consent, no
Borrower shall consent to the assignment of any obligations under any Major Project Document by any
counterparty thereto.



          6.21 Acquisition of Real Property.
No Borrower shall acquire or lease any real property or other interest in real property
(excluding the acquisition of any easements or the acquisition (but not the exercise) of any
options to acquire any such interests in real property) other than the Site, Easement and other
interests in real property acquired on or prior to the Closing Date.




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          6.22 ERISA. Borrowers shall not and shall not permit or suffer to exist in any ERISA Affiliate, any ERISA
Plan or Multiemployer Plan.




          6.23 No Merchant Sales. Consent to, or permit, the provision of electrical products to any Person other than the
Utilities under each of the PPAs.




          6.24 Lease Obligations. Other than pursuant to the Ground Lease, no Borrower shall create, incur, assume or suffer to
exist any obligations as lessee for the rent or hire of any property under leases or agreements to
lease having an original term of one year or more that would cause the direct and contingent
liabilities of Borrowers in respect of all such obligations to exceed $200,000 payable in any
period of 12 consecutive months.




          6.25 Sale and Leaseback Transactions. No Borrower shall enter into any arrangement, directly or indirectly, with any Person whereby
it shall sell or transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or other property which
it intends to use for substantially the same purpose or purposes as the property being sold or
transferred unless (a) the sale of such property is permitted by Section 6.4 and (b) any Liens
arising in connection with its use of such property are permitted by Section 6.2.




          6.26 Other Agreements. No Borrower shall enter into any agreement with any Person if the performance of such
agreement or any Operative Document by Borrowers could reasonably be expected to result in a
default under or breach of such new agreement or any Operative Document.




          6.27 Disputes. No Borrower shall agree, authorize or otherwise consent to any proposed settlement, resolution
or compromise of any litigation, arbitration or other dispute with any Person without the prior
written authorization of Administrative Agent if such proposed settlement, resolution or compromise
would be reasonably likely to result in a Material Adverse Effect.




          6.28 Anti-Terrorism Law; Anti-Money Laundering.




               6.28.1 No Borrower shall directly or indirectly, knowingly (a) conduct any business or engage
in making or receiving any contribution of funds, goods or services to or for the benefit of any
Person described in Section 4.30(b), (b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the
Executive Order or any other Anti-Terrorism Law, or (c) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law (and Borrowers shall deliver
to the Lenders any certification or other evidence requested from time to time by any Lender in its
reasonable discretion, confirming Borrowers’ compliance with this Section 6.28.1).



               6.28.2 No Borrower shall cause or permit any of the funds that are used to repay the Loans to
be derived from any unlawful activity with the result that the making of the Loans would be in
violation of law.



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          6.29 Embargoed Persons.




               6.29.1 (a) No Borrower shall become a Person whose property or interests in property are
blocked or subject to blocking pursuant to Section 1 of the Executive Order, or (b) engage in any
dealings or transactions prohibited by Section 2 of the Executive Order, or be otherwise associated
with any such Person in any manner violative of such Section 2.



               6.29.2 No Borrower shall cause or permit (a) any of the funds or properties that are used to
repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, any
Person subject to sanctions or trade restrictions under United States law (each, an “Embargoed
Person”) that is identified on (1) the “List of Specially Designated Nationals and Blocked
Persons” maintained by OFAC or on any other similar list maintained by OFAC pursuant to any
authorizing statute including, but not limited to, the International Emergency Economic Powers Act,
50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
executive order or regulation promulgated thereunder, with the result that the investment in the
Sponsor Entities (whether directly or indirectly) is prohibited by law, or the Loans made by the
Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation
or any other similar executive orders, or (b) any Embargoed Person to have any direct or indirect
interest, of any nature whatsoever in the Project, Borrowers and the other Sponsor Entities, with
the result that the investment in the Project or Borrowers (whether directly or indirectly) is
prohibited by law or the Loans are in violation of law.



          6.30 Bonds. Borrowers shall not:





          (a) cause the Bonds to be optionally redeemed for any reason without the prior written
consent of the Required Lenders;




          (b) elect the fixed rate option under the Indenture;




          (c) amend or terminate any existing Bond Documents in any material respect or enter into
any additional Bond Documents which have not been approved by the Majority Lenders;




          (d) take or permit to be taken on its behalf any action that would adversely affect the
exclusion from gross income for Federal income tax purposes of the interests paid on the Bonds,
nor will the Borrowers omit to take any action required to maintain the tax-exempt status of the
Bonds, including maintaining a strict program at the Site and through load tickets to segregate
fuel which is characterized as “solid waste” within the meaning of United States Treasury
Regulation § 1.103-8(f)(2)(ii)(b) from fuel which is not so characterized;




          (e) cause an Alternate Credit Facility (as such term is defined in the Bond Documents) to
be delivered to Trustee without payment in full to the Lenders of all Obligations, cancellation
of the Commitments, and return of the Letter of Credit to LC Issuer for cancellation; or



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          (f) replace, remove or appoint a successor to or consent to the replacement or removal of
or appointment of a successor to Trustee or bond counsel without the consent of the Majority
Lenders, such consent not to be unreasonably withheld.



          6.31 Ground Lease.  SWMP shall not, without the prior written consent of
Administrative Agent, in consultation with the Independent Engineer and acting at the direction of
the Majority Lenders, remove or consent to the removal of Catalyst as the Facility Operator under
and as defined in the Ground Lease.




ARTICLE 7

ACCOUNTS




          7.1 Construction Account.





          (a) On or prior to the Closing Date, SWMP shall establish at Administrative Agent’s office
an account entitled “Snowflake Project Construction Account” (“Construction Account”).
There shall be deposited into the Construction Account the proceeds of all Construction Loans,
together with any equity contributions, and all Project Revenues (not to include any Renegy Fuel
Business Revenues) earned prior to Term-Conversion.




          (b) Borrowers agree that Administrative Agent shall transfer any or all of a Construction
Loan and other sums in the Construction Account into the account of any contractor, or any other
materialmen or subcontractors in payment of amounts due and owing to such party from Borrowers
without further authorization from Borrowers, but only after providing two Business Days’ notice
to Borrowers unless Administrative Agent determines that delay in payment will prejudice the
Project or Administrative Agent; provided, however, that if Borrowers have notified
Administrative Agent that they are contesting a claim for payment by such contractor or a
subcontractor or materialmen in accordance with the requirements of this Agreement and the
definition of “Permitted Liens,” Administrative Agent will not pay any amount being contested.
Borrowers hereby constitute and appoint Administrative Agent their true and lawful
attorney-in-fact to make such direct-payments and this power of attorney shall be deemed to be a
power coupled with an interest and shall be irrevocable. No further direction or authorization
from Borrowers shall be necessary to warrant or permit Administrative Agent to make such direct-payments, and all such payments
shall satisfy pro tanto the obligations of Administrative Agent hereunder, and shall be secured
by the Collateral Documents as fully as if made directly to the applicable Borrower, regardless
of the disposition thereof by the payee.




          (c) Borrowers shall pay Project Costs and, prior to Term-Conversion, O&M Costs (not to
include any Renegy Fuel Business Costs), by requesting that Administrative Agent disburse funds
in the Construction Account to providers of goods and services. Such request shall be in the
form of a Drawdown Certificate (together with backup documentation as indicated in the form of
Drawdown Certificate).



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          (d) Upon Term-Conversion, Administrative Agent shall (i) transfer the DSR Requirement from
the Construction Account to the DSR Account and (ii) transfer to the Sponsor from the
Construction Account any amount determined pursuant to Section 3.4.3(b).



          7.2 Revenue Account.





          (a) On or prior to the Term-Conversion Date, SWMP shall establish at Administrative Agent’s
office an account entitled “Snowflake Project Revenue Account” (“Revenue Account”).
Upon and after the Term-Conversion Date, all Project Revenues (not to include any Renegy Fuel
Business Revenues) shall be deposited into the Revenue Account, and SWMP shall instruct
applicable payors to make such deposits directly to the Revenue Account, through ACH or other
wire transfer method if available.




          (b) So long as no Event of Default has occurred and is continuing or will occur upon giving
effect to the application described below, Administrative Agent shall apply funds in the Revenue
Account at the following times and in the following order of priority (each, a “Waterfall
Level”) either by (i) disbursement by Administrative Agent, on its own volition or pursuant
to a Monthly Disbursement Requisition, directly to the Person entitled thereto, (ii) internal
account transfer by Administrative Agent to another Account as provided herein, or (iii) subject
to compliance with Section 7.7, to one or more of the Checking Accounts:



                    (1) From time to time, to pay O&M Costs (not to include any Renegy Fuel Business Costs)
currently payable and payable within one month after the date of the Monthly Disbursement
Requisition, and with respect to which funds have not already been withdrawn from the Revenue
Account, subject in all events to a maximum amount determined pursuant to Section 7.2(c).



                    (2) From time to time, to the payment of all reimbursable amounts currently payable to
Administrative Agent or Collateral Agent in connection with the Credit Documents.



                    (3) From time to time, to the payment of amounts currently payable to Administrative Agent,
Collateral Agent, LC Issuer, the Trustee, the Remarketing Agent, the transfer agent for the Bonds,
and the Bond Issuer, of fees and charges in connection with the Credit Documents and Bond
Documents, other than the Commitment Fee.



                    (4) From time to time, (i) to the payment of the Commitment Fee, (ii) to the payment of
interest on the Loans and reimbursement of the LC Issuer for a draw on the Letter of Credit for
interest payable on the Bonds, and on other amounts accruing interest under the Credit Documents,
(iii) to payment of LC Fees, and (iv) to payments due by SWMP pursuant to any Swap Agreements, in
each case currently payable.



                    (5) On Payment Dates, (i) to repayment of principal of the Loans (pro rata as between Renegy
Term Loans and Term Loans in accordance with scheduled repayments amounts set forth on Exhibit
I-1 and Exhibit I-2) until paid in full and then (ii) to reimbursement of draws under
the Letter of Credit in respect of optional redemption of Bonds



84









 







required hereby, together with
payment of any associated Swap Breaking Fees, with any payments on the Payment Date when payments
are due under both clause (i) and clause (ii) to be made on a pro rata basis in accordance with
scheduled repayment and redemption amounts set forth on Exhibit I-1, Exhibit I-2
and Exhibit I-3.



                    (6) On Payment Dates after the Term-Conversion Date, to the maintenance of the Major
Maintenance Account pursuant to Section 7.4.



                    (7) On Payment Dates after the Term-Conversion Date, to the maintenance of the DSR Account
pursuant to Section 7.3.



                    (8) On Payment Dates for so long as the Rescission Date has not occurred, to the account
specified by Borrowers for payment of the amounts due and payable to Renegy Holdings in accordance
with Sections 4.4 and 8.2 of the LLC Operating Agreement so long as no Event of Default or Default
has occurred and is continuing as of the applicable Payment Date and such payment would not cause
an Event of Default or Default.



                    (9) Within 45 days after each Payment Date following the first Principal Repayment Date after
Term-Conversion, if the Restricted Payment Conditions have been satisfied, and after the
establishment of prudent working capital reserves, to the account specified by Borrowers in the
Monthly Disbursement Requisition; and if the Restricted Payment Conditions have not been satisfied,
to the prepayment of Renegy Term Loans in inverse order of maturity, then Term Loans (and any
associated Swap Breaking Fees) in inverse order of maturity, and then to the optional redemption of
Bonds (and any associated Swap Breaking Fees).




          (c) O&M Costs (not to include any Renegy Fuel Business Costs) payable at Waterfall Level 1
shall not in any event exceed the amounts prescribed by Section 5.15.4. SWMP shall promptly pay
all O&M Costs (not to include any Renegy Fuel Business Costs) in excess of the foregoing limit.



          7.3 Debt Service Reserve Account.





          (a) On or prior to the Term-Conversion Date, SWMP shall establish at Administrative Agent’s
office an account entitled “Snowflake Project Debt Service Reserve Account” (“DSR
Account”). On the Term-Conversion Date, Borrowers shall deposit or cause to be deposited
into the DSR Account $2,762,342, which amount may be obtained through a Construction Loan that otherwise meets all of the requirements of this Agreement.
Such amount is equal to (i) principal (including principal payable as a result of optional
redemption of Bonds required hereby) and interest which is expected to be payable with respect
to the Bonds and the Loans in the first two full Repayment Periods after Term-Conversion, plus
(ii) net payments expected to be owed to or received by SWMP under Swap Agreements during such
period (with any amount to be received expressed as a negative number). Upon and after the
first Principal Repayment Date, such amount shall be reasonably calculated by Administrative
Agent for the then-prospective two Repayment Periods, and such calculated amount shall be the
“DSR Requirement”. Administrative Agent shall be entitled to withdraw amounts from the
DSR Account to pay fees, costs, charges,



85









 







interest, principal, reimbursements of draws on the
Letter of Credit, and other amounts due to Administrative Agent, LC Issuer or the Lenders in the
event that Project Revenues or other amounts in the Revenue Account are insufficient therefor.




          (b) If on any Payment Date amounts in the DSR Account are below the DSR Requirement,
Administrative Agent shall deposit all amounts in excess of the amounts applied pursuant to
Waterfall Levels 1-6 in the DSR Account until the balance in the DSR Account is equal to the DSR
Requirement. To the extent the stated amount of the DSR Letter of Credit plus amounts on
deposit in the DSR Account exceed the DSR Requirement on a Payment Date, Administrative Agent
shall release cash in the DSR Account to the Revenue Account.




          (c) In lieu of depositing cash in the DSR Account pursuant to Sections 7.3(a) and 7.3(b),
Sponsor may provide an unconditional, irrevocable direct-pay letter of credit (“DSR Letter
of Credit”) issued in a face amount equal from time to time to or, to the extent cash is
deposited, less than, the DSR Requirement for the account of Sponsor by a financial institution
whose long-term debt is rated at least “A” by S&P and “A2” by Moody’s, naming Administrative
Agent as the beneficiary, and containing terms and provisions satisfactory to Administrative
Agent in its sole discretion. In addition to and without limiting the foregoing, the DSR Letter
of Credit (i) shall have an initial expiration date of at least 12 months beyond the
Term-Conversion Date and (ii) shall not be secured by any of the Collateral. If no agreement
for a renewal or replacement of the DSR Letter of Credit has been made 30 days prior to the
expiration of the DSR Letter of Credit, Administrative Agent may draw upon the DSR Letter of
Credit and deposit such drawing in the DSR Account or Sponsor shall deposit cash in the DSR
Account in the amount of the DSR Letter of Credit. Fees, costs, expenses and reimbursement
obligations relating to any DSR Letter of Credit shall be paid only out of any funds distributed
to Borrowers at Waterfall Level 9.



          7.4 Major Maintenance Account.





          (a) On or prior to the Term-Conversion Date, SWMP shall establish at Administrative Agent’s
office an account entitled “Snowflake Project Major Maintenance Account” (“Major Maintenance
Account”). Borrowers or Administrative Agent shall be entitled to withdraw amounts
therefrom to pay fees, costs, charges and other amounts due in connection with any Major
Maintenance.




          (b) If on any Payment Date amounts in the Major Maintenance Account are below the Major
Maintenance Reserve Requirement, Administrative Agent shall deposit all amounts in excess of the
amounts applied pursuant to Waterfall Levels 1-5 in the Major Maintenance Account until the
balance in the Major Maintenance Account is equal to the Major Maintenance Reserve Requirement.
To the extent the stated amount of the Major Maintenance Letter of Credit plus amounts on
deposit in the Major Maintenance Account exceed the Major Maintenance Reserve Requirement,
Administrative Agent shall release cash in the Major Maintenance Account to the Revenue Account.



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          (c) If the incurred cost of any Major Maintenance is less than the amount reserved therefor
in the Major Maintenance Account, Administrative Agent shall deposit any excess into the Revenue
Account.




          (d) In lieu of depositing cash in the Major Maintenance Account pursuant to Section 7.4(a),
Sponsor may provide an unconditional, irrevocable direct-pay letter of credit (the “Major
Maintenance Letter of Credit”) issued in a face amount equal from time to time or to, to the
extent cash is deposited, less than, the Major Maintenance Reserve Requirement for the account
of Sponsor by a financial institution whose long-term debt is rated at least “A” by S&P and “Aa”
by Moody’s, naming Administrative Agent as the beneficiary, and containing terms and provisions
satisfactory to Administrative Agent in its sole discretion. In addition to and without
limiting the foregoing, the Major Maintenance Letter of Credit (i) shall have an initial
expiration date of at least 12 months beyond the Term-Conversion Date and (ii) shall not be
secured by any of the Collateral. If no agreement for a renewal or replacement of the Major
Maintenance Letter of Credit has been made 30 days prior to the expiration of the Major
Maintenance Letter or Credit, Administrative Agent may draw on the Major Maintenance Letter of
Credit and deposit such drawing in the Major Maintenance Account or Sponsor shall deposit cash
in the Major Maintenance Account in the amount of the Major Maintenance Letter of Credit. Fees,
costs, expenses and reimbursement obligations relating to any Major Maintenance Letter of Credit
shall be paid only out of any funds distributed to SWMP under Waterfall Level 9.



          7.5 Application of Insurance Proceeds.





          (a) Borrowers shall notify Administrative Agent of any casualty and keep Administrative
Agent timely apprised of insurance claim proceedings. All amounts and proceeds (including
instruments) in respect of the proceeds of any insurance policy required to be maintained by
Borrowers hereunder (“Insurance Proceeds”) shall be applied as provided in this Section.
In the event Insurance Proceeds are not to be made available to Borrowers as provided herein,
such Insurance Proceeds shall be paid by the insurers directly to Administrative Agent (as loss
payee or additional insured, as the case may be), and if paid to Borrowers, such Insurance
Proceeds shall be received only in trust for Administrative Agent, shall be segregated from
other funds of Borrowers, and shall be forthwith paid over to Administrative Agent in the same
form as received (with any necessary endorsement). To the fullest extent that it effectively
may do so under applicable law, Administrative Agent shall apply all such Insurance Proceeds in
accordance with the provisions of this Section 7.5.




          (b) Any business interruption Insurance Proceeds received by Administrative Agent or
Borrowers shall be deposited into the Revenue Account.




          (c) Unless each of the following conditions is satisfied or waived by Administrative Agent,
all Insurance Proceeds shall be applied to the prepayment of Loans in inverse order of maturity:



                    (1) such damage or destruction does not constitute the destruction of all or substantially all
of the man-made portion of the Project;



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                    (2) no Event of Default has occurred and is continuing and after giving effect to any proposed
repair and restoration, such damage or destruction or proposed repair and restoration will not
result in a Default or Event of Default;



                    (3) SWMP and the Independent Engineer certify, and Administrative Agent determines in its
reasonable judgment, that repair or restoration of the Project is technically and economically
feasible within a six-month period and that a sufficient amount of funds is or will be available to
SWMP to make such repairs and restorations;



                    (4) if such damage or destruction occurs during construction, such repair or restoration will
occur, in the reasonable judgment of Administrative Agent after consultation with the Independent
Engineer, prior to the Construction Loan Maturity Date;



                    (5) Administrative Agent determines that after repair and restoration the Project will be able
to repay the Loans and Bonds and other amounts due the Lenders as and when due;



                    (6) no material Permit is necessary to proceed with the repair and restoration and no material
amendment to this Agreement or any of the Credit Documents or Bond Documents and no other
instrument, is necessary for the purpose of effecting the repairs or restorations or subjecting the
repairs or restorations to the Liens of the Collateral Documents or, if any such is necessary, SWMP
will be able to obtain such as and when required;



                    (7) the Lenders shall receive an opinion of counsel acceptable to Administrative Agent opining
as to the matters described in paragraph (6) above, and such opinion shall also state that such
repairs or restoration will be subject to the Liens of the Collateral Documents at the same level
of priority as the other Collateral; and



                    (8) Administrative Agent shall receive such additional title insurance, title insurance
endorsements, mechanic’s lien waivers, certificates, opinions or other matters as it may reasonably
request as necessary or appropriate in connection with such repairs or restoration or to preserve
or protect the Lenders’ interests hereunder and in the Collateral.




          (d) Provided that the conditions set forth in Section 7.5(c) have been satisfied or waived
as provided therein, if there shall occur any damage or destruction of the Project with respect
to which Insurance Proceeds for any single loss not in excess of $250,000 are payable, such
Insurance Proceeds shall be paid to SWMP and applied to the prompt payment of the cost of the repair or restoration of such damage or destruction.
SWMP shall submit a detailed report to Administrative Agent describing SWMP’s plan for
effectuating repairs and improvements, and such report shall be subject to the review and
approval of Administrative Agent.




          (e) Provided that the conditions set forth in Section 7.5(c) have been satisfied or waived
as provided therein, if there shall occur any damage or destruction of the Project with respect
to which Insurance Proceeds for any single loss in excess of $250,000 are payable, such
Insurance Proceeds shall be deposited into an account established by SWMP at Administrative
Agent’ office for the purpose (“Loss Proceeds Account”) and



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released by Administrative
Agent and applied to the prompt repair or restoration of the Project in accordance with the
following procedures:



                    (1) SWMP shall cause any repairs or restoration to be commenced and completed promptly and
diligently at the cost and expense of SWMP;



                    (2) From time to time after Administrative Agent shall have duly approved the making of such
repairs or restoration, Administrative Agent’s release of Insurance Proceeds for application toward
such repairs or restoration shall be conditioned upon SWMP’s written request and the presentation
to Administrative Agent of all documents, certificates and information with respect to such
Insurance Proceeds which would be required in order to obtain a Loan under this Agreement,
including a certificate from SWMP (A) describing in reasonable detail the nature of the repairs or
restoration to be effected with such release, (B) stating the cost of such repairs or restoration
and the specific amount requested to be paid over to or upon the order of SWMP and that such amount
is requested to pay the cost thereof, (C) stating that the aggregate amount requested by SWMP in
respect of such repairs or restoration (when added to any other Insurance Proceeds received by SWMP
in respect of such damage of destruction) does not exceed the cost of such repairs or restoration
and that a sufficient amount of funds is or will be available to SWMP to complete the Project, and
(D) stating that no Event of Default has occurred and is continuing other than an Event of Default
resulting solely from such damage or destruction.




          (f) If, after Insurance Proceeds have been applied to the repair or restoration of the
Project as provided in Section 7.5(d) or 7.5(e), Administrative Agent determines that the
Project will be able to operate at a level enabling Borrowers to pay and perform the Obligations
as well as before the damage or destruction, any excess Insurance Proceeds shall be paid into
the Revenue Account, otherwise such excess Insurance Proceeds shall be applied to the prepayment
of Loans in inverse order of maturity.




          (g) If a Default or Event of Default shall have occurred and be continuing, then any
provisions of this Section 7.5 to the contrary notwithstanding, the Insurance Proceeds
(including any Permitted Investments made with such proceeds, which shall be liquidated in such
manner as Administrative Agent shall deem reasonable and prudent under the circumstances) may be
applied by Administrative Agent (i) to curing such Default or Event of Default, and any
Insurance Proceeds remaining thereafter shall be applied as provided in this Section 7.5 or (ii)
toward payment of the Obligations, in connection with exercise of Administrative Agent’s
remedies pursuant to Article 8.



          7.6 Application of Eminent Domain Proceeds. All amounts and proceeds (including instruments) received in respect of any Event of Eminent
Domain (“Eminent Domain Proceeds”) shall be subject to the same treatment as Insurance
Proceeds as provided in Section 7.5, provided, however, that if Administrative Agent determines
that the Project should be restored, but no or insufficient replacement property is available for
such restoration, then such Eminent Domain Proceeds shall be applied to the prepayment of Loans in
inverse order of maturity.




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          7.7 Checking Accounts.




               7.7.1 Establishment. Each Borrower may establish one Checking Account with a bank (each, a
“Checking Account Bank”) on or prior to the date upon which it requests that Loan proceeds
or funds from the Revenue Account be deposited therein. No Borrower shall move, close or change
its Checking Account without the prior written consent of Administrative Agent (which consent shall
not be unreasonably withheld).



               7.7.2 Deposits. Administrative Agent shall withdraw from the Revenue Account and transfer to
the applicable Checking Account the amount specified in a Monthly Disbursement Requisition.
Notwithstanding anything to the contrary herein, the Borrowers shall not permit the aggregate
amount of funds on deposit in the Checking Accounts at any time to exceed (a) prior to the
Term-Conversion Date (i) $120,000 for the SWMP Checking Account, or (ii) $60,000 in the aggregate
for the Renegy and Renegy Trucking Checking Accounts or (b) after the Term-Conversion Date $60,000
in the aggregate for all the Checking Accounts.



               7.7.3 Withdrawals. Borrowers shall be entitled to withdraw amounts from the Checking Accounts
solely to (a) pay Project Costs or O&M Costs which have become due and payable or to become due and
payable within the next month, provided that with respect to the SWMP Checking Account, each such
Project Cost or O&M Cost payable does not exceed $20,000, or (b) re-deposit such amounts in the
Construction Account (prior to Term-Conversion) or the Revenue Account.



               7.7.4 Security Interest. Borrowers shall execute and deliver such documents and instruments
as Collateral Agent shall reasonably request in order to grant Collateral Agent, for the benefit of
the Secured Parties, a perfected first priority Lien in the Checking Accounts. Borrowers shall
cause each Checking Account Bank to enter into a Control Agreement.



               7.7.5 Books of Accounts; Statements. Not later than the 15th day of each month, the
applicable Borrower shall cause its Checking Account Bank (if any) to deliver to Collateral Agent a
statement setting forth the transactions in the applicable Checking Account during the preceding
month (including deposits, withdrawals and transfers from and to such Checking Account) and
specifying the amounts held in the Checking Account at the close of business on the last Business
Day of the preceding month. In addition, Borrowers shall promptly respond to requests by
Collateral Agent for information regarding deposits, investments and transfers into, in respect of
the Checking Account.



          7.8 Proceeds and Accounts; Control.





          (a) Borrowers shall not have any rights or powers with respect to any Proceeds or Account
except to have funds on deposit therein applied in accordance with this Agreement.
Administrative Agent is hereby authorized to reduce to cash any Permitted Investment (without
regard to maturity) in order to make any application required by any section of this Article 7
or otherwise pursuant to the Credit Documents. Upon the occurrence of an Event of Default,
Collateral Agent shall have all rights and powers with respect to Proceeds and Accounts as it
has with respect to any other Collateral and may apply Proceeds



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and Accounts to the payment of
interest, principal, fees, costs, charges or other amounts due or payable to the Secured Parties
in such order as Administrative Agent may elect in its sole discretion.




          (b) Administrative Agent is acting as securities intermediary (as such term is used in the
UCC) with respect to the Accounts. Borrowers acknowledge and agree that (i) SWMP is the sole
entitlement holder (as such term is used in the UCC) with respect to the Accounts and (ii) upon
receipt of notice from Collateral Agent of the occurrence and continuation of an Event of
Default, Administrative Agent shall comply with entitlement orders (as such term is used in the
UCC) originated by Collateral Agent without further consent of SWMP or any other Borrower;
provided that Administrative Agent may act as Collateral Agent’s agent in respect of such
entitlement orders pursuant to Section 10.5.



          7.9 Permitted Investments. Administrative Agent shall invest all amounts held in the Accounts or as Insurance Proceeds or
Eminent Domain Proceeds only in Permitted Investments as directed by and at the expense and risk of
Borrowers.




ARTICLE 8

EVENTS OF DEFAULT; REMEDIES




          8.1 Events of Default. The occurrence of any of the following events shall constitute an event of default (each, an
“Event of Default”) hereunder:




               8.1.1 Failure to Make Payments. Borrowers shall fail to pay, in accordance with the terms of
this Agreement (a) any principal on any Loan or any reimbursement obligation on the date that such
sum is due, (b) any interest on any Loan, Bond or reimbursement obligation within three days after
the date such sum is due, (c) any scheduled fee, cost, charge or sum due hereunder or under any
Credit Document within three days of the date that such sum is due, (d) any amount due for
mandatory prepayment, on the date that such payment is due, or (e) any other fee, cost, charge or
other sum due under any Credit Document within 10 days after written notice is received by
Borrowers that such sum is due, except in each case as a result of Administrative Agent’s failure
to perform its obligations under this Article 7.



               8.1.2 Bankruptcy; Insolvency. The Sponsor (until expiration of the Sponsor Guaranty), any
Pledgor, Borrowers or any other Major Project Participant (so long as such Major Project
Participant shall have outstanding or unperformed obligations under the Operative Document to which
it is a party) shall become subject to a Bankruptcy Event.



               8.1.3 Defaults Under Other Indebtedness. Borrowers or, prior to the termination of the
Sponsor Guaranty pursuant to the terms hereof and thereof, the Sponsor shall default for a period
beyond any applicable grace period (not to exceed 30 days) (a) in the payment of any principal,
interest or other amount due under any agreement or instrument involving Debt (other than the Debt
hereunder) and the outstanding amount or amounts payable under any such agreement or instrument
equals or exceeds $100,000 in the aggregate; (b) in the observance or performance of any other
agreement or condition relating to such Debt or contained in any agreement or instrument
evidencing, securing or relating thereto, or any other event shall occur or condition exist, the
effect of which default, event or condition is to cause, or



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to permit any holder of such Debt (or a trustee or agent of such holder or beneficiary) to cause, such Debt to become or be declared due
and payable prior to its stated maturity or the stated maturity of any underlying obligation, as
the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise); or (c)
any such Debt shall otherwise be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof.



               8.1.4 Judgments. A final judgment or order for the payment of money shall be entered against
any of the Borrowers or, the Sponsor at any time prior to the termination of the Sponsor Guaranty
pursuant to the terms hereof and thereof, in the amount of $100,000 or more individually or in the
aggregate, other than, in each case, a judgment or order, (i) which is fully
covered by insurance and the insurer has been notified of, and has not disputed the claim made for
the payment of, the amount of such judgment or order, (ii) which is discharged within 30 days after
its entry, or (iii) the execution of which is effectively stayed within 30 days after its entry
but only for 30 days after the date on which such stay is terminated or expires, or any
non-monetary judgment or order shall be entered against Borrowers or the Sponsor, at any time prior
to the termination of the Sponsor Guaranty pursuant to the terms hereof and thereof, that could
reasonably be expected to have a Material Adverse Effect other than a judgment or
order, which is discharged within 30 days after its entry or the execution of which is effectively
stayed within 30 days after its entry (but only for 30 days after the date on which such stay is
terminated or expires).



               8.1.5 Breach of Terms of Agreement.




          (a) Defaults Without Cure Periods. (i) Borrowers shall fail to perform or observe
any of the covenants set forth in Section 5.1,5.4, 5.5, 5.9(a), 5.17, 5.19, 5.25 or Article 6
(other than Sections 6.7, 6.8, 6.14 and 6.17) of this Agreement; or (ii) the Sponsor shall fail
to perform or observe any of the material covenants set forth in the Sponsor Guaranty.




          (b) Defaults With 10 Day Cure Periods. Borrowers shall fail to perform or observe
any of the covenants set forth in Articles 5 and 6 of this Agreement (other than in Sections of such Articles specifically listed in Section 8.1.5(a)), and such failure shall
continue unremedied for a period of 10 days after Borrowers become aware thereof or receive
written notice thereof from Administrative Agent.




          (c) Other Defaults. Borrowers or any other Sponsor Entity shall fail to perform or
observe any of the agreements set forth herein or in any Credit Document not otherwise
specifically provided for in Section 8.1.5(a), Section 8.1.5(b) or elsewhere in this Article 8,
and such failure shall continue unremedied for a period of 30 days after Borrowers become aware
thereof or receive written notice thereof from Administrative Agent; provided,
however, that, if (i) such failure cannot be cured within such 30 day period, (ii) such
failure is susceptible of cure within 90 days, (iii) Borrowers or such other Sponsor Entity, as
applicable, is proceeding with diligence and in good faith to cure such failure, (iv) the
existence of such failure has not had and could not, after considering the nature of the cure,
be reasonably expected to have a Material Adverse Effect, and (v) Administrative Agent



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shall have received an officer’s certificate signed by a Responsible Officer of the applicable entity
to the effect of clauses (i), (ii), (iii) and (iv) above and stating what action Borrowers or
such other Sponsor Entity, as applicable, is taking to cure such failure, then such 30 day cure
period shall be extended to such date, not to exceed a total of 90 days, as shall be necessary
for Borrowers or such other Sponsor Entity, as applicable, diligently to cure such failure.



               8.1.6 Loss of Collateral. (a) All or any material portion of the Collateral is damaged,
seized or appropriated without appropriate insurance proceeds (subject to the underlying
deductible) or without fair value being paid therefor so as to allow replacement of such Collateral
or prepayment of Loans and to allow Borrowers to continue satisfying their obligations hereunder
and under the other Operative Documents, or (b) any Person other than the Secured Parties attaches
or institutes proceedings to attach all or any material part of the Collateral, and any such
proceeding or attachment or any judgment Lien against any such Collateral (i) remains unlifted,
unstayed or undischarged for a period of 30 days or (ii) is upheld in a final nonappealable
judgment of a court of competent jurisdiction.



               8.1.7 Term-Conversion. Term-Conversion shall not have occurred by the Date Certain.



               8.1.8 Regulatory Status.




          (a) If loss of Exempt Wholesale Generator status for SWMP or loss of Eligible Facility
status for the Project could reasonably be expected to have a Material Adverse Effect, (i) SWMP
shall have tendered notice to FERC that SWMP has ceased to be an Exempt Wholesale Generator or
(ii) FERC shall have issued an order determining that SWMP no longer meets the criteria of an
Exempt Wholesale Generator or takes other action revoking such Exempt Wholesale Generator
status.




          (b) An Adverse PUHCA Event shall occur.




          (c) If loss of SWMP’s market-based rate authority could reasonably be expected to have a
Material Adverse Effect, (i) SWMP shall have tendered notice to FERC that it seeks to cancel its market-based rate authority or (ii) FERC shall have issued an
order revoking SWMP’s market-based rate authority.




          (d) If SWMP’s failure to comply with any requirements under the FPA applicable to a “public
utility” with authority to sell at wholesale electric power at market-based rates could
reasonably be expected to have a Material Adverse Effect, FERC shall have issued an order
finding that SWMP has not complied with such requirement under the FPA applicable to a “public
utility” with authority to sell at wholesale electric power at market-based rates.



               8.1.9 Abandonment.




          (a) At any time prior to Term-Conversion, SWMP shall announce that it is abandoning the
Project or the Project shall be abandoned or work thereon shall cease for a



93









 







period of more than 30 consecutive days for any reason (which period (i) shall be measured from the first occurrence
of a work stoppage and continuing until work of a substantial nature is resumed and thereafter
diligently continued, and (ii) shall not include delays caused by any event of force majeure or
default by a Major Project Participant (other than Borrowers or their Affiliates) under the
Construction Contracts or any other Project Document pursuant to which material construction
activities are being performed).




          (b) At any time following Term-Conversion, SWMP shall announce that (i) it is abandoning
the Project or (ii) the Project shall be abandoned or operation thereof shall be suspended for a
period of more than 30 consecutive days for any reason (other than force majeure);
provided, that none of (A) scheduled maintenance of the Project, (B) repairs to the
Project, whether or not scheduled, or (C) a forced outage or scheduled outage of the Project,
shall constitute abandonment or suspension of the Project, so long as SWMP is diligently
attempting to end such suspension.



               8.1.10 Security. Any of the Collateral Documents, once executed and delivered, shall fail to
provide to Collateral Agent the Liens, first priority security interest (subject to Permitted Liens
described in clauses (a) and (e) of the definition thereof and, to the extent required by
Governmental Rule, clauses (b), (c) and (g) of the definition thereof), rights, titles, interest,
remedies permitted by law, powers or privileges intended to be created thereby (including the
priority intended to be created thereby) or, except in accordance with its terms, cease to be in
full force and effect, or the first priority or validity thereof or the applicability thereof to
the Loans, the Notes (if any) or any other Obligations purported to be secured or guaranteed
thereby or any part thereof shall be disaffirmed by or on behalf of Borrowers.



               8.1.11 Change of Control. The Sponsor (which for purposes of this Section 8.1.11 shall be
deemed to include Sponsor’s Affiliates, except Renegy Holdings) shall cease to directly or
indirectly maintain at least 50.1% of the economic interests in and voting power of Renegy
Holdings, the Sponsor ceases to be a manager of Renegy Trucking or Renegy or Renegy Holdings ceases
to be the Manager of SWMP or to continue to hold the same Membership Interest in SWMP held as of
the date hereof or, should the Rescission Date occur, the Rescission Date (a “Change of
Control”); provided, that a Change of Control shall not be deemed to occur if Sponsor’s
economic interests in and voting power of Renegy Holdings falls below 50.1% after the one year anniversary of the Term-Conversion Date provided Sponsor
continues to exercise titular and effective managerial control of Renegy Holdings and Renegy
Holdings continues to be the Manager of SWMP and continues to hold the same Membership Interest in
SWMP held as of the date hereof or, should the Rescission Date occur, the Rescission Date;
provided, further, that upon Sponsor’s death, a Change of Control shall not be
deemed to occur until one year has passed and will not be deemed to occur if as of such time 100%
of the economic and voting interests in Renegy Holdings maintained by Sponsor at the time of
Sponsor’s death have been transferred, provided that such interests constitute at least 50.1% of
the economic and voting interests in Renegy Holdings so long as:




          (a) the applicable transferee is a corporation, limited liability company or limited
partnership organized or formed in the United States or a state or commonwealth therein;



94









 






          (b) at the time of the proposed disposition, the applicable transferee’s unsecured senior
long-term debt has a rating of at least Baa3 by Moody’s and BBB- by S&P;




          (c) the electric energy generation business is a substantial part of the applicable
transferee’s business;




          (d) on the date of any such disposition, the ownership interests in Borrowers held by
Renegy Holdings shall continue to be pledged by Renegy Holdings to Collateral Agent and the
applicable transferee (or its applicable subsidiary) executes and delivers all applicable Credit
Documents as requested by Administrative Agent; and




          (e) on or before the date of any such disposition, the applicable transferee delivers to
Administrative Agent (addressed to the Secured Parties) such opinions, resolutions, certificates
and other evidence as Administrative Agent may reasonably request (all of which shall be in form
and substance reasonably satisfactory to Administrative Agent) to ensure Administrative Agent’s
reasonable satisfaction as of the date of any such disposition with the matters covered by
Sections 3.1.1 through 3.1.6(a), 3.1.8 and 3.1.18 (with respect solely to the applicable
transferee and, if reasonably requested by Administrative Agent, Borrowers and Renegy Holdings);




provided further that, any transaction involving the effective transfer by
Renegy Holdings of interests to a purchaser of production tax credits or similar tax attributes
arising from ownership of a Borrower shall not constitute a Change of Control so long as Renegy
Holdings continues to be the Manager of SWMP and continues to hold the same Membership Interest
in SWMP held as of the date hereof or, should the Rescission Date occur, the Rescission Date and
the Sponsor maintains at least 50.1% of the economic interests in and voting power of Renegy
Holdings; provided further that, removal of Renegy Holdings as Manager in
accordance with the terms and conditions of Section 8.3 of the LLC Operating Agreement in
existence as of the date hereof shall not constitute a Change of Control so long as
Administrative Agent approves the replacement Manager, as provided for in Section 8.3 thereof.



               8.1.12 Loss of or Failure to Obtain Applicable Permits.




          (a) Borrowers shall fail to obtain any Permit on or before the date that such Permit
becomes an Applicable Permit with respect to the Project, and such failure could reasonably be
expected to have a Material Adverse Effect.




          (b) Any Applicable Permit or Applicable Third Party Permit shall be materially modified
(other than modifications contemplated in a Project Document requested by Borrowers and approved
in writing in advance of such modification by Administrative Agent acting at the direction of
the Majority Lenders, which approval shall not be unreasonably withheld), revoked, canceled or
not renewed by the issuing agency or other Governmental Authority having jurisdiction (or
otherwise ceases to be in full force and effect) and within 30 days thereafter Borrowers are not
able to demonstrate to the reasonable satisfaction of the Majority Lenders that such
modification of, revocation of, cancellation of,



95









 







failure to renew, or failure to maintain in
full force and effect such Permit could not reasonably be expected to have a Material Adverse
Effect.



               8.1.13 Credit Documents. At any time after the execution and delivery thereof, (a) any Credit
Document or any material provision hereof or thereof (i) ceases to be in full force and effect or
to be valid and binding on any party thereto other than a Secured Party (other than by reason of
the satisfaction in full of the Obligations or any other termination of a Credit Document in
accordance with the terms hereof or thereof), or is assigned or otherwise transferred (except as
otherwise required or expressly permitted hereunder or thereunder) or is prematurely terminated by
any party thereto (other than a Secured Party), (ii) is or becomes invalid, illegal or
unenforceable, or any party hereto or thereto (other than a Secured Party) repudiates or disavows
or takes any action to challenge the validity or enforceability of such agreement, (iii) is
declared null and void by a Governmental Authority of competent jurisdiction, or (iv) fails to or
ceases to provide the rights, powers and privileges purported to be created thereby or hereby, or
(b) any authorization or approval by any Governmental Authority necessary to enable Borrowers or
any other Sponsor Entity to timely comply with or perform its Obligations shall be revoked,
withdrawn or withheld, or shall otherwise fail to be issued or remain in full force and effect.



               8.1.14 Misstatements; Omissions. Any representation or warranty made, or deemed made upon
occurrence of a Credit Event, by any Sponsor Entity in any Credit Document to which such Person is
a party, or any certificate or document delivered by a Responsible Officer of such Sponsor Entity
to any Secured Party under any Credit Document to which such Person is a party, proves to have been
untrue, false or misleading in any material respect as of the time made, deemed made, confirmed or
furnished.



               8.1.15 Project Documents.




          (a) Borrowers. Borrowers shall be in breach of, or in default under, a Major
Project Document and such breach or default shall not be remediable or, if remediable, shall
continue unremedied for the lesser of (i) a period of 30 days or (ii) such period of time
(without giving effect to any extension given to Collateral Agent under any applicable Consent
with respect thereto) under such Major Project Document which Borrowers have available to them in which to remedy such breach or default; provided, that if (A)
such breach does not involve the payment of money and cannot be cured within such 30 day period
(or such lesser period of time, as the case may be), (B) such breach is susceptible of cure
within 90 days after such breach or default, (C) Borrowers are proceeding with diligence and in
good faith to cure such breach, (D) the existence of such breach or default has not had and
could not after considering the nature of the cure, be reasonably expected to give rise to
termination by the counterparty of the Major Project Document which is subject to breach or to
otherwise have a Material Adverse Effect, and (E) Administrative Agent shall have received an
officer’s certificate signed by a Responsible Officer to the effect of clauses (A), (B), (C) and
(D) above and stating what action Borrowers are taking to cure such breach, then such 30 day
cure period (or such lesser period of time, as the case may be) shall be extended to such date,
not to exceed a total of 90 days, as shall be necessary for Borrowers diligently to cure such
breach.



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          (b) Third Party. Any Person other than Borrowers shall be in breach of, or in
default under, a Major Project Document and such breach or default shall not be remediable or,
if remediable, shall continue unremedied for a period of 30 days from the time Borrowers obtain
knowledge of such breach; provided, that if (i) such breach cannot be cured within such
30 day period, (ii) such breach or default is susceptible of cure within 90 days, (iii) the
breaching Person or Borrowers is or are proceeding with diligence and in good faith to cure such
breach, and (iv) the existence of such breach has not had and could not after considering the
nature of the cure, be reasonably expected to result in a Material Adverse Effect, then such 30
day cure period shall be extended to such date, not to exceed a total of 90 days, as shall be
necessary for such breaching Person diligently to cure such breach.




          (c) Third Party Consents. (i) Any Person other than Borrowers shall disaffirm or
repudiate in writing its material obligations under any Consent, (ii) any representation or
warranty made by any Person other than Borrowers in a Consent shall be untrue or misleading in
any material respect as of the time made and such untrue or misleading representation or
warranty could reasonably be expected to materially adversely affect the rights of Collateral
Agent or the Secured Parties thereunder or to otherwise result in a Material Adverse Effect, or
(iii) a Person other than Borrowers shall breach any material covenant of a Consent and such
breach or default shall not be remediable or, if remediable, shall continue unremedied for a
period of 30 days from the time Borrowers obtain knowledge of such breach; provided,
that if (A) such breach cannot be cured within such 30 day period, (B) such breach is
susceptible of cure within 90 days, (C) the breaching party or Borrowers is or are proceeding
with diligence and in good faith to cure such breach, and (D) the existence of such breach has
not had and could not after considering the nature of the cure, be reasonably expected to have a
Material Adverse Effect, then such 30 day cure period shall be extended to such date, not to
exceed a total of 90 days, as shall be necessary for such third party diligently to cure such
breach.




          (d) Termination. At any time after the execution and delivery thereof, (a) any
Major Project Document or any material provision hereof or thereof (i) ceases to be in full
force and effect or to be valid and binding on any party thereto (other than by reason of the
satisfaction in full of the Obligations or any other termination thereof in accordance with the terms thereof), or is assigned or otherwise transferred (except as otherwise required
or expressly permitted hereunder or thereunder) or is prematurely terminated by any party
thereto, (ii) is or becomes invalid, illegal or unenforceable, or any party hereto or thereto
repudiates or disavows or takes any action to challenge the validity or enforceability of such
agreement, (iii) is declared null and void by a Governmental Authority of competent
jurisdiction, or (iv) fails to or ceases to provide the rights, powers and privileges purported
to be created thereby or hereby.




          (e) Interconnection Agreement. SWMP shall fail to have in place by November 1,
2006 an interconnection agreement with APS, Abitibi and SWMP, in form and substance satisfactory
to Administrative Agent.



               8.1.16 Expropriation. There shall have occurred any act or series of acts attributable to any
Governmental Authority which (a) in the reasonable judgment of Administrative Agent has the effect
of depriving the Secured Parties of their fundamental rights



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as creditors in respect of the Credit Documents, (b) confiscates, expropriates, nationalizes or otherwise acquires compulsorily the
ownership or control by the Company of all or any material part of the Project, or (c) in the
reasonable judgment of Administrative Agent has the effect of materially impairing the value of any
Major Project Document, and such act or series of acts continues uncured for 90 days or more.



               8.1.17 Indenture Default. An Event of Default shall have occurred under the Indenture, other
than an Event of Default under Section 9.1(g) of the Indenture.



               8.1.18 Paper Sludge Shortfall. The Catalyst mill shall for any reason have ceased delivery of
paper sludge to the Project in an amount at least equal to 250 bone-dry tons per day, for a period
of 45 days, or Catalyst has announced that it intends such cessation, and Borrowers shall not have
in place at the Site or available from counterparties under contracts a fuel supply stockpile such
that (a) during the first year after such moment (i.e., after either the end of such 45-day period
or the end of the 45-day period following the time of Catalyst’s announcement, as applicable),
would allow the Project to continue operating without paper sludge at a capacity of 24.5 MW for 400
days and (b) from and after the first anniversary of such moment, would allow the Project to
continue operating without paper sludge at a capacity of 24.5 MW for 800 days (the amount of fuel
described in clause (a) or clause (b), as applicable, the “Alternate Fuel Stockpile”).



          8.2 Remedies. Upon the occurrence and during the continuation of an Event of Default, Administrative Agent
and Collateral Agent on behalf of the Secured Parties may, at the election and direction of the
Majority Lenders, without further notice of default, presentment or demand for payment, protest or
notice of non-payment or dishonor, or other notices or demands of any kind, all such notices and
demands (other than notices required by the Credit Documents) being waived, exercise any or all of
the following rights and remedies, in any combination or order that the Majority Lenders may elect,
in addition to such other rights or remedies as the Secured Parties may have hereunder, under the
Collateral Documents or at law or in equity:




               8.2.1 No Further Loans. Declare all Commitments cancelled and refused, and Administrative
Agent, and the Lenders shall not be obligated, to continue any Loans, make any additional Loans,
make any payments, or permit the making of payments, from any Account or the Construction Fund or
any Proceeds or other funds held by Administrative Agent or Collateral Agent under the Credit
Documents or on behalf of Borrowers; provided, that in the case of an Event of Default
occurring under Section 8.1.2 with respect to Borrowers, all such Commitments shall be cancelled
and terminated without further act of any Secured Party.



               8.2.2 Cure by Agents. Without any obligation to do so, make disbursements or Loans to or on
behalf of Borrowers or disburse amounts from the Construction Account or any other Account to cure
(a) any Event of Default or Default hereunder and (b) any default and render any performance under
any Project Document as the Majority Lenders in their sole discretion may consider necessary or
appropriate, whether to preserve and protect the Collateral or the Secured Parties’ interests
therein or for any other reason. All sums so expended through new Loans, together with interest on
such total amount at the Default Rate (but in no event shall the rate exceed the maximum lawful
rate), shall be repaid by Borrowers to



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Administrative Agent or Collateral Agent, as the case may
be, on demand and shall be secured by the Credit Documents, notwithstanding that such expenditures
may, together with amounts advanced under this Agreement, exceed the Total Loan Commitment.



               8.2.3 Acceleration. Declare and make all or a portion of the sums of accrued and outstanding
principal and accrued but unpaid interest remaining under this Agreement, together with all unpaid
fees, costs (including LIBOR Breakage Costs and Swap Breaking Fees) and charges due under any
Credit Document, immediately due and payable and require Borrowers immediately, without
presentment, demand, protest or other notice of any kind, all of which Borrowers hereby expressly
waive, to pay Administrative Agent for the benefit of the Secured Parties an amount in immediately
available funds equal to the aggregate amount of any outstanding Obligations; provided,
that, in the event of an Event of Default occurring under Section 8.1.2 with respect to Borrowers,
all such amounts shall become immediately due and payable without further act of any Secured Party.



               8.2.4 Cash Collateral. Apply or execute upon any amounts on deposit in any Account or any
Proceeds or any other moneys of Borrowers on deposit with any Secured Party in the manner provided
in the UCC and other relevant statutes and decisions and interpretations thereunder with respect to
cash collateral. Without limiting the foregoing, each of Administrative Agent and Collateral Agent
shall have all rights and powers with respect to Proceeds, the Accounts and the contents of the
Accounts as it has with respect to any other Collateral and may apply, or cause the application of,
such amounts to the payment of interest, principal, fees, costs, charges or other amounts due or
payable to any Secured Party with respect to the Loans and the Letter of Credit in such order as
the Majority Lenders may elect in their sole discretion. If such Event of Default occurs prior to
Term-Conversion, until such time as the Majority Lenders so elect to exercise such rights and
powers, amounts in the Construction Account constituting Project Revenues shall continue to be
applied by Administrative Agent to O&M Costs to the extent that Administrative Agent so elects in
its sole discretion. If such Event of Default occurs following Term-Conversion, until such time as
the Majority Lenders so elect to exercise such rights and powers, amounts in the Revenue Account
shall be applied as provided in Section 7.5. Borrowers shall not have any rights or powers with respect to such amounts
except as expressly provided in this Section 8.2.4.



               8.2.5 Possession of Project. Enter into possession of the Project and perform any and all
work and labor necessary to complete the Project substantially according to the Plans and
Specifications or to operate and maintain the Project, and all sums expended by Administrative
Agent or Collateral Agent in so doing, together with interest on such total amount at the Default
Rate, shall be repaid by Borrowers to Administrative Agent or Collateral Agent, as the case may be,
upon demand and shall be secured by the Credit Documents, notwithstanding that such expenditures
may, together with amounts advanced under this Agreement, exceed the aggregate amount of the Total
Loan Commitment.



               8.2.6 Remedies Under Credit Documents. Administrative Agent may, and at the direction of the
Majority Lenders shall, exercise and direct Collateral Agent to exercise, any and all rights and
remedies available to it under any of the Credit Documents, including judicial or non-judicial
foreclosure or public or private sale of any of the Collateral pursuant to the Collateral
Documents.



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ARTICLE 9

SCOPE OF LIABILITY




          Except as set forth in this Article 9, notwithstanding anything in any Credit Document to the
contrary, the Secured Parties shall have no claims with respect to the transactions contemplated by
the Operative Documents against AZ Biomass, the Sponsor or any of their Affiliates (other than
Borrowers), shareholders, officers, directors or employees (collectively, the “Nonrecourse
Persons”), and the Secured Parties’ recourse against Borrowers and the Nonrecourse Persons
shall be limited to the Collateral, the Project, all Project Revenues, all Loan proceeds, Insurance
Proceeds, Eminent Domain Proceeds, and all income or revenues of the foregoing as and to the extent
provided herein and in the Collateral Documents; provided, that the foregoing provision of
this Article 9 shall not in any way (a) constitute a waiver, release or discharge of any of the
indebtedness, or of any of the terms, covenants, conditions, or provisions of any Credit Document
(and the same shall continue, but without personal liability to the Nonrecourse Persons, until
fully paid, discharged, observed, or performed) or otherwise relieve any such Person from its
obligations under the Credit Documents to which such Nonrecourse Person is a party or shall
preclude, restrict, reduce, limit or otherwise affect the rights, powers and remedies of the
Secured Parties to enforce (or cause to be enforced) such obligations against such Person or such
Person’s properties to the extent permitted by any Credit Document to which such Nonrecourse Person
is a party; (b) limit, reduce, restrict or otherwise affect the right of any Secured Party (or any
assignee, beneficiary or successor to any of them) to name Borrowers or any other Nonrecourse
Person as a defendant in any action or suit for a judicial foreclosure or for the exercise of any
other remedy under or with respect to any Credit Document, or for injunction or specific
performance of such Credit Document, so long as no judgment in the nature of a deficiency judgment
shall be enforced against any Nonrecourse Person, except as set forth in this Article 9; (c) limit,
reduce, restrict or otherwise affect any right or remedy of any Secured Party (or any assignee or
beneficiary thereof or successor thereto) with respect to, and each of the Nonrecourse Persons
shall remain fully liable to the extent that it would otherwise be liable for its own actions with
respect to, any fraud, willful misrepresentation (which shall not include innocent or negligent misrepresentation), or misappropriation of
Project Revenues, Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds or any other earnings,
revenues, rents, issues, profits or proceeds from or of the Collateral, that should or would have
been paid as provided herein or paid or delivered to any Secured Party (or any assignee or
beneficiary thereof or successor thereto) towards any payment required under any other Credit
Document; (d) affect or diminish or constitute a waiver, release or discharge of any specific
written obligation, covenant, or agreement in respect of the transactions contemplated by the
Operative Documents made by any of the Nonrecourse Persons or any security granted by the
Nonrecourse Persons in support of the obligations of such Persons under any Collateral Document (or
as security for the obligations of Borrowers) or the Sponsor Guaranty; and (e) limit the liability
of (i) any Person who is a party to any Project Document or has issued any certificate or other
statement in connection therewith with respect to such liability as may arise solely by reason of
the terms and conditions of such Project Document (but subject to any limitation of liability in
such Project Document), certificate or statement, or (ii) any Person rendering a legal opinion
pursuant to this Agreement, in each case under this clause (e) relating solely to such liability of
such Person as may arise under such referenced agreement, instrument or opinion. The limitations
on recourse set forth in this Article 9 shall survive the termination of



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this Agreement, the termination of all Commitments and the Swap Agreements to which any Secured Party is a party and
the payment and performance in full of the Obligations.




ARTICLE 10

AGENTS; SUBSTITUTION




          10.1 Appointment and Authority




               10.1.1 Each of the Secured Parties hereby irrevocably appoints CoBank, ACB to act on its
behalf as Administrative Agent hereunder and under the other Credit Documents and hereby
irrevocably appoints CoBank, ACB to act on its behalf as Collateral Agent hereunder and under the
other Credit Documents for purposes of acquiring, holding and enforcing any and all Liens on
Collateral granted by any of the Sponsor Entities to secure any of the Obligations and authorizes
Administrative Agent and Collateral Agent to take such actions on its behalf and to exercise such
powers as are delegated to Administrative Agent or Collateral Agent, as the case may be, by the
terms hereof or thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article 10 are solely for the benefit of the Secured Parties, and
Borrowers shall not have rights as a third party beneficiary of any of such provisions.



               10.1.2 Each of Administrative Agent and Collateral Agent is hereby authorized by the Secured
Parties to execute, deliver and perform each of the Credit Documents to which Administrative Agent
or Collateral Agent (as the case may be) is or is intended to be a party, and each Lender agrees to
be bound by all of the agreements of Administrative Agent and Collateral Agent contained in the
Credit Documents. Each of Administrative Agent and Collateral Agent is further authorized by the
Secured Parties to enter into agreements supplemental hereto for the purpose of curing any formal
defect, inconsistency, omission or ambiguity in any Credit Document to which it is a party.



          10.2 Rights as a Lender. The Persons serving as Administrative Agent and Collateral Agent shall have the same rights
and powers in its capacity as a Lender as any other Lender and may exercise the same as though it
were not Administrative Agent or Collateral Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include the Person serving
as Administrative Agent hereunder in its individual capacity. Such Persons and their respective
Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other
advisory capacity for and generally engage in any kind of business with Borrowers or any Affiliate
thereof as if such Person were not Administrative Agent or Collateral Agent and without any duty to
account therefor to the Lenders.




          10.3 Exculpatory Provisions.




               10.3.1 Administrative Agent and Collateral Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Credit Documents. Without limiting the
generality of the foregoing, Administrative Agent and Collateral Agent:



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          (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default or Event of Default has occurred and is continuing;




          (b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other
Credit Documents that Administrative Agent or Collateral Agent is required to exercise as
directed in writing by the Majority Lenders (or such other number or percentage of the Lenders
as shall be expressly provided for), provided, that Administrative Agent and Collateral
Agent shall not be required to take any action that, in its opinion or the opinion of its
counsel, may expose Administrative Agent or Collateral Agent to liability or that is contrary to
any Credit Document or applicable law; and




          (c) shall not, except as expressly set forth herein and in the other Credit Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any information
relating to Borrowers or any of their Affiliates that is communicated to or obtained by the
Person serving as Administrative Agent, Collateral Agent or any of their respective Affiliates
in any capacity.



               10.3.2 Administrative Agent and Collateral Agent shall not be liable for any action taken or
not taken by it (a) with the consent or at the request of the Majority Lenders (or such other
number or percentage of the Lenders as shall be necessary, or as Administrative Agent or Collateral
Agent, as the case may be, shall believe in good faith shall be necessary, under the circumstances
and which would not constitute gross negligence or willful misconduct) or (b) in the absence of its
own gross negligence or willful misconduct. Administrative Agent and Collateral Agent shall be
deemed not to have knowledge of any Default, Event of Default or Material Adverse Effect unless and
until notice describing such is given to Administrative Agent or Collateral Agent, as the case may
be, by Borrowers, a Lender or LC Issuer.



               10.3.3 Administrative Agent and Collateral Agent shall not be responsible for or have any duty
to ascertain or inquire into (a) any statement, warranty or representation made in or in connection
with any Credit Document, (b) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (c)
the performance or observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default or Event of Default, (d) the validity,
enforceability, effectiveness or genuineness of any Credit Document or any other agreement,
instrument or document, or the creation, perfection or priority of any Lien purported to be created
by the Collateral Documents, (d) the value or the sufficiency of any Collateral, or (e) the
satisfaction of any condition set forth in Article 3 or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to Administrative Agent or Collateral Agent, as
the case may be.



          10.4 Reliance. Administrative Agent and Collateral Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. Administrative Agent and Collateral Agent also may rely upon
any statement made to it orally or by telephone and believed



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by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan, or the issuance of the Letter of Credit, that by its
terms must be fulfilled to the satisfaction of a Lender or LC Issuer, Administrative Agent and
Collateral Agent may presume that such condition is satisfactory to such Lender or LC Issuer unless
Administrative Agent or Collateral Agent, as the case may be, shall have received notice to the
contrary from such Lender or LC Issuer prior to the making of such Loan or the issuance of such
Letter of Credit. Administrative Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.




          10.5 Delegation of Duties. Administrative Agent and Collateral Agent may perform any and all of their respective duties
and exercise their respective rights and powers under the Credit Documents by or through Collateral
Agent or Administrative Agent, respectively, or any one or more sub-agents appointed by them, with
or without a written agency appointment. Administrative Agent and Collateral Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and powers by or through
their respective Affiliates. The exculpatory and indemnification provisions of this Agreement
shall apply to any such sub-agent and to the Affiliates of Administrative Agent and Collateral
Agent and any such sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities as Administrative
Agent and Collateral Agent.




          10.6 Resignation. Either Administrative Agent or Collateral Agent may at any time give notice of its resignation
to the Secured Parties and Borrowers. Upon receipt of any such notice of resignation, the Majority
Lenders shall have the right, in consultation with Borrowers, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any
such bank with an office in the United States. If no such successor shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring
Administrative Agent or Collateral Agent gives notice of its resignation, then the retiring
Administrative Agent or Collateral Agent, as the case may be, may on behalf of the Secured Parties,
appoint a successor Administrative Agent or Collateral Agent, as the case may be, meeting the
qualifications set forth above; provided, that if Administrative Agent or Collateral Agent
shall notify the Borrowers and the Secured Parties that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in accordance with such
notice and (a) the retiring Administrative Agent or Collateral Agent, as the case may be, shall be
discharged from its duties and obligations under the Credit Documents (except that in the case of
any collateral security held by Collateral Agent, the retiring Collateral Agent shall continue to
hold such collateral security until such time as a successor Collateral Agent is appointed) and (b)
all payments, communications and determinations provided to be made by, to or through
Administrative Agent or Collateral Agent, as the case may be, shall instead be made by or to each
Lender, Swap Bank and LC Issuer directly, until such time as the Majority Lenders appoint a
successor Administrative Agent or Collateral Agent as provided for above in this Section. Upon the
acceptance of a successor’s appointment as Administrative Agent or Collateral Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring (or retired) Administrative Agent or



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Collateral Agent, and the retiring
Administrative Agent or Collateral Agent shall be discharged from all of its duties and obligations
hereunder or under the other Credit Documents (if not already discharged therefrom as provided
above in this Section). The fees payable by Borrowers to a successor Administrative Agent or
Collateral Agent shall be the same as those payable to its predecessor unless otherwise agreed
between Borrowers and such successor. After the retiring Administrative Agent’s or Collateral
Agent’s resignation under the Credit Documents, the provisions of the exculpatory and
indemnification provisions of this Agreement shall continue in effect for the benefit of such
retiring Administrative Agent or Collateral Agent, its sub-agents and their respective Affiliates
in respect of any actions taken or omitted to be taken by any of them while the retiring
Administrative Agent or Collateral Agent was acting as such.




          Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring LC Issuer, (b) the retiring LC Issuer shall be discharged from its duties and
obligations under the Credit Documents, and (c) the successor LC Issuer shall issue a letter of
credit in substitution for the Letter of Credit outstanding at the time of such succession or make
other arrangements satisfactory to the retiring LC Issuer to effectively assume the obligations of
the retiring LC Issuer with respect to the Letter of Credit.




          10.7 Non-Reliance. Each Lender and LC Issuer acknowledges that it has, independently and without reliance upon
Administrative Agent, Collateral Agent, Lead Arranger or any other Lender or any of their
Affiliates and based on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender and LC Issuer also
acknowledges that it will, independently and without reliance upon Administrative Agent, Collateral Agent, Lead Arranger or any other Lender or any of their Affiliates and
based on such documents and information as it shall from time to time deem appropriate, continue to
make its own decisions in taking or not taking action under or based upon any Credit Document or
any related agreement or any document furnished hereunder or thereunder.




          10.8 Administrative Agent May File Proofs of Claim.




               10.8.1 In case of the pendency of any proceeding under any Bankruptcy Law or any other
judicial proceeding relative to any Sponsor Entity, Administrative Agent (irrespective of whether
the principal of any Loan or LC Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether Administrative Agent shall have made any
demand on Borrowers) shall be entitled and empowered, by intervention in such proceeding or
otherwise:




          (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, LC Obligations and all other Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in order to have the
claims of the Secured Parties (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Secured Parties and their respective agents and counsel and
all other amounts due the Secured Parties hereunder) allowed in such judicial proceeding; and



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          (b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;



and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Secured Party to make such payments to
Administrative Agent and, if Administrative Agent shall consent to the making of such payments
directly to the Secured Parties, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and its agents and
counsel, and any other amounts due Administrative Agent hereunder.



               10.8.2 Nothing contained herein shall be deemed to authorize Administrative Agent to authorize
or consent to or accept or adopt on behalf of any Secured Party any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Secured Party
to authorize Administrative Agent to vote in respect of the claim of any Secured Party or in any
such proceeding.



          10.9 Collateral Matters. The Secured Parties irrevocably authorize Collateral Agent, at its option and in its
discretion to release any Lien on any property granted to or held by Collateral Agent under any
Collateral Document pursuant to a release document reasonably acceptable to Collateral Agent and
Borrowers (a) upon termination of the Commitments and payment in full of all Obligations (other
than contingent indemnification obligations) and the expiration or termination of the Letter of
Credit, (b) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any Credit Document, or (iii) if approved, authorized or ratified
in writing in accordance herewith.




          10.10 Indemnification. Without limiting the Obligations of Borrowers, each Lender agrees to indemnify the Lead
Arranger, Collateral Agent and Administrative Agent and their respective officers, directors,
shareholders, controlling Persons, employees, agents and servants, ratably in accordance with their
Proportionate Shares for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by or asserted against Administrative Agent, the Lead Arranger,
Collateral Agent or such Person in any way relating to or arising out of this Agreement or any
documents contemplated by or referred to herein or therein or the transactions contemplated hereby
or thereby or the enforcement of any of the terms hereof or thereof or of any such other documents
(to the extent Borrowers have not paid any such amounts pursuant to Section 5.11);
provided, however, that no Lender shall be liable for any of the foregoing to the
extent they arise from Administrative Agent’s, the Lead Arranger’, Collateral Agent’s or any such
Person’s gross negligence or willful misconduct. Administrative Agent or any such Person shall be
fully justified in refusing to take or to continue to take any action under any Credit Document
unless it shall first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or continuing to take any
such action. Without limitation of the foregoing, each Lender agrees to reimburse Administrative
Agent, the Lead Arranger, Collateral Agent or any such Person promptly upon demand for its
Proportionate Share of any out-of-pocket expenses (including counsel fees) incurred by
Administrative Agent, the Lead Arranger, Collateral Agent or any such Person in connection with the
preparation, execution, administration or enforcement of, or legal advice in respect of rights or
responsibilities under, the



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Operative Documents, to the extent that Administrative Agent, the Lead
Arranger, Collateral Agent or any such Person is not reimbursed for such expenses by Borrowers.
The agreements in this Section 10.10 shall survive the satisfaction or discharge of Borrowers’
Obligations under the Credit Documents.




          10.11 Withholding Tax. If the forms or other documentation required by Section 2.5.6 are not delivered to
Administrative Agent, then Administrative Agent may withhold from any interest payment to any
Lender not providing such forms or other documentation, an amount equivalent to the applicable
withholding tax.




               10.11.1 If the Internal Revenue Service or any authority of the United States or other
jurisdiction asserts a claim that Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason), then such Lender shall indemnify Administrative Agent fully for all amounts
paid, directly or indirectly, by Administrative Agent as tax or otherwise, including penalties and
interest, together with all expenses incurred, including legal expenses, allocated staff costs, and
any out of pocket expenses. Borrowers shall not be responsible for any amounts paid or required to be paid by a
Lender under this Section 10.11.1.



               10.11.2 If any Lender sells, assigns, grants participation in, or otherwise transfers its
rights under this Agreement, the purchaser, assignee, participant or transferee, as applicable,
shall comply and be bound by the terms of Section 2.5.6 and this Section 10.11 as though it were
such Lender.



          10.12 General Provisions as to Payments. Administrative Agent shall promptly distribute to each Lender, subject to the terms of any
separate agreement between Administrative Agent and such Lender, its pro rata share of each payment
of principal and interest payable to the Lenders on the Loans and of fees hereunder received by
Administrative Agent for the account of the Lenders and of any other amounts owing under the Loans.
The payments made for the account of each Lender shall be made, and distributed to it, for the
account of (a) its domestic lending office in the case of payments of principal of, and interest
on, its Base Rate Loans, (b) its domestic or foreign lending office, as each Lender may designate
in writing to Administrative Agent, in the case of LIBOR Loans, and (c) its domestic lending
office, or such other lending office as it may designate for the purpose from time to time, in the
case of payments of fees and other amounts payable hereunder. Lenders shall have the right to
alter designated lending offices upon five Business Days prior written notice to Administrative
Agent and Borrowers.




          10.13 Substitution of Lender. Should any Lender fail to make a Loan in violation of its obligations under this Agreement (a
“Non-Advancing Lender”), Administrative Agent shall (a) in its sole discretion fund the
Loan on behalf of the Non-Advancing Lender or (b) cooperate and consult with Borrowers or any other
Lender to find another Person that shall be acceptable to Administrative Agent and that shall be
willing to assume the Non-Advancing Lender’s obligations under this Agreement (including the
obligation to make the Loan which the



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Non-Advancing Lender failed to make but without assuming any liability for damages for failing to have made such Loan or any previously required Loan). Subject
to the provisions of the next following sentence, such Person shall be substituted for the
Non-Advancing Lender hereunder upon execution and delivery to Administrative Agent of an agreement
acceptable to Administrative Agent by such Person assuming the Non-Advancing Lender’s obligations
(including its Commitments) under this Agreement, and all interest and fees which would otherwise
have been payable to the Non-Advancing Lender shall thereafter be payable to such Person. Nothing
in (and no action taken pursuant to) this Section 10.13 shall relieve the Non-Advancing Lender from
any liability it might have to Borrowers or to the other Lenders as a result of its failure to make
any Loan.




          10.14 Administrative Agent Has LC Issuer’s Power of Attorney. For so long as there are no outstanding Unreimbursed Amounts, LC Issuer hereby constitutes and
appoints Administrative Agent its true and lawful attorney-in-fact to give such consents and
waivers and take other discretionary actions as may be afforded to LC Issuer pursuant to the Bond
Documents.




ARTICLE 11

INDEPENDENT CONSULTANTS




          11.1 Removal and Fees. Administrative Agent, in its reasonable discretion, may remove from time to time, any one or
more of the Independent Consultants and appoint replacements as Administrative Agent may choose.
Notice of any replacement Independent Consultant shall be given by Administrative Agent to
Borrowers, the Lenders and to the Independent Consultant being replaced. All reasonable fees and
expenses of the Independent Consultants (whether the original ones or replacements) shall be paid
by Borrowers pursuant to agreements reasonably acceptable to Borrowers; provided, that no
such acceptance shall be required at any time an Event of Default shall have occurred and be
continuing.




          11.2 Duties. Each Independent Consultant shall be contractually obligated to (a) on or before the Closing
Date, the Lead Arranger and (b) thereafter, Administrative Agent to carry out the activities
required of it in this Agreement and as otherwise requested by the Lead Arranger or Administrative
Agent (as the case may be) and shall be responsible solely to the Lead Arranger or Administrative
Agent (as the case may be). Borrowers acknowledge that they will not have any cause of action or
claim against any Independent Consultant resulting from any decision made or not made, any action
taken or not taken or any advice given by such Independent Consultant in the due performance in
good faith of its duties to the Lead Arranger or Administrative Agent (as the case may be).




          11.3 Independent Consultants’ Certificates.





          (a) Until the receipt by Administrative Agent of certificates satisfactory to
Administrative Agent from each Independent Consultant whom Administrative Agent considers
necessary or appropriate certifying Completion or Final Completion, Borrowers shall provide such
documents and information to the Independent Consultants as any of the Independent Consultants
may reasonably consider necessary in order for the Independent Consultants to deliver to
Administrative Agent the following certificates:




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                    (i) certificates of the Insurance Consultant, Independent Engineer and Fuel Consultant
delivered on and dated as of the Closing Date as described in Sections 3.1.9 and 3.1.11,
respectively, and containing the matters set out therein;



                    (ii) after the Closing Date, all certificates to be delivered thereafter pursuant to this
Agreement; and



                    (iii) monthly after the Closing Date, a full report and status of the progress of the Project
to that date, a complete assessment of Project Costs to Final Completion and such other information
and certification as Administrative Agent may reasonably require from the Independent Engineer from
time to time.





          (b) Following Completion, Borrowers shall provide such documents and information to the
Independent Consultants as they may reasonably consider necessary in order for the Independent
Consultants to deliver annually to Administrative Agent a certificate setting forth a full
report on the status of the Project and such other information and certification as
Administrative Agent may reasonably require from time to time.



          11.4 Certification of Dates. Administrative Agent will request that the Independent Consultants act diligently in the
issuance of all certificates required to be delivered by the Independent Consultants hereunder, if
their issuance is appropriate. Borrowers shall provide the Independent Consultants with reasonable
notice of the expected occurrence of any such dates or events.




ARTICLE 12

MISCELLANEOUS




          12.1 Notices; Signatures.




               12.1.1 Notice Addresses. Any communications between the parties hereto or notices provided
herein to be given may be given to the following addresses:



	 	 	 
	If to Administrative Agent or
Collateral Agent:

	 	CoBank, ACB

5500 S. Quebec Street

Greenwood Village, CO 80111

Attn: Dale Keyes

Fax: (303)-224-2599
	 
	 	 
	If to Borrowers:

	 	Snowflake White Mountain Power, LLC

3418 N. Val Vista Drive

Mesa, AZ 85213

Attn: Robert M. Worsley

Fax: (480) 718-7977






          For the purposes hereof, the address of each party hereto shall be (i) for Borrowers and
Administrative Agent, the address specified in this Section 12.1.1 and (ii) for each Lender, as set
forth in its Administrative Questionnaire, provided, that any party shall have



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the right to change its address for notice hereunder to any other location within the
continental United States by giving of 30 days’ notice to the other parties in the manner set forth
above.




               12.1.2 Means of Transmittal. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing and shall be
considered as properly given (a) if delivered in person, (b) if sent by overnight courier service
(including Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight delivery
services), (c) if mailed by first class United States Mail, postage prepaid, registered or
certified with return receipt requested, (d) if sent by telefacsimile, with the original sent by
other means set forth in this Section 12.1.2, or (e) other electronic means complying with Section
12.1.4.



               12.1.3 Effectiveness of Notices. Notices delivered in person or overnight courier service, or
mailed by registered or certified mail, shall be deemed to have been given when received; notices
sent by telecopier shall be deemed to have been given when sent and receipt has been confirmed to
sender by the recipient (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent provided in Section
12.1.4, shall be effective as provided in said section.



               12.1.4 Electronic Communications.




          (a) Notices and other communications hereunder may be delivered or furnished by electronic
communication (including email and Internet or intranet websites) pursuant to procedures
approved by Administrative Agent; provided, that the foregoing shall not apply to
notices pursuant to Article 2 if the party to receive the notice has notified Administrative
Agent that it is incapable of receiving notices under such Article by electronic communication.
The Secured Parties and Borrowers may, in their discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved by
them, respectively; provided, that approval of such procedures may be limited to
particular notices or communications.




          (b) Unless Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an email address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function,
as available, return email or other written acknowledgement); provided, that if such
notice or other communication is not sent during the normal business hours of the recipient,
such notice or communication shall be deemed to have been sent at the opening of business on the
next business day for the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended recipient at
its email address as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.



          12.2 Additional Security; Right to Set-Off.




               12.2.1 Any deposits (general or special, time or demand, provisional or final, including
indebtedness evidenced by certificates of deposit, whether matured or



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unmatured, but not including trust accounts) or other sums at any time held or owing by any
Secured Party or any Affiliate thereof to or for the credit or the account of Borrowers and any
Project Revenues, securities or other property of Borrowers in the possession of any Secured Party
may at all times be treated as collateral security for the payment of the Loans and any Notes and
all other obligations of Borrowers to the Secured Parties under the Credit Documents, and Borrowers
hereby pledge to Collateral Agent and grant Collateral Agent a security interest in and to all such
deposits, sums, securities or other property.




               12.2.2 In addition to any rights and remedies (including other rights of set-off) now or
hereafter granted to the Secured Parties under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuation of any Event of Default and with the
prior consent of Collateral Agent, subject to Section 2.5.2, regardless of the adequacy of any
other collateral, each Secured Party is hereby authorized by Borrowers at any time or from time to
time, without notice to Borrowers or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits and sums referred to in the
previous paragraph against and on account of the Obligations to such Secured Party or to any other
Secured Party, including all claims of any nature or description arising out of or connected with
any Credit Document, irrespective of whether or not (a) such Secured Party shall have made any
demand hereunder or (b) the principal of or the interest on the Loans or any other amounts due
hereunder shall have become due and payable and although said obligations and liabilities, or any
of them, may be contingent or unmatured. Each Secured Party agrees to notify Borrowers promptly
after any such set-off and application, provided, that the failure to give such notice
shall not affect the validity of such set-off or application or the rights of such Secured Party
under this Section. The rights of each Secured Party under this Section 12.2 are in addition to
other rights and remedies (including other rights of set-off) which such Secured Party may have.



          12.3
Delay and Waiver.




               12.3.1 No delay, failure or omission to exercise, and no course of dealing with respect to,
any right, power, privilege or remedy accruing to the Secured Parties upon the occurrence of any
Event of Default, Default, Material Adverse Effect or any breach or default of Borrowers or any
other Sponsor Entity or unsatisfied condition precedent under any Credit Document shall impair any
such right, power, privilege or remedy of the Secured Parties, nor shall it be construed to be a
waiver of any such breach or default or unsatisfied
condition precedent, or an acquiescence therein, or of or in any similar breach or default or
unsatisfied condition precedent thereafter occurring; nor shall any single or partial exercise of
any such right, power or remedy, or any abandonment or discontinuance of steps to enforce such a
right, power or remedy, preclude any other or further exercise thereof or the exercise of any other
right or power.



               12.3.2 Upon effectiveness of any waiver of a Default or Event of Default, the parties shall be
restored to their former position and rights under the Credit Documents, and such Default or Event
of Default shall be deemed to be cured and not continuing, provided, however that
any waiver of any single Event of Default, Default, Material Adverse Effect or other breach or
default or unsatisfied



110









 




condition precedent shall not be deemed a waiver of any other Event of
Default, Default, Material Adverse Effect or other breach or default or unsatisfied condition
precedent theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of any Secured Party of any Event of Default, Default, Material Adverse
Effect or other breach or default or unsatisfied condition precedent under any Credit Document, or
any waiver on the part of any Secured Party of any provision or condition of any Credit Document,
must be in writing in accordance with Section 12.20 and shall be effective only to the extent in
such writing specifically set forth and only in the specific instance and for the purpose for which
given. Subject to the provisions of Article 9, all remedies, either under any Credit Document or
by law or otherwise afforded to the Secured Parties, shall be cumulative and not alternative.




               12.3.3 Without limiting the generality of the foregoing, the making of a Loan shall not be
construed as a waiver of any Event of Default or Default, regardless of whether Administrative
Agent or any Lender may have had notice or knowledge of such Event of Default or Default at the
time.



     12.4 Costs, Expenses and Attorneys’ Fees. Whether or not the transactions contemplated hereby shall be consummated, Borrowers agree to
promptly pay or reimburse each of the Secured Parties, as applicable, promptly upon demand:





          (a) for (i) all of actual/out-of-pocket and other reasonable costs and expenses in
connection with the preparation, negotiation and execution of this Agreement and the documents
contemplated hereby, any consents, amendments, waivers or other modifications hereof or thereof,
and consummation and administration of the transactions contemplated hereby or thereby,
including all reasonable fees, charges, expenses and disbursements of Latham & Watkins LLP as
counsel to Administrative Agent and Quarles & Brady Streich Lang LLP as counsel to the
Confirming Bank, together with other legal counsel retained by Administrative Agent in the
Project Jurisdiction, provided, however that Borrowers shall not be required to
pay the fees of the other Lenders’ attorneys; (ii) all costs and expenses of furnishing all
opinions by counsel for Borrowers (including any opinions requested by Administrative Agent or
the Lenders as to any legal matters arising hereunder) and of Borrowers’ performance of and
compliance with all agreements and conditions on its part to be performed or complied with under
the Credit Documents including with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) all costs and expenses incurred in connection with any filing, recording, registration or
perfection of any security interest contemplated by any Collateral Document or any other
document referred to therein of creating, including filing and recording fees, expenses and
taxes, stamp or documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Collateral Agent and of counsel providing any opinions
that Collateral Agent may request in respect of the Collateral Documents or the Liens created
pursuant thereto in accordance with this Agreement or the Collateral Documents; (iv) all costs
and expenses (including the reasonable fees, expenses and disbursements of any Advisors (as
defined below) employed or retained by Administrative Agent or its counsel) of obtaining and
reviewing any appraisals provided for under this Agreement and any environmental audits or
reports provided for under this Agreement; (v) all other reasonable costs and expenses incurred
in connection with the syndication of the Commitments, the Loans or this Agreement; and (vi) all
reasonable costs and expenses,



111









 







including reasonable attorneys’ fees and fees, costs and expenses of Advisors, incurred by
Administrative Agent and its counsel relating to efforts to evaluate or assess any Sponsor
Entity, its business or financial condition and protect, evaluate, assess or dispose of any of
the Collateral; and




          (b) for (i) all costs and expenses incurred by Administrative Agent or Collateral Agent,
including the fees, charges and disbursements of Advisors, in connection with any action, suit
or other proceeding affecting the Collateral or any part thereof, in which action, suit or
proceeding Administrative Agent or Collateral Agent is made a party or participates or in which
the right to use the Collateral or any part thereof is threatened, or in which it becomes
necessary in the judgment of Administrative Agent or Collateral Agent to defend or uphold the
Liens granted by the Collateral Documents (including any action, suit or proceeding to establish
or uphold the compliance of the Collateral with any Legal Requirements); (ii) all costs and
expenses incurred by the LC Issuer, Administrative Agent, Collateral Agent, or any Lender,
including the fees, charges and disbursements of Advisors but not, in the case of the Lenders,
counsel fees) and costs of settlement, incurred in connection with the enforcement or protection
of its rights under the Credit Documents or the Obligations in connection with an Event of
Default or Default, in actions for declaratory relief in any way related to the Credit Documents
or in collecting any sum which becomes due under the Credit Documents (including in connection
with the sale of, collection from, or other realization upon any of the Collateral); and (iii)
all costs and expenses incurred by the Lead Arranger, LC Issuer, Administrative Agent,
Collateral Agent, or any Lender, including fees, charges and disbursements of Advisors, in
connection with any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” (whether or not consummated) or related negotiations
pursuant to any insolvency or bankruptcy proceedings, or otherwise relating to the occurrence of
any Default or Event of Default.




          For purposes of this Section, “Advisors” shall mean legal counsel (including local
counsel), auditors, accountants, consultants, appraisers, experts or other advisors;
provided, that (x) in the case of clause (a), the engagement of any Advisors other than
legal counsel (including local counsel) shall be subject to approval by Borrowers (which approval
shall not be unreasonably withheld) and (y) in the case of clause (b), the engagement of any
Advisors by any Lender other than one firm of legal counsel for all the Lenders, shall be subject
to approval by Administrative Agent.




          12.5
Entire Agreement. This Agreement and any agreement, document or instrument attached hereto or referred to
herein, and the CoBank, ACB patronage materials, integrate all the terms and conditions mentioned
herein or incidental hereto and supersede all oral negotiations and prior writings in respect to
the subject matter hereof. In the event of any conflict between the terms, conditions and
provisions of this Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail.



          12.6
Governing Law. THE CREDIT DOCUMENTS (UNLESS OTHERWISE EXPRESSLY PROVIDED FOR THEREIN), AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN




112









 







ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND
SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.




          12.7 Severability. Any provision of this Agreement that is invalid, illegal, prohibited or unenforceable in any
respect in any jurisdiction, shall as to such jurisdiction be ineffective to the extent of such
invalidity, illegality, prohibition or unenforceability without affecting, invalidating or
impairing the validity, legality and enforceability of the remaining provisions hereof; and any
such invalidity, illegality, prohibition or unenforceability in any jurisdiction shall not affect,
invalidate or impair such provision in any other jurisdiction.




          12.8 Headings. Article, Section and Paragraph headings have been inserted in this Agreement as a matter of
convenience for reference only and it is agreed that such headings are not a part of this Agreement
and shall not be used in the interpretation of any provision of this Agreement or be given any
substantive effect.




          12.9 Additional Financing, Etc. The parties hereto acknowledge that as of the Closing Date the Lenders have made no agreement
or commitment to provide any financing except as set forth herein. The obligations of the Lenders
hereunder are several and no Lender shall be responsible for the obligations or Commitments of any
other Lender hereunder. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and enforce its rights
arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.




          12.10 No Partnership, Etc. The Secured Parties and Borrowers intend that the relationship between them shall be solely
that of creditor and debtor. Nothing contained in any of the Credit Documents, and no action taken
by the Lenders pursuant hereto or thereto, shall be deemed or construed to create a partnership, an
association, tenancy-in-common, joint tenancy, joint venture or co-ownership by or between the
Secured Parties and Borrowers or any other Person. No Secured Party shall be in any way
responsible or liable for the debts, losses, obligations or duties of Borrowers or any other Person
with respect to the Project or otherwise. All obligations to pay real property or other taxes,
assessments, insurance premiums, and all other fees and charges arising from the ownership,
operation or occupancy of the Project (if any) and to perform all obligations and other agreements
and contracts relating to the Project shall be the sole responsibility of Borrowers.




          12.11 Mortgage/Collateral Documents. The Obligations are secured in part by the Mortgage encumbering certain properties in Navajo
County, Arizona. Reference is hereby made to the Mortgage and the other Collateral Documents for
the provisions, among others, relating to the nature and extent of the security provided
thereunder, the rights, duties and obligations of Borrowers and the rights of the Secured Parties
with respect to such security.




          12.12 Limitation on Liability. No claim shall be made by Borrowers against any Secured Party or any of their respective
Affiliates, directors, employees, attorneys or agents




113









 







for any loss of profits, business or anticipated savings, special or punitive damages or any
indirect or consequential loss whatsoever in respect of any breach or wrongful conduct (whether or
not the claim therefor is based on contract, tort or duty imposed by law), in connection with,
arising out of or in any way related to the transactions contemplated by this Agreement or the
other Operative Documents or any act or omission or event occurring in connection therewith, and
Borrowers hereby waive, release and agree not to sue upon any such claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in their favor (except for
any such damages or claims against a Secured Party arising from the gross negligence or willful
misconduct of such Secured Party). No Secured Party or any of their respective Affiliates,
directors, employees, attorneys or agents shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in connection with the
Credit Documents or the transactions contemplated thereby (except for any such damages or claims
against a Secured Party arising from the gross negligence or willful misconduct of such Secured
Party).




          
12.13 Waiver of Jury
Trial. 
EACH OF THE SECURED PARTIES AND BORROWERS HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF
SUCH SECURED PARTIES, BORROWERS, OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.




               The scope of this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims and all other common law and statutory claims. Each
party hereto acknowledges that (i) this waiver is a material inducement to enter into a business
relationship, (ii) it has already relied on this waiver in entering into this Agreement, and (iii)
it will continue to rely on this waiver in their related future dealings. Each party hereto
further warrants and represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.
In the event of litigation, this Agreement may be filed as a written consent to a trial by the
court. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 12.13 AND EXECUTED BY
EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.



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          12.14 Consent to Jurisdiction. Each Secured Party and each Borrower, for itself and in connection with its properties, hereby
irrevocably and unconditionally, to the fullest extent it may legally and effectively do so:






          (a) agrees that (i) any legal action or proceeding by or against Borrowers or with respect
to or arising out of any Credit Document, or for recognition or enforcement of any related
judgment, may be brought in or removed to the courts of the State of New York, in and for the
County of New York, or of the United States of America for the Southern District of New York, as
Administrative Agent may elect, any in any appellate court from any thereof, and (ii) a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. By execution and
delivery of this Agreement, the parties hereto accept, for themselves and in respect of their
property, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts.
Nothing herein shall affect the right of Administrative Agent to bring any legal action or
proceeding against Borrowers with respect to or arising out of any Credit Document, including
judicial or non-judicial foreclosure of the Mortgage, in any other competent jurisdiction. The
parties further agree that the aforesaid courts of the State of New York and of the United
States of America shall have exclusive jurisdiction with respect to any claim or counterclaim of
Borrowers based upon the assertion that the rate of interest charged by the Lenders on or under
the Credit Documents is usurious;





          (b) (i) waives, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding under or in connection with any or all of the Project, or any
Credit Document in any court referred to in paragraph (a) of this Section, and (ii) waives any
right to stay or dismiss any such action or proceeding brought before the foregoing courts on
the basis of forum non-conveniens;





          (c) agrees that the provisions of this Section 12.14 relating to jurisdiction and venue
shall be binding and enforceable to the fullest extent permissible under New York General
Obligations Law Section 5-1402 or otherwise; and





          (d) consents and agrees that in the event that any claim, suit, action, arbitration or
mediation proceedings or any other proceedings arise under, or in connection with, any Credit
Document in any courts or other forum other than the courts described in paragraph (a) above,
Administrative Agent shall have full power and authority to remove such claim, suit, action,
proceedings, arbitration or mediation to one of the courts described in paragraph (a) or to
consolidate such claims, suits, actions, proceedings, arbitration or mediation in one of such
courts. Each party hereto irrevocably designates, appoints and empowers Administrative Agent
hereby as its permitted designee, appointee and agent to remove or consolidate such claims,
suits, actions or proceedings and waives, to the fullest extent permitted by law, any objection
to any such removal or consolidation.



          12.15 Knowledge and Attribution. References in the Credit Documents to the “knowledge,” “best knowledge” or facts and
circumstances “known to” a Sponsor Entity, and all like references, mean facts or circumstances of
which a Responsible Officer of the applicable Sponsor Entity has actual knowledge.




115









 








          12.16 Effectiveness. This Agreement shall become effective as of the effective date hereof when it shall have been
executed by all parties hereto.




          12.17 Successors and Assigns.






               12.17.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Borrowers may not assign or otherwise transfer any of their rights or
obligations hereunder without the prior written consent of Administrative Agent, LC Issuer and each
Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder
except (a) to an assignee in accordance with the provisions of Section 12.17.1, (b) by way of
participation in accordance with the provisions of Section 12.17.3, (c) by way of pledge or
assignment of a security interest subject to the restrictions of Section 12.17.5, or (d) to an SPC
in accordance with the provisions of Section 12.17.7 (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in Section
12.17.3 and, to the extent expressly contemplated hereby, the Affiliates of each of the Secured
Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.




               12.17.2 Assignments by Lenders. Any Lender may at any time assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including all or a portion of
its Commitment(s) and the Loans (including for purposes of this Section 12.17.2, participations in
LC Obligations) at the time owing to it); provided, that any such assignment shall be
subject to the following conditions:





               (a) Minimum Amounts.





                    (i) in the case of an assignment of the entire remaining amount of the assigning Lender’s
Commitment under any credit facility hereunder and the Loans at the time owing to it under such
credit facility or in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned; and





                    (ii) in any case not described in Section 12.17.2(a)(i), the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is
not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject
to each such assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each of
Administrative Agent and, so long as no Event of Default has occurred and is continuing, Borrowers
otherwise consent (each such consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members
of an Assignee Group and concurrent assignments from members of an Assignee Group to a single
Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as
a single assignment for purposes of determining whether such minimum amount has been met;



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          (b) Proportionate Amounts. Each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations under this
Agreement with respect to the Loans or the Commitment assigned, except that this clause (b)
shall not prohibit any Lender from assigning all or a portion of its rights and obligations
among separate Facilities on a non-pro rata basis;





          (c) Required Consents. No consent shall be required for any assignment except to
the extent required by Section 12.17.2(a)(ii) and, in addition:





                    (i) the consent of Administrative Agent (such consent not to be unreasonably withheld or
delayed) shall be required for assignments in respect of (A) any Term Commitment or Revolving
Credit Commitment if such assignment is to a Person that is not a Lender with a Commitment in
respect of the applicable Facility, an Affiliate of such Lender or an Approved Fund with respect to
such Lender or (ii) any Term Loan to a Person that is not a Lender, an Affiliate of a Lender or an
Approved Fund; and





                    (ii) the consent of LC Issuer (such consent not to be unreasonably withheld or delayed) shall
be required for any assignment that increases the obligation of the assignee to participate in
exposure under the Letter of Credit (whether or not then outstanding).




          (d) Assignment and Assumption. The parties to each assignment shall execute and
deliver to Administrative Agent an Assignment and Assumption, together with Administrative
Agent’s then-applicable processing and recordation fee; provided, however, that
Administrative Agent may, in its sole discretion, elect to waive such processing and recordation
fee in the case of any assignment. The assignee, if it shall not be a Lender, shall deliver to
Administrative Agent an Administrative Questionnaire.




          (e) No Assignment to Borrowers. No such assignment shall be made to Borrowers or
any of Borrowers’ Affiliates.




          (f) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.


Subject to acceptance and recording thereof by Administrative Agent in the Register, from and after
the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 12.4 and 12.12 with respect to facts and circumstances occurring prior to the effective
date of such assignment). Upon request, Borrowers (at their expense) shall execute and deliver a
Construction Note, Term Note, Revolving Note, or LC Loan Note, as applicable, to
the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this Section 12.17.2 shall be treated for purposes of this


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Agreement as a sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.17.3.




               12.17.3 Participations. Any Lender may at any time, without the consent of, or notice
to, Borrowers or Administrative Agent, sell participations to any Person (other than a natural
person or Borrowers or any of Borrowers’ Affiliates) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion
of its Commitment and/or the Loans (including such Lender’s participations in LC Obligations) owing
to it); provided, that (a) such Lender’s obligations under this Agreement shall remain
unchanged, (b) such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (c) Borrowers and the Secured Parties shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve
any amendment, modification or waiver of any provision of this Agreement; provided, that
such agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 12.20 that affects such Participant. Subject to Section 12.17.4, Borrowers agree that each
Participant shall be entitled to the benefits of Sections 2.1.10(a), 2.5.4 and 2.7.3 to the same
extent as if it were a Lender (subject to the requirements of such sections) and had acquired its
interest by assignment pursuant to Section 12.17.2. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.2.2 as though it were a Lender,
provided, such Participant agrees to be subject to Section 2.6.2 as though it were a Lender.



               12.17.4 Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 2.5 or 2.7 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with the Borrowers’ prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.5.4 unless the Borrowers are notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section
2.5.6 as though it were a Lender.



               12.17.5 Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to secure obligations
to a Federal Reserve Bank; provided, that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.



               12.17.6 Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and



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National Commerce Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.



               12.17.7 Special Purpose Funding Vehicles. Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle identified as such in writing from time to time by the Granting Lender to Administrative
Agent and Borrowers (an “SPC”) the option to provide all or any part of any Loan that such
Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided,
that (a) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (b) if an
SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the
Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails
to do so, to make such payment to Administrative Agent as is required under Section 2.1.7(d). Each
party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of
such option shall increase the costs or expenses or otherwise increase or change the obligations of
Borrowers under this Agreement, (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or other modification of
any provision of any Credit Document, remain the Lender of record hereunder. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior
to the date that is one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any SPC, it will not institute against, or join any other Person in
instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding
anything to the contrary contained herein, any SPC may (A) with notice to, but without prior
consent of Borrowers and Administrative Agent and with the payment of a processing fee in the
amount of $2,500, assign all or any portion of its right to receive payment with respect to any
Loan to the Granting Lender and (B) disclose on a confidential basis any non-public information
relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any
surety or guarantee or credit or liquidity enhancement to such SPC.



               12.17.8 Provision of Information. Borrowers authorize each Lender to disclose any
information concerning Borrowers or any other Sponsor Entity in the possession of such Lender from
time to time to assignees and participants (including prospective assignees and participants).



          12.18 Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto or in connection
herewith may be executed in one or more duplicate counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be deemed an original,
but all such counterparts together shall constitute but one and the same instrument; signature
pages may be detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.




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          12.19 Survival. All representations, warranties, covenants and agreements made herein and in the certificates
or other instruments delivered in connection with or pursuant to this Agreement and the other
Credit Documents shall be considered to have been relied upon by the parties hereto and shall
survive the execution and delivery of this Agreement, the other Credit Documents and the making of
the Loans. Notwithstanding anything in this Agreement or implied by law to the contrary, and
without prejudice to the survival of any other agreement of Borrowers hereunder, the agreements and
obligations of Borrowers set forth in Sections 2.2.13, 2.5.4, 2.7.3, 2.7.4, 2.8, 5.11, 10.3, 12.4
and 12.12 and shall survive the payment and performance of the Loans and the other Obligations and
the reimbursement of any amounts drawn hereunder, the termination of the Commitments and the
termination or expiration of this Agreement or any provision hereof, and, in the case of any Lender
that may assign any interest in its Commitment(s) or Loans hereunder, shall survive the making of
such assignment, notwithstanding that such assigning Lender may cease to be a “Lender” hereunder.




          12.20 Amendments; Waivers.




               12.20.1 Any provision of the Credit Documents may be amended, modified, supplemented or
waived, or any consent thereunder granted, only by an instrument in writing signed by the Majority
Lenders or, where a provision requires consent from the Required Lenders, Administrative Agent,
Collateral Agent or LC Issuer, signed by such group or Person, and the relevant Sponsor Entity;
provided, however, that no amendment, modification, supplement, waiver or consent
shall, without the consent of all of the Lenders (or, as provided in Section 12.20.1(f), the
Required Lenders):





          (a) modify, in any respect adverse to the Lenders, Section 2.1.1(c), 2.1.2(c), 2.13(b),
2.1.4(c), 2.1.9(c), 2.6.2, 2.8, or 10.12, or Section 1 of the Sponsor Guaranty; or




          (b) increase the amount of the Commitment of any Lender hereunder; or




          (c) amend the percentage specified in the definition of “Majority Lenders” or the
definition of “Required Lenders” or any other provision of the Credit Documents specifying the
number or percentage of the Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder; or




          (d) permit Borrowers to assign its rights under this Agreement except as provided in
Section 6.15, or permit a sale or disposition prohibited by Section 8.1.11; or




          (e) amend this Section 12.20.1; or




          (f) without the consent of the Required Lenders, release any Collateral (other than
immaterial portions thereof) from the Lien of any of the Collateral Documents or allow release
of any funds from any Account other than in accordance with the terms of the Credit Documents;
or



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          (g) extend the Construction Loan Maturity Date, the Term Loan Maturity Date, the LC
Facility Expiration Date or the Revolving Loan Maturity Date or reduce the rate or change the
time of payment of interest due on any Loan; or




          (h) reduce the amount or extend the payment date for any amount due hereunder, whether
principal, interest, fees or other amounts, provided that the Required Lenders may elect
to not impose the Default Rate when the Lenders are otherwise entitled to do so; or




          (i) release the Sponsor from any of its material obligations under the Sponsor Guaranty; or




          (j) increase the maximum duration of Interest Periods permitted hereunder; or




          (k) subordinate the Loans to any other Debt.



               12.20.2 No amendment, modification, termination or waiver of any provision of this Agreement
affecting the rights or obligations of Administrative Agent, Collateral Agent, LC Issuer or the
Lead Arranger shall be effective without the written consent of Administrative Agent, Collateral
Agent, LC Issuer or the Lead Arranger, as the case may be. No amendment, modification, termination
or waiver of any provision of any Note (other than by way of amending a document referred to
therein) shall be effective without the written concurrence of the Lender which is the holder of
such Note.



               12.20.3 Any amendment, supplement, waiver or modification hereunder shall apply equally to
each Lender and be binding upon Borrowers and the Secured Parties and each Lender that becomes a
party hereto.



               12.20.4 Each representation and warranty made, or deemed to be made by a notice of any
extension of credit, herein or pursuant hereto shall survive the making of such representation and
warranty.



               12.20.5 No Lender shall be deemed to have waived, by reason of making any extension of credit
hereunder, any Event of Default or Default that may arise by reason of such representation or
warranty proving to have been false or misleading, notwithstanding that such Lender or
Administrative Agent may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time such extension of credit was made.



               12.20.6 Lender Confirmation. By executing and delivering an Assignment and Assumption, each
Lender assignor party thereto and each assignee party thereto confirm to each other and other
parties hereto as follows: (a) such assignee is an Eligible Assignee; (b) such assignee has
experience and expertise in the making of or purchasing loans such as the Loans; (c) such assignee
will make or purchase Loans for its own account in the ordinary course of its business and without
a view to distribution of such Loans within the meaning of the Securities Act or the Exchange Act
or other federal securities laws (it being



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understood that, subject to the provisions of this Section 12.20.6, the disposition of such
Loans or any interests therein shall at all times remain within its exclusive control); (d) such
assignee agrees that it will perform in accordance with their terms all the obligations that by
terms of this Agreement are required to be performed by it as a Lender; (e) such assignee has
received a copy of the Credit Documents, together with the copies of the current financial
statements that will have been delivered by Borrowers hereunder and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Assumption; (f) such assignee will, independently and without reliance upon
Administrative Agent, such assigning Lender or any other Secured Party and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (g) such assignee appoints and authorizes each
of Administrative Agent and Collateral Agent to take such action on its behalf and to exercise such
powers and discretion under the Credit Documents as are delegated to each such agent respectively
by the terms hereof and thereof, together with such powers and discretion as are reasonably
incidental thereto; (h) other than as provided in the Assignment and Assumption, such assigning
Lender makes no representation and warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Credit Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to be created under or
in connection with, the Credit Documents and any other document or instrument furnished hereunder
or thereunder; and (i) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the other Sponsor Entities,
or the performance or observance by any such Person of its obligations under the Credit Documents.




          12.21 Laws. Notwithstanding the foregoing provisions of this Agreement, no sale, assignment, transfer,
negotiation or other disposition of the interests of any Lender hereunder or under the other Credit
Documents shall be allowed if it would require registration under the Securities Act, any other
federal securities laws or regulations or the securities laws or regulations of any applicable
jurisdiction. Borrowers shall, from time to time at the request of Administrative Agent, execute
and deliver to Administrative Agent, or to such party or parties as Administrative Agent may
designate, any and all further instruments as may in the opinion of Administrative Agent be
reasonably necessary or advisable to give full force and effect to such sale, assignment, transfer,
negotiation or disposition which would not require any such registration.




          12.22 Assignability as Collateral. Notwithstanding any other provision contained in this Agreement or any other Credit Document
to the contrary, any Lender may (without notice to Borrowers, Administrative Agent or any other
Lender and without payment of any fee) assign all or any portion of the Loans or Notes held by it
in favor of any Federal Reserve Bank or the United States Treasury as collateral security;
provided, that any payment in respect of such assigned Loans or Notes made by Borrowers to
or for the account of the assigning or pledging Lender in accordance with the terms of this
Agreement shall satisfy Borrowers’ obligations hereunder in respect of such
assigned Loans or Notes to the extent of such payment. No such assignment shall release the
assigning Lender from its obligations hereunder. In the case of any Lender that is a Fund, such
Lender may, without the consent of Borrowers or



122









 






Administrative Agent, collaterally assign or pledge all or any portion of its rights under
this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a
Lender under this Agreement, to any holder of, trustee for, or any other representative of holders
of, obligations owed or securities issued, by such fund, as security for such obligations or
securities.




          12.23 Service of Process




               12.23.1 The Secured Parties and Borrowers hereby consent to the service of process made by
registered or certified mail, return receipt requested, at its address provided for notices in
Section 12.1.1 and agrees that such service is sufficient to confer personal jurisdiction over it
in any relevant proceeding in any relevant court, and otherwise constitutes effective and binding
service in every respect.



               12.23.2 Nothing in this Agreement or the other Operative Documents will affect the right of
any party hereto to serve process in any other manner permitted by law.



          12.24 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the Interest Rate applicable
to any Loan, together with all fees, charges and other amounts which are treated as interest on
such Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such Lender in respect of other
Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Rate for each day to the date of
repayment, shall have been received by such Lender.




          12.25 Marshalling; Assets Set Aside. Neither Administrative Agent, Collateral Agent nor any Lender shall be under any obligation to
marshal any assets in favor of Borrowers or any other party or against or in payment of any or all
of the Obligations. To the extent that Borrowers makes a payment or payments to any Secured Party,
or any Secured Party enforces any security interests or exercises its rights of set-off, and such
payment or payments or the proceeds of such enforcement or set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or
federal law, common law or any equitable cause (and whether as a result of any demand, settlement,
litigation or otherwise), then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor or related
thereto, shall be revived and continued in full force and effect as if such payment or payments had
not been made or such enforcement or set-off had not occurred.




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          12.26 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Default if such action is taken or condition exists.




          12.27 Construction of the Documents. Each of the parties hereto acknowledges that (a) it has been represented by counsel in the
negotiation and documentation of the terms of the Credit Documents, (b) it has had full and fair
opportunity to review and revise the terms of the Credit Documents, (c) the Credit Documents have
been negotiated and drafted jointly by all of the parties hereto, and (d) neither Administrative
Agent nor any Lender has any fiduciary relationship with or duty to Borrowers arising out of or in
connection with any of the Credit Documents, and the relationship between Administrative Agent and
the Lenders, on one hand, and Borrowers, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor. Accordingly, each of the parties hereto acknowledges and
agrees that (i) the Credit Documents shall be deemed to be the work product of all parties hereto
and thereto, (ii) the terms hereof and thereof shall not be construed against or in favor of any
party, and (iii) no ambiguity in any Credit Document shall be construed in favor of or against any
party solely as a result of such party having drafted or proposed the ambiguous provision.




          12.28 Syndication. In connection with syndication of the Loans and Commitments, an information package containing
certain relevant information concerning Borrowers, the Project and the other Project participants
(including a computer model prepared by Borrowers containing the Base Case Project Projections) has
been or may be prepared on behalf of Borrowers and provided to potential Lenders and participants.
Borrowers agree to cooperate and to cause the Sponsor to cooperate in the syndication of the Loans
and Commitments in all respects reasonably requested by the Lead Arranger, including participation
of the Sponsor in bank meetings held in connection with such syndication.




          12.29 Waiver. Borrowers hereby irrevocably waive, to the fullest extent permitted by applicable law, any
claim that any action or proceeding commenced by Administrative Agent relating in any way to the
Credit Documents should be dismissed or stayed by reason, or pending the resolution, of any action
or proceeding commenced by Borrowers relating in any way to the Credit Documents whether or not
commenced earlier. To the fullest extent permitted by applicable law, Borrowers shall take all
measures necessary or desirable for any such action or proceeding commenced by Administrative Agent
to proceed to judgment prior to the entry of judgment in any such action or proceeding commenced by
Borrowers.




          12.30 The Platform.




               12.30.1 Election Under Platform. Borrowers hereby acknowledge that (a) Administrative Agent
and/or the Lead Arranger may make available to the Secured Parties materials and/or information
provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) by
posting the Borrower Materials on IntraLinks or another similar electronic system (the
“Platform”) and (b) certain of the Secured Parties may be “public-side” Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect to the Borrowers
or their securities) (each, a “Public Lender”). Borrowers hereby agree



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that so long as any Affiliate of any of the Borrowers is the issuer of any outstanding debt or
equity securities that are registered or issued pursuant to a private offering or is actively
contemplating issuing any such securities it will use commercially reasonable efforts to identify
that portion of the Borrower Materials that may be distributed to the Public Lenders and that (i)
all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by
marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Secured
Parties to treat such Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to Borrowers or its Affiliates or their
securities for purposes of United States Federal and state securities laws; (iii) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor;” and (iv) Administrative Agent and the Lead Arranger shall be entitled
to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on
a portion of the Platform not designated “Public Investor.” Notwithstanding the foregoing, the
Borrowers shall be under no obligation to mark any Borrower Materials “PUBLIC”.



               12.30.2 Platform Defects. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”
ADMINISTRATIVE AGENT DOES NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE
ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ADMINISTRATIVE AGENT IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall Administrative Agent or any of its Related
Parties have any liability to Borrowers or any other Secured Party or any other Person for losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of Borrowers’ or Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of Administrative Agent; provided,
however, that in no event shall Administrative Agent or any Related Parties have any
liability to Borrowers, any other Secured Party or any other Person for indirect, special,
incidental, consequential or punitive damages (as opposed to direct or actual damages).



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          IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized, intending to be
legally bound, have caused this Credit Agreement to be duly executed and delivered as of the day
and year first above written.



	 	 	 	 	 
	 	SNOWFLAKE WHITE MOUNTAIN POWER, LLC,

an Arizona limited liability company

 	 
	 	By:  	                                              Renegy Holdings, Inc.,
 	 
	 	 	a Delaware corporation, as Manager 	 
	 	 	 	 
	 	  	                                                 /s/ Robert M. Worsley
 	 
	 	 	Name:  	Robert M. Worsley 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	RENEGY, LLC,

an Arizona limited liability company

 	 
	 	By:  	/s/ Robert M. Worsley
 	 
	 	 	Name:  	Robert M. Worsley 	 
	 	 	Title:  	Manager 	 
	 
	 	RENEGY TRUCKING, LLC,


an Arizona limited liability company

 	 
	 	By:  	/s/ Robert M. Worsley
 	 
	 	 	Name:  	Robert M. Worsley 	 
	 	 	Title:  	Manager 	 
	 
	 	COBANK, ACB,


as Administrative Agent, Collateral Agent, LC Issuer

and a Lender

 	 
	 	By:  	/s/ Dale Keyes
 	 
	 	 	Name:  	Dale Keyes 	 
	 	 	Title:  	Vice President, Energy Banking Group 	 
	 



AMENDED AND RESTATED CREDIT AGREEMENT





 











 





EXHIBIT A

to Credit Agreement




DEFINITIONS




Section and Article references used herein refer to sections and articles

of the Credit Agreement, unless otherwise specified.




          “Abitibi” means Abitibi Consolidated Sales Corp.




          “Accounts” means the Construction Account, the Revenue Account, the Major Maintenance
Account, the DSR Account, the Loss Proceeds Account and each cash collateral account referred to in
the Credit Documents, including any sub-accounts within such accounts.




          “Additional Project Documents” means any material contracts or agreements related to
the construction, testing, maintenance, repair, operation or use of the Project entered into by
Borrowers and any other Person, or assigned to Borrowers, subsequent to the Closing Date;
provided that all contracts and agreements providing for the payment by Borrowers of less
than $200,000 per annum individually, or the provision to Borrowers of less than $200,000 per annum
individually in value of goods or services shall be deemed not to constitute an Additional Project
Document.




          “ADEQ” means the Arizona Department of Environmental Quality.




          “Adjusted LIBO Rate” means, with respect to any LIBOR Loan for any Interest Period,
(a) an interest rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) determined
by Administrative Agent to be equal to the LIBO Rate for such LIBOR Loan in effect for such
Interest Period divided by (b) 1 minus the Reserve Requirement (if any) for such LIBOR Loan for
such Interest Period.




          “Administrative Agent” means CoBank ACB, acting in its capacity as administrative
agent for the Secured Parties under the Credit Documents.




          “Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by Administrative Agent.




          “Adverse PUHCA Event” means that Borrowers or any of its “affiliates” (within the
meaning of Section 1(a)(11)(B) of PUHCA) becomes an “electric utility company”, “public-utility
company”, or “holding company” required to register as such within the meaning of PUHCA at a time
at which applicable provisions of PUHCA, or any successor statute thereof, and the rules and
regulations thereunder are in effect and such event or occurrence has, or with the passage of time
will have, a Material Adverse Effect or a material and adverse effect on Administrative Agent or
the Lenders.




          “Affiliate” of a specified Person means any other Person that (a) directly, or
indirectly through one or more intermediaries, Controls, is Controlled by or is under common
Control with such Person, or (b) only with respect to matters relating to PUHCA, holds or



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beneficially owns 10% or more of the equity interest in the Person specified or 10% or more of
any class of voting securities of the Person specified. When used with respect to Borrowers,
“Affiliate” shall include the Sponsor, any Pledgor, and any Affiliate thereof (other than
Borrowers). For purposes of this definition, “Control” means the possession, directly or
indirectly (either alone or pursuant to an arrangement or understanding with one or more other
Persons), of the power to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise, and the terms
“Controlling” and “Controlled” shall have meanings correlative thereto.




          “A.L.T.A.” means American Land Title Association.




          “Alternate Fuel Stockpile” has the meaning given in Section 8.1.18.




          “Annual Insurance Certificate” has the meaning given in Section 5.8.3.




          “Annual Operating Budget” has the meaning given in Section 5.15.3.




          “Anti-Terrorism Laws” has the meaning given in Section 4.30.1.




          “Applicable Permit” means, at any time, any Permit, including any zoning, land use,
environmental protection, pollution (including air, water or noise), sanitation, FERC, import,
export, safety, siting or building Permit (a) that is necessary under applicable Legal Requirements
or any of the Operative Documents to have been obtained by or on behalf of Borrowers at such time
in light of the stage of development, construction or operation of the Project to construct, test,
operate, maintain, repair, lease, own or use the Project as contemplated by the Operative
Documents, to sell electricity from the Project or deliver fuel to the Project, or for Borrowers to
enter into any Operative Document or to consummate any transaction contemplated thereby, in each
case in accordance with all applicable Legal Requirements, or (b) that is necessary so that none of
Borrowers or any Secured Party nor any Affiliate of any of them may be deemed by any Governmental
Authority to be subject to regulation under the FPA or PUHCA (except as Borrowers may be subject to
compliance requirements under Section 21 of PUHCA applicable to it being an Exempt Wholesale
Generator or treated as a public utility under the Constitution and the laws of the Project
Jurisdiction as presently constituted and as construed by the courts of the Project Jurisdiction
with respect to the regulation of the rates of, or the financial or organizational regulation of,
electric utilities as a result of the development and construction or operation of the Project or
the sale of electricity therefrom.




          “Applicable Third Party Permit” means, at any time, any Permit, including any zoning,
environmental protection, pollution, sanitation, FERC, export, safety, siting or building Permit or
that is necessary to have been obtained by such time by any Person (other than Borrowers) that is a
party to a Major Project Document or a Credit Document in order to perform such Person’s
obligations thereunder (other than Permits necessary to conduct its business generally and maintain
its existence and good standing), or in order to consummate any transaction contemplated thereby,
in each case in accordance with all applicable Legal Requirements.




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          “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.




          “APS” means Arizona Public Service Company.




          “APS PPA” means the Master Power Purchase and Sales Agreement, dated as of September
6, 2005, together with the related Amended and Restated Transaction Confirmation, dated September
1, 2006, between APS and SWMP.




          “Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.




          “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section
12.17.2), and accepted by Administrative Agent, in the form approved by Administrative Agent.




          “Available Construction Funds” means, at any time and without duplication, the sum of
(a) amounts in the Construction Account, (b) the undisbursed proceeds, if any, of the Total
Construction Loan Commitment, (c) undisbursed Insurance Proceeds or Eminent Domain Proceeds which
are available for payment of Project Costs, (d) any delay liquidated damages which Borrowers have
received under any Construction Contract or any other contract for construction related to the
Project, (e) amounts in the Construction Fund, and (f) any other liquidated damages which Borrowers
have received under the other Project Documents and which, by the terms of the Credit Documents,
are available for the payment of Project Costs.




          “Available Construction Loan Commitment” means (a) at any time and from time to time
during the Construction Loan Availability Period, the Total Construction Loan Commitment at such
time minus the aggregate principal amount of all Construction Loans outstanding at such time and
(b) at any time after the Construction Loan Availability Period, zero.




          “AZ Biomass” means AZ Biomass LLC, a Delaware limited liability company.




          “AZ Biomass Pledge Agreement” means that certain Pledge Agreement, dated as of the
date hereof, between AZ Biomass and Collateral Agent; provided that, upon reassignment of
the Class A Interests (as defined in the LLC Operating Agreement) to Renegy Holdings upon the
occurrence of the Rescission Date, if any, the AZ Biomass Pledge Agreement shall be deemed
terminated.




          “B&W” means The Babcock & Wilcox Company.




          “Bank Equity Interests” means investments in non-voting participation certificates of
CoBank, ACB acquired by the Borrowers in connection with their Loans hereunder from CoBank, ACB.




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          “Bankruptcy Event” shall be deemed to occur, with respect to any Person, if (a) that
Person shall commence any case, proceeding or other voluntary action seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, arrangement, adjustment, winding-up, reorganization, dissolution, composition under
the Bankruptcy Law or other relief with respect to it or its debts; (b) such Person shall apply
for, or consent or acquiesce to, the appointment of, a receiver, administrator, administrative
receiver, liquidator, sequestrator, trustee or other official with similar powers for itself or any
substantial part of its assets; (c) such Person shall make a general assignment for the benefit of
its creditors; (d) an involuntary case shall be commenced seeking liquidation or reorganization of
such Person under the Bankruptcy Law, or seeking issuance of a warrant of attachment, execution or
distraint, or any similar proceedings shall be commenced against such Person under any other
applicable law and (i) such Person consents to the institution of the involuntary case against it,
(ii) the petition commencing the involuntary case is not timely controverted, (iii) the petition
commencing the involuntary case is not dismissed within 60 days of its filing, (iv) an interim
trustee is appointed to take possession of all or a portion of the property, and/or to operate all
or any part of the business of such Person and such appointment is not vacated within 60 days, or
(v) an order for relief shall have been issued or entered therein; or (e) a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver, administrator,
administrative receiver, liquidator, sequestrator, trustee or other official having similar powers,
over such Person or all or a part of its property shall have been entered; or (f) any other similar
relief shall be granted against such Person under any applicable Bankruptcy Law, or such Person
shall file a petition or consent or shall otherwise institute any similar proceeding under any
other applicable law, or shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in any of the acts set forth above in this definition; or (g) such
Person shall generally not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due.




          “Bankruptcy Law” means Title 11, United States Code, and any other existing or future
law (or any successor law or statute) of any jurisdiction, domestic (including state and federal)
or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, moratorium or
similar law for the relief of debtors.




          “Base Case Project Projections” has the meaning given in Section 3.1.20.




          “Base Rate” means the greater of (a) the prime commercial lending rate established
from time to time by Administrative Agent at its Denver office or (b) the Federal Funds Rate plus
0.50%. The Base Rate may not necessarily be the highest or lowest rate of interest charged by
Administrative Agent to its commercial borrowers.




          “Base Rate Loan” means each Loan requested by Borrowers at Base Rate.




          “Biomass Services Agreement” means the Amended and Restated Biomass Supply and
Services Agreement, dated as of January 1, 2009, among SWMP, Renegy Trucking and Renegy.




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          “Boiler Purchase Contract” means the Standard Form Purchase Order No. 02.4321,
together with the Equipment Supply Terms and Conditions of Sale (Domestic), each dated July 20,
2006, between SWMP and B&W.




          “Bond Documents” means the Indenture, the Tax Agreement, the Bond Loan Agreement, the
Bond Purchase Agreement and the Remarketing Agreement.




          “Bond Issuer” means the Industrial Development Authority of the City of Show Low,
Arizona.




          “Bond Loan Agreement” means the Loan Agreement, dated as of September 1, 2006, between
SWMP and Bond Issuer.




          “Bond Pledge Agreement” has the meaning given in Section 2.2.9.




          “Bond Purchase Agreement” means the Bond Purchase Agreement, dated September 7, 2006,
among SWMP, Bond Issuer and Thornton Farish Inc.




          “Bonds” has the meaning given in the Indenture.




          “Borrower Materials” has the meaning given in Section 12.30.1.




          “Borrowers” means Snowflake White Mountain Power, LLC, an Arizona limited liability
company, Renegy, LLC, an Arizona limited liability company, and Renegy Trucking, LLC, an Arizona
limited liability company.




          “Borrowing” means a borrowing by Borrowers of any Loans of the same Type made on the
same day by the Lenders.




          “Business Day” means any day other than a Saturday, Sunday or other day on which banks
are or Administrative Agent is authorized or required to be closed in the Project Jurisdiction or
the State of New York and, where such term is used in any respect relating to a LIBOR Loan, which
is also a day on which dealings in Dollar deposits are carried out in the London interbank market.




          “Calculation Period” means, as to a particular date, the 12 month period (or, during
the initial 12 months following Term-Conversion, the actual number of calendar months or partial
calendar months following Term-Conversion) immediately preceding such date.




          “Capital Adequacy Requirement” has the meaning given in Section 2.7.4.




          “Catalyst” means Catalyst Paper (Snowflake) Inc., a Delaware corporation.




          “Change of Control” has the meaning given in Section 8.1.11.




          “Change of Law” has the meaning given in Section 2.7.2.




          “Charges” has the meaning given in Section 12.24.




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          “Checking Account Bank” has the meaning given in Section 7.7.1.




          “Checking Accounts” means the checking account established by each Borrower pursuant
to Section 7.7.1.




          “Clean-Up Period” has the meaning given in Section 2.1.10(c).




          “Closing Date” has the meaning given in Section 3.1.




          “Code” means the Internal Revenue Code of 1986, as amended.




          “Collateral” means all property which is subject or is intended to become subject to
the security interests or liens granted by any of the Collateral Documents.




          “Collateral Agent” means CoBank, ACB acting in its capacity as collateral agent for
the Secured Parties under the Credit Documents.




          “Collateral Documents” means the Mortgage, the Bond Pledge Agreement, the Renegy
Holdings Pledge Agreement, the AZ Biomass Pledge Agreement, if any, the Security Agreement, each
Consent, and any fixture filings, financing statements, or other similar documents filed, recorded
or delivered in connection with the foregoing.




          “Commercial Operation” means achieving the “Commercial Operation Date” as defined in
the APS PPA and the “Delivery Commencement Date” as defined in the SRP PPA.




          “Commitment Fee” means the fees payable pursuant to Section 2.4.2.




          “Commitments” means, with respect to each Lender, such Lender’s Construction Loan
Commitment, Term Loan Commitment, Renegy Term Loan Commitment, Revolving Loan Commitment, and LC
Commitment, and with respect to all Lenders, the Total Construction Loan Commitment, the Total Term
Loan Commitment, the Total Renegy Term Loan Commitment, the Total Revolving Loan Commitment, and
the Total LC Commitment.




          “Completion” means (a) that all necessary equipment for the processing, transportation
and receipt of the appropriate fuels to the Project has been procured, (b) all work under the
applicable Construction Contracts and each of the PPAs (other than Punchlist items) has been
completed substantially in accordance with the Plans and Specifications and the requirements of all
Applicable Permits (other than with respect to violations of the Original Air Permit solely to the
extent addressed by the Major Source Permit), (c) the Performance Tests either (i) have been
successfully completed as provided in such contracts or (ii) performance liquidated damages as
provided in such contracts (as applicable) have been paid in full, (d) that all facilities
necessary for the procurement, transportation and discharge of water to the Project and wastewater
from the Project have been obtained or completed, (e) that necessary interconnection facilities
sufficient to transmit all power generated by the Project have been completed in accordance with
the Interconnection Agreement, (f) that all other aspects of the Project have been constructed,
other than items that could not reasonably be expected to materially affect the performance,
integrity, safety, or reliability of the Project or the status or validity of any Applicable Permit
(other with respect to violations of the Original Air Permit



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solely to the extent addressed by the Major Source Permit and all as duly certified by the
Independent Engineer to Administrative Agent), (g) that all real estate rights reasonably necessary
for completion of the foregoing and continued operations of the Project have been obtained, and (h)
that the Project has the Fuel Stockpile in place.




          “Completion Date” means the date on which Completion occurs.




          “Confirmation” means the confirmation of the Letter of Credit issued pursuant to the
Confirmation Agreement.




          “Confirmation Agreement” means the Confirmation Agreement, dated as of September 1,
2006, between CoBank, ACB and Confirming Bank.




          “Confirming Bank” means JPMorgan Chase Bank, N.A.




          “Consents” means the consents specified on Exhibit E-2 to the Credit Agreement
and any other third party consents to the assignments contemplated by the Credit Documents.




          “Construction Account” has the meaning given in Section 7.1(a).




          “Construction Contractor” means each contract counterparty to a Borrower under a
Construction Contract.




          “Construction Contracts” means the Interconnection Agreement, the Boiler Purchase
Contract and the other contracts relating to engineering, procurement or construction of the
Project, together in each case with all guaranties from the relevant contractor’s or vendor’s
parent or other credit support.




          “Construction Credit Event” has the meaning given in Section 3.3.




          “Construction Fund” has the meaning given in the Indenture.




          “Construction Loan” has the meaning given in Section 2.1.1(a).




          “Construction Loan Availability Period” means the period from the Closing Date to the
earlier of (a) full utilization of the Total Construction Loan Commitment and (b) the Construction
Loan Maturity Date.




          “Construction Loan Commitment” means, at any time with respect to each Lender, such
Lender’s Proportionate Share of the Total Construction Loan Commitment at such time.




          “Construction Loan Maturity Date” means the date that is the earliest to occur of (a)
the Term-Conversion Date, (b) the acceleration of the Obligations upon and during the occurrence
and continuance of an Event of Default, (c) the date that the Project suffers a casualty and it is
determined in accordance with the Credit Documents not to rebuild it, and (d) the Date Certain.




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          “Construction Note” has the meaning given in Section 2.1.6.




          “Contingent Obligation” means, as to any Person, any obligation, agreement,
understanding or arrangement (including purchase or repurchase agreements, reimbursement agreements
with respect to letters of credit or acceptances, indemnity arrangements, grants of collateral to
support the obligations of another Person, keep-well agreements and take-or-pay or through-put
arrangements) of such Person guaranteeing or intended to guarantee any indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly; provided, however, that the term
“Contingent Obligation” shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for
which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument
evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to perform thereunder)
as determined by such Person in good faith.




          “Control Agreement” means an account control agreement providing Collateral Agent,
among other things, “control” within the meaning of the UCC, over the applicable Checking Account,
and otherwise in form and substance reasonably satisfactory to Collateral Agent.




          “Credit Agreement” means the Credit Agreement, dated as of September 1, 2006, by and
among Borrowers, Administrative Agent, Collateral Agent, the LC Issuer and the Lenders.




          “Credit Documents” means the Credit Agreement, any Notes, the Collateral Documents,
the Swap Agreements, the Fee Letter, the Sponsor Guaranty, and any other loan or security
agreements or letter agreement or similar document, entered into by any Secured Party, on the one
hand, and the Sponsor or one or more Affiliates of Sponsor, on the other hand, in connection with
the transactions contemplated by the Credit Documents.




          “Credit Event” means the Closing Date, each Borrowing and resulting Loan, issuance of
the Letter of Credit, each LC Loan, and Term-Conversion.




          “Date Certain” means February 28, 2009.




          “Debt” of any Person means, without duplication, (a) all obligations (including
contingent obligations) of such Person for borrowed money, (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services, except trade accounts payable
and other accrued expenses arising in the ordinary course of business which in accordance with GAAP
would be shown on the liability side of the balance sheet of such Person, (d) all obligations of
such Person under leases which are or should be, in accordance with GAAP, recorded as capital
leases in respect of which such Person is liable, (e) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale



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of the same or substantially similar securities (or property), (f) all deferred obligations of
such Person to reimburse any bank or other Person in respect of amounts paid or advanced under a
letter of credit or other instrument, (g) all obligations, contingent or otherwise, of such Person
in respect of acceptances, letters of credit or similar extensions of credit, (h) all Debt (as
described in the preceding clauses) of others secured by (or for which the holder of such Debt has
an existing right, contingent or otherwise, to be secured by) any Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (i) all Debt (as described in the preceding
clauses) of others guaranteed directly or indirectly by such Person or as to which such Person has
an obligation which is substantially the economic equivalent of a guaranty, and (j) all net
obligations of such Person in respect of the Swap Agreements.




          “Debt Service” means, for any period, the sum of (a) all fees (other than fees paid on
the Closing Date) payable during such period to any Secured Party, (b) interest on Term Loans and
the Bonds less (for purposes of calculating the Debt Service Coverage Ratio) net payments, if any,
received during such period pursuant to the Swap Agreements, (c) scheduled Term Loan principal
payments (as reduced to reflect actual prepayments through the date of such calculation) payable
during such period, (d) interest on the Renegy Term Loans, (e) scheduled Renegy Term Loan principal
payments (as reduced to reflect actual prepayments through the date of such calculation) payable
during such period, (f) interest on Revolving Loans, assuming a principal balance equal to the
average balance over the previous 12-month period, and (g) net payments, if any, payable during
such period pursuant to the Swap Agreements.




          “Debt Service Coverage Ratio” means, for any period, the ratio of (a) Operating Cash
Available for Debt Service for such period to (b) Debt Service for such period.




          “Default” means any occurrence, circumstance or event, or any combination thereof,
which, with the lapse of time or the giving of notice or both, would constitute an Event of
Default.




          “Default Rate” has the meaning given in Section 2.5.3.




          “Dollars” and “$” means United States dollars or such coin or currency of the
United States of America as at the time of payment shall be legal tender for the payment of public
and private debts in the United States of America.




          “Drawdown Certificate” means a certificate delivered to Administrative Agent
substantially in the form of Exhibit C-4 to the Credit Agreement.




          “Drawing Date” has the meaning given in Section 2.2.3.




          “DSR Account” has the meaning given in Section 7.3(a).




          “DSR Letter of Credit” has the meaning given in Section 7.3(c).




          “DSR Requirement” has the meaning given in Section 7.3(a).




          “Easements” means the easements granted to SWMP by Abitibi pursuant to Section 3(i) of
the Consent and Agreement, dated as of September 1, 2006, among SWMP,



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Abitibi and Collateral Agent, as amended by Section 1(b) of that certain First Amendment to
Consent and Agreement, dated as of April 10, 2008, between Catalyst and Collateral Agent.




          “Eligible Assignee” means any Person that meets the requirements to be an assignee
under Section 12.17.2(c), (e) and (f) (subject to such consents, if any, as may be required under
Section 12.17.2(c)).




          “Eligible Facility” means an “eligible facility” within the meaning of PUHCA.




          “Embargoed Person” has the meaning given in Section 6.29.2.




          “Eminent Domain Proceeds” has the meaning given in Section 7.6.




          “Environmental Claims” means any and all liabilities, losses, administrative,
regulatory or judicial actions, suits, demands, decrees, claims, liens, judgments, warning notices,
notices of noncompliance or violation, investigations, proceedings, removal or remedial actions or
orders, or damages (foreseeable and unforeseeable, including consequential and punitive damages),
penalties, fees, out-of-pocket costs, expenses, disbursements or attorneys’ or consultants’ fees,
relating in any way to (a) a violation or alleged violation of any Hazardous Substance Law or
Permit issued under any Hazardous Substance Law, (b) a Release or threatened Release of Hazardous
Substances, or (c) any legal or administrative proceedings relating to any of the above.




          “Environmental Report” means the Phase 1 Environmental Site Assessment relating to the
Real Property, dated June 12, 2006, prepared by Environmental Site Assessments, Inc.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) that is
treated as a single employer together with Borrowers under Section 414 of the Code.




          “ERISA Plan” means any employee benefit plan (other than a Multiemployer Plan) (a)
maintained by Borrowers or any ERISA Affiliate, or to which any of them contributes or is obligated
to contribute, for its employees and (b) covered by Title IV of ERISA or to which Section 412 of
the Code applies.




          “Event of Default” has the meaning given in Article 8.




          “Event of Eminent Domain” means any compulsory transfer or taking by condemnation,
eminent domain or exercise of a similar power, or transfer under threat of such compulsory transfer
or taking, of any part of the Collateral, by any agency, department, authority, commission, board,
instrumentality or political subdivision of the Project Jurisdiction, the United States or another
Governmental Authority having jurisdiction.




          “Executive Order” has the meaning given in Section 4.30.1.




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          “Exempt Wholesale Generator” means an “exempt wholesale generator” within the meaning
of PUHCA.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and any successor statute.




          “Federal Funds Rate” means, for any day, the weighted average of the per annum rates
on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers as published by the Federal Reserve Bank of New York for such day (or, if
such rate is not so published for any day, the average rate charged by Administrative Agent on such
day on such transactions as determined by Administrative Agent).




          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System.




          “Fee Letter” means the letter agreement regarding fees, dated September 8, 2006, by
and between CoBank, ACB and the Borrowers.




          “FERC” means the Federal Energy Regulatory Commission and its successors.




          “Final Completion” means that Completion shall have occurred and the Independent
Engineer shall have confirmed that all of the work under each Construction Contract has been
completed and the Project is complete in accordance with the Plans and Specifications.




          “Final Construction Drawing” has the meaning given in Section 3.4.3.




          “Final Project Cost” means the actual total Project Costs incurred or to be incurred
through Final Completion, as determined at Term-Conversion by Administrative Agent in consultation
with Independent Engineer and Borrowers.




          “FIRREA” means the Federal Institutions Reform, Recovery and Enforcement Act of 1989.




          “Fixed Rate” means 7.15%.




          “FPA” means the Federal Power Act, as amended.




          “Fuel Consultant” means HDR | Brown, Vence & Associates, Inc.




          “Fuel Stockpile” means a 2.5-year availability of fuel (other than paper sludge)
either on the Site or available from counterparties on contractual terms reasonably acceptable to
Administrative Agent, provided that at least a 1-year stockpile of such 2.5-year availability of
fuel (other than paper sludge) shall be on the Site at all times and provided further that such
2.5-year availability of fuel (other than paper sludge) shall be determined assuming that (a) the
Project generates at 24.5 MW and at a 92% capacity factor and (b) Catalyst supplies paper sludge at
a rate of 250 bone-dry tons per day.




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          “Fuel Supply Plan” has the meaning given in Section 5.22.




          “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.




          “GAAP” means generally accepted accounting principles in the United States of America.




          “Governing Documents” means, with respect to any Person, the certificate or articles
of incorporation, bylaws, operating agreement or other organizational or governing documents of
such Person, and, in particular, (a) in the case of any corporation, the certificate of
incorporation and by-laws (or similar documents) of such person, (b) in the case of any limited
liability company, the certificate of formation and operating agreement (or similar documents) of
such person and, with respect to SWMP, the LLC Operating Agreement, (c) in the case of any limited
partnership, the certificate of formation and limited partnership agreement (or similar documents)
of such person, (d) in the case of any general partnership, the partnership agreement (or similar
document) of such person and (e) in any other case, the functional equivalent of the foregoing.




          “Governmental Authority” means (a) any nation or government (whether domestic or
foreign), (b) any federal, state, provincial, regional, municipal, local, territorial, or other
political, governmental or quasi-governmental subdivision thereof, including any central bank
thereof and any comparable authority, (c) any other judicial, public, statutory or administrative
agency, authority, board, body, bureau, commission, department, entity or instrumentality
(including any zoning authority, FERC, the Securities Exchange Commission, the Comptroller of the
Currency or the Federal Reserve Board) or any subdivision thereof, (d) any other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government or (e) any arbitrator with authority to bind a party at law.




          “Governmental Rule” means any constitution, code, statute, law, regulation, ordinance,
rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive,
guideline, treaty, judgment, policy or requirement of, or other governmental restriction or any
similar form of decision of or determination by, or any interpretation or administration of any of
the foregoing by, any Governmental Authority.




          “Granting Lender” has the meaning given in Section 12.17.7.




          “Ground Lease” means the Lease Agreement, dated as of September 1, 2005, between
Abitibi and SWMP, as amended by Section 3 of the Consent and Agreement, dated as of September 1,
2006, among Abitibi, SWMP and Collateral Agent, Amendment No. 2 to Lease Agreement, dated as of
August 2, 2007, between Abitibi, SWMP, Amendment No. 3 to Lease Agreement, dated as of August 23,
2007, between Abitibi and SWMP, Section 1(b) of the First Amendment to Consent and Agreement, dated
as of April 10, 2008, between Catalyst and SWMP, as assigned to Catalyst pursuant to that certain
Assignment and Assumption Agreement,



A-12









 






dated as of April 10, 2008 between Abitibi and Catalyst and Amendment No. 4 to Lease
Agreement, dated as of December 31, 2008, between Catalyst and SWMP.




          “Hazardous Substances” means any gasoline or petroleum (including crude oil or any
fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Hazardous Substances Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.




          “Hazardous Substances Disclosure” has the meaning given in Section 4.10.1.




          “Hazardous Substances Law” means any all federal, state, local and municipal
Governmental Rules, any and all Legal Requirements, and any and all common law requirements, rules
and bases of liability regulating, relating to, or imposing liability or standards of conduct
concerning pollution or protection of human health or the environment or which otherwise govern
Hazardous Substances, as are now or may at any time hereafter be in effect, together with the
regulations adopted and publications promulgated pursuant to all foregoing.




          “Improvements” has the meaning given in the Mortgage.




          “Indenture” means the Indenture of Trust, dated as of September 1, 2006, between the
Trustee and the Bond Issuer.




          “Indemnitees” has the meaning given in Section 5.11.1.




          “Independent Consultants” means, collectively, the Insurance Consultant, the Fuel
Consultant and the Independent Engineer.




          “Independent Engineer” means Stone & Webster Management Consultants, Inc.




          “Independent Engineer’s Drawdown Certificate” has the meaning given in Section
3.3.2(b).




          “Insurance Consultant” means Moore-McNeil LLC.




          “Insurance Proceeds” has the meaning given in Section 7.5(a).




          “Insurance Requirements” has the meaning given in Section 5.8.3.




          “Interconnection Agreement” means the Standard Large Generator Interconnection
Agreement (LGIA), dated as of November 1, 2006, by and among Abitibi, SWMP and APS, as assigned to
Catalyst pursuant to that certain Assignment and Assumption Agreement, dated as of April 10, 2008
between Abitibi and Catalyst.




          “Interest Period” means, with respect to any LIBOR Loan comprising part of the same
Borrowing, initially, the time period selected by Borrowers or otherwise provided for pursuant to
the Credit Agreement which commences on the first day of such Loan, or the effective date of any
conversion (as the case may be) and ends on the last day of such time period, and thereafter, each
subsequent period commencing on the last day of the immediately



A-13









 






preceding Interest Period and ending on the last day of the period selected by Borrowers or
provided for pursuant to the Credit Agreement; provided that no single day shall be deemed
to be a part of two Interest Periods.




          “Interest Rate” means the Fixed Rate, Base Rate or the Adjusted LIBO Rate, as the case
may be.




          “Interest Rate Determination Date” means, with respect to any Interest Period, two
Business Days prior to the first day of such Interest Period.




          “LC Advance” means, with respect to each Lender, such Lender’s participation in any
Unreimbursed Amount in accordance with its Proportionate Share, other than by funding an LC Loan.




          “LC Commitment” means, at any time with respect to each Lender, such Lender’s
Proportionate Share of the Total LC Commitment at such time.




          “LC Facility Expiration Date” means the two-year anniversary of the Closing Date, as
it may be extended from time to time pursuant to Section 2.2.1, but in no event beyond the Term
Loan Maturity Date.




          “LC Fee” has the meaning given in Section 2.4.4.




          “LC Issuer” means CoBank, ACB, in its capacity as issuer of the Letter of Credit, or
any successor.




          “LC Loan” has the meaning given in Section 2.2.3.




          “LC Loan Note” has the meaning given in Section 2.1.6.




          “LC Obligations” means, as at any date of determination, the aggregate undrawn face
amount of the outstanding Letter of Credit plus the aggregate of all Unreimbursed Amounts,
but not including Unreimbursed Amounts paid or deemed paid with proceeds of LC Loans.




          “Lead Arranger” means CoBank, ACB.




          “Legal Requirements” means, as to any Person, the Governing Documents of such Person,
any requirement under a Permit, and any Governmental Rule in each case applicable to or binding
upon such Person or any of its properties or to which such Person or any of its property is
subject.




          “Lender” or “Lenders” means the banks and other financial institutions
(including any insurance company or other financial institution (whether a corporation,
partnership, trust or other entity) that are or become parties to the Credit Agreement and their
successors and assigns. For purposes of determining Obligations secured by the Collateral, each
Swap Bank shall be deemed a “Lender” party to the Credit Agreement and Credit Documents to the
extent so specified in Section 5.20.3.




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          “Lending Office” means, with respect to any Lender, the office designated in writing
as such to Administrative Agent and Borrowers from time to time.




          “Letter of Credit” has the meaning given in Section 2.2.1.




          “LIBOR Loans” means any Loan requested by Borrowers at the LIBO Rate.




          “LIBO Rate” means, with respect to any LIBOR Loan for any Interest Period, the rate
per annum determined by Administrative Agent at approximately 11:00 a.m. (London time) on the
Interest Rate Determination Date by reference to the British Bankers’ Association Interest
Settlement Rates for deposits in Dollars (as set forth by any service selected by Administrative
Agent which has been nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum
determined by Administrative Agent to be the average of the rates per annum at which deposits in
Dollars are offered for such Interest Period to major banks in the London interbank market in
London, England by Administrative Agent at approximately 11:00 a.m. (London time) on the Interest
Rate Determination Date. Each determination by Administrative Agent pursuant to this definition
shall be conclusive in the absence of manifest error.




          “LIBOR Breakage Costs” has the meaning given in Section 2.8.1.




          “Lien” means, with respect to any property or asset, any mortgage, deed of trust,
lien, pledge, charge, security interest, or encumbrance of any kind, as well as the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.




          “LLC Operating Agreement” means that certain Amended and Restated Limited Liability
Company Agreement of Snowflake White Mountain Power, LLC, dated as of January 1, 2009 or, upon the
occurrence of the Rescission Date, if any, any further Second Amended and Restated Limited
Liability Company Agreement of Snowflake White Mountain Power, LLC, dated as of the Rescission
Date.




          “Loans” means, collectively, the Construction Loans, the Term Loans, the Renegy Term
Loans, the Revolving Loans, and the LC Loans.




          “Loss Proceeds Account” has the meaning given in Section 7.5(e).




          “Major Construction Contract” means each Construction Contract as to which the Lenders
required a consent to assignment be delivered, as set forth on Exhibit E-2.




          “Major Maintenance” means labor, materials and other direct expenses for any overhaul
of, or major maintenance procedure for, the Project which requires significant disassembly or
shutdown of the Project and which ordinarily occurs less frequently than once per year, each of
which shall (a) be in accordance with Prudent Utility Practices, (b) be pursuant to



A-15









 






manufacturers’ requirements to avoid voiding any such manufacturer’s warranty, (c) be pursuant
to any applicable Legal Requirement and (d) exceed $150,000 in total cost.




          “Major Maintenance Account” has the meaning given in Section 7.4(a).




          “Major Maintenance Letter of Credit” has the meaning given in Section 7.4(d).




          “Major Maintenance Plan” has the meaning given in Section 5.15.5.




          “Major Maintenance Reserve Requirement” has the meaning given in Section 5.15.5.




          “Major Project Documents” means each Major Construction Contract, the PPAs, the
Biomass Services Agreement, the Interconnection Agreement, the Ground Lease, the Transmission
Agreement, the LLC Operating Agreement, any guaranty agreements related to the foregoing executed
by Persons in favor of Borrowers and, unless otherwise agreed by Administrative Agent prior to its
execution and delivery, any Additional Project Documents.




          “Major Project Participants” means, without duplication, Borrowers, the Sponsor (until
expiration of the Sponsor Guaranty), Catalyst, SRP, APS, any Pledgor, the Construction Contractors
party to a Major Construction Contract (until the expiration of the warranty period under the
applicable Construction Contract), B&W (until the expiration of the warranty period under the
Boiler Purchase Contract), any other Person which provides any guaranty agreement which is a Major
Project Document, and to the extent not already included in this list, any counterparty to any
Major Project Document.




          “Major Source Permit” means the Original Air Permit as significantly modified pursuant
to a Maximum Achievable Control Technology (MACT) analysis and will include increases to emission
allowances such that the Project is deemed a major source facility for hazardous air pollutants by
ADEQ and its emissions, including hydrogen-chloride emissions, meet the new updated ADEQ’s emission
requirements.




          “Majority Lenders” means, at any time, Lenders having Proportionate Shares which in
the aggregate exceed 50%.




          “Manager” has the meaning given in the LLC Operating Agreement.




          “Mandatory Prepayment” has the meaning given in Section 2.1.10(c).




          “Material Adverse Effect” means an event, circumstance, condition or occurrence of
whatever nature that materially and adversely affects (a) the business, assets (including the
Project), property, prospects, results of operation or financial condition of Borrowers or, until
the termination of the Sponsor Guaranty in accordance with its terms, Sponsor (b) Borrowers’ rights
to the Project and the Project assets, (c) Borrowers’ or any other Major Project Participant’s
ability to perform its obligations under any material provision of the Operative Documents, (d) the
validity or priority of the Secured Parties’ security interests in the Collateral, or (e) the
validity or enforceability of any Operative Document (including the ability of the Secured Parties
to enforce any of their remedies thereunder).




A-16









 








          “Maturity” or “maturity” means, with respect to any Loan, Borrowing, interest,
fee or other amount payable by Borrowers under the Credit Documents, the date such Loan, Borrowing,
interest, fee or other amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.




          “Maximum Rate” has the meaning given in Section 12.24.




          “Membership Interest” means the Class B Interest as defined in the LLC Operating
Agreement or, upon the occurrence of the Rescission Date, if any, the Class A Interest and the
Class B Interest, each as defined in the LLC Operating Agreement.




          “Minimum Notice Period” means (a) at least three Business Days before the date of any
Borrowing, Term-Conversion, continuation or conversion of a Type of Loan resulting in whole or in
part in one or more LIBOR Loans, (b) at least one Business Day before any Borrowing,
Term-Conversion or conversion of a Type of Loan resulting in whole or in part in one or more Base
Rate Loans, and (c) at least one Business Day before any Borrowing consisting of Renegy Term Loans.




          “Moody’s” means Moody’s Investors Service, Inc.




          “Monthly Disbursement Requisition” means a certificate of Borrowers in substantially
the form of Exhibit M.




          “Mortgage” means the Leasehold Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of the date hereof, in substantially the form of Exhibit
D-1, by SWMP to Collateral Agent.




          “Mortgaged Property” has the meaning given in the granting clause of the Mortgage.




          “Multiemployer Plan” means a “multiemployer plan” (as such term is defined in Section
3(37) of ERISA) to which any Borrower or any ERISA Affiliate contributes or is obligated to
contribute for its employees.




          “Non-Advancing Lender” has the meaning given in Section 10.13.




          “Non-Bank Certificate” has the meaning given in Section 2.5.6.




          “Nonrecourse Persons” has the meaning given in Article 9.




          “Notes” means, collectively, the Construction Notes, LC Loan Notes, Term Notes, Renegy
Term Notes, or Revolving Notes.




          “Notice of Borrowing” has the meaning given in Section 2.1.1(b).




          “Notice of Interest Terms” means a notice from Borrower to Administrative Agent, in
substantially the form of Exhibit C-3 to the Credit Agreement, appropriately completed in
accordance with the instructions contained in such form.




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          “Notice of Revolving Loan Borrowing” has the meaning given in Section 2.1.4.




          “Notice of Term-Conversion” has the meaning in Section 2.1.2(b).




          “O&M Costs” means, for any period, cash amounts incurred and paid by Borrowers for the
operation and maintenance of the Project or any portion thereof (other than as funded from the
Major Maintenance Account) and for the purchase of goods and services in connection therewith,
including (a) premiums for insurance policies, (b) fuel supply and fuel transportation costs and
the cost of other consumables, (c) costs of obtaining any other materials, supplies, utilities or
services for the Project, (d) costs of maintaining, renewing and amending Permits, (e) franchise,
licensing, property, real estate, sales and excise taxes, (f) general and administrative expenses,
(g) employee salaries, wages and other employment-related costs, (h) business management and
administrative service fees, (i) costs required to be paid by the Project under any Project
Document or Credit Document (other than scheduled Debt Service and Project Costs, but including
interest or lease payments in respect of Permitted Debt) or to satisfy any Legal Requirement or
obtain or maintain any Permit, (j) legal, accounting and consulting fees and other transaction
costs and all other fees payable to the Lenders (other than amounts constituting scheduled Debt
Service), (k) necessary capital expenditures (other than capital expenditures made in connection
with the repair or restoration of any casualty suffered by the Project to the extent funded with
insurance or similar proceeds applied pursuant to Section 7.5 or infusions of equity pursuant to
the Credit Documents), and (l) all other fees and expenses necessary for the continued operation
and maintenance of the Project and the conduct of the business of the Project, but exclusive in all
cases of non-cash charges, and also exclusive of all interest charges, LC Fees and charges for the
payment or amortization of principal of the Bonds or the Loans. O&M Costs shall not include (i)
costs of Major Maintenance to the extent paid with funds on deposit in the Major Maintenance
Account, (ii) depreciation, (iii) payments for restoration or repair of the Project from the Loss
Proceeds Account, (iv) costs associated with the violations of and modifications to the Original
Air Permit solely to the extent addressed by the Major Source Permit or (v) amounts due and payable
to Renegy Holdings in accordance with Sections 4.4 and 8.2 of the LLC Operating Agreement.




          “Obligations” means and includes all loans, advances, debts, liabilities, and
obligations, howsoever arising, owed by the Sponsor Entities (or, if such term is used by reference
to any other Person, by such Person) to any of the Secured Parties of every kind and description
(whether or not evidenced by any note or instrument and whether or not for the payment of money),
direct or indirect, absolute or contingent, due or to become due, now existing or hereafter
arising, pursuant to the terms of the Credit Documents, including (a) all interest, fees, charges,
expenses, attorneys’ fees and accountants fees chargeable to Borrowers (or such Person) and payable
by Borrowers (or such Person) hereunder or thereunder, and (b) the due and punctual performance of
all covenants, agreements, obligations and liabilities of Borrowers (or such Person) to such
parties under or pursuant to the Credit Documents.




          “OFAC” means the U.S. Treasury Department Office of Foreign Assets Control.




          “Operating Budget Category” means (a) individually, any line item category set forth
in that portion of the then-current Annual Operating Budget showing sources and uses of



A-18









 






Project funds, and (b) collectively, all line item categories set forth in that portion of the
then-current Annual Operating Budget showing sources and uses of Project funds.




          “Operating Cash Available for Debt Service” means, for any period, Project Revenues
during such period minus (a) O&M Costs during such period and (b) deposits into the Major
Maintenance Account during such period.




          “Operative Documents” means, collectively, the Credit Documents, the Bond Documents
and the Project Documents.




          “Original Air Permit” means the Class I Air Quality Control Permit No. 386183 issued
February 8, 2006 by the ADEQ to SWMP, as modified by the Minor Permit Revision to Air Quality
Control Permit No. 450012 with respect to Class I Air Quality Control Permit No. 36183, issued July
19, 2006.




          “Other Taxes” has the meaning given in Section 2.5.4(a).




          “Participant” has the meaning given in Section 12.17.3.




          “Payment Date” means each January 1, April 1, July 1 and October 1.




          “Pending Litigation” has the meaning given in Section 4.10.2.




          “Performance Tests” means the conduct of any “performance tests” or “acceptance tests”
(however defined) required under the Boiler Purchase Contract.




          “Permit” means any action, approval, consent, waiver, exemption, variance, franchise,
order, permit, authorization, right or license of or from a Governmental Authority.




          “Permit Schedule” has the meaning given in Section 3.1.14(a).




          “Permitted Debt” means (a) Debt incurred under the Credit Documents, (b) Debt pursuant
to the terms of a Project Document (but not for borrowed money), either not more than 90 days past
due or being contested in good faith, (c) trade or other similar Debt incurred in the ordinary
course of business (but not for borrowed money), either not more than 90 days past due or being
contested in good faith, (d) contingent liabilities, to the extent otherwise constituting Debt,
including those relating to (i) the acquisition of goods, supplies or merchandise in the normal
course of business or normal trade credit, (ii) the endorsement of negotiable instruments received
in the normal course of its business, and (iii) contingent liabilities incurred with respect to any
Applicable Permit or Operative Document, (e) purchase money obligations incurred to finance the
purchase price of discrete items of equipment not comprising an integral part of the Project that
extend only to the equipment being financed in an aggregate amount of secured principal and capital
lease obligations not exceeding $1,000,000 at any one time outstanding, and (f) obligations in
respect of surety bonds or similar instruments in an aggregate amount not exceeding $1,000,000 at
any one time outstanding.




          “Permitted Investments” means (a) securities issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality thereof




A-19









 







(provided that the full faith and credit of the United States of America is pledged in support
thereof) having a maturity not exceeding one year from the date of issuance, (b) interest-bearing
deposit accounts, including time deposits and certificates of deposit, of any Lender or any
domestic or foreign commercial bank whose outstanding long-term debt is rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s having capital and
surplus in excess of $500,000,000 having a maturity not exceeding 90 days from the date of
acquisition, (c) commercial paper issued by any domestic corporation rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and, in each case,
having a maturity not exceeding 90 days from the date of acquisition, (d) fully secured repurchase
obligations with a term of not more than seven days for underlying securities of the types
described in clause (a) above entered into with any bank meeting the qualifications established in
clause (b) above, (e) high-grade corporate bonds rated at least AA or the equivalent thereof by S&P
or at least Aa2 or the equivalent thereof by Moody’s having a maturity not exceeding 90 days from
the date of acquisition, (f) banker’s acceptances drawn on and accepted by any domestic or foreign
commercial bank whose long-term senior unsecured debt is rated at least A or the equivalent thereof
by S&P or at least A2 or the equivalent thereof by Moody’s, (g) money market mutual funds whose
investment criteria are substantially similar to items (a) through (f) of this definition, (h)
instruments issued by an investment company rated at least A or the equivalent thereof by S&P or at
least A2 or the equivalent thereof by Moody’s having a portfolio consisting of 95% or more of the
securities described in items (a) through (g) of this definition, (i) investment contracts pursuant
to which moneys are deposited (to bear interest at an agreed rate) with a bank, insurance company
or other financial institution whose long-term senior unsecured debt is rated at least A or the
equivalent thereof by S&P or at least A2 or the equivalent thereof by Moody’s, and (j) Borrowers’
investments in Bank Equity Interests.




          “Permitted Liens” means (a) the rights and interests of any Secured Party as provided
in the Credit Documents; (b) Liens for any tax, assessment or other governmental charge, (i) not
yet due or being contested in good faith by appropriate proceedings, so long as such proceedings
shall not involve any substantial danger of the sale, forfeiture or loss of the Project, the Site
or any Easements, as the case may be, title thereto or any interest therein and shall not interfere
in any material respect with the use of the Project, the Site or any Easements, (ii) with respect
to which a bond or other security reasonably acceptable to Administrative Agent has been posted or
provided in such manner and amount as to assure Administrative Agent that any taxes, assessments or
other charges determined to be due will be promptly paid in full when such contest is determined,
or (iii) if adequate cash reserves have been provided therefor; (c) materialmen’s, mechanics’,
workers’, repairmen’s, employees’ or other like Liens, arising in the ordinary course of business
or in connection with the construction, operation or maintenance of the Project, either for amounts
not yet due or for amounts being contested in good faith and by appropriate proceedings, so long as
(i) such proceedings shall not involve any substantial danger of the sale, forfeiture or loss of
the Project, the Site or any Easements, as the case may be, title thereto or any interest therein
and shall not interfere in any material respect with the use or disposition of the Project, the
Site or any Easements, (ii) a bond or other security reasonably acceptable to Administrative Agent
has been posted or provided in such manner and amount as to assure Administrative Agent that any
amounts determined to be due will be promptly paid in full when such contest is determined, or
(iii) adequate cash reserves have been provided therefor;




A-20









 







(d) Liens arising out of judgments or awards so long as an appeal or proceeding for review is
being prosecuted in good faith and for the payment of which adequate reserves, bonds or other
security reasonably acceptable to Administrative Agent have been provided or are fully covered by
insurance; (e) Liens, deposits or pledges to secure statutory obligations or performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of
like general nature in the ordinary course of its business, not to exceed $500,000 in the aggregate
at any time, and with any such Lien to be released as promptly as practicable; (f) other Liens
incident to the ordinary course of business that are not incurred in connection with the obtaining
of any loan, advance or credit and that do not in the aggregate materially impair the use of the
property or assets of Borrowers or the value of such property or assets for the purposes of such
business; (g) involuntary Liens as contemplated by the Operative Documents (including a lien of an
attachment, judgment or execution) securing a charge or obligation, on any of Borrowers’ property,
either real or personal, whether now or hereafter owned in the aggregate sum of less than $500,000;
(h) rights of way, easements, restrictions (including zoning restrictions), covenants, consents,
reservations, encroachments, variations, mineral reservations and rights, leases, licenses and all
other similar restrictions, charges, encumbrances (whether or not recorded) affecting the Project
or the Real Property which either (1) are shown in the Title Policy, (2) which arise in the
ordinary course of business that do not secure any monetary obligations (other than maintenance
assessments) or (3) do not detract materially from the value or use of the Project; and (i) CoBank,
ACB’s statutory Lien on the Borrowers’ Bank Equity Interests.




          “Person” means any natural person, corporation, partnership, limited liability
company, firm, association, Governmental Authority or any other entity whether acting in an
individual, fiduciary or other capacity.




          “Plans and Specifications” means the plans and specifications for the construction and
design of the Project as set forth in the Construction Contracts, as updated from time to time, and
any other similar design, engineering or technical documents referred to in such Construction
Contracts.




          “Platform” has the meaning given in Section 12.30.1.




          “Pledged Bonds” has the meaning given in Section 2.2.9.




          “Pledgor” means each of Renegy Holdings and, for so long as the AZ Biomass Pledge
Agreement is existing and outstanding, AZ Biomass.




          “PPAs” means both of the SRP PPA and the APS PPA.




          “Principal Repayment Dates” means the first Payment Date which occurs after the
90th day following the Term-Conversion Date and each Payment Date thereafter,
corresponding to the number of Payment Dates set forth on Exhibit I-1 (for Term Loans) and
Exhibit I-2 (for Renegy Term Loans), and also the Term Loan Maturity Date (for Term Loans)
and Renegy Term Loan Maturity Date (for Renegy Term Loans).




          “Proceeds” means Insurance Proceeds and Eminent Domain Proceeds.




A-21









 








          “Project” means the approximately 24 MW biomass-fired power generation plant to be
located on the Site and the fuel and timber procurement, processing, transportation, storage and
sales (in the case of timber) business of Renegy and Renegy Trucking.




          “Project Budget” has the meaning given in Section 3.1.19.




          “Project Budget Category” means any line item category set forth in that portion of
the Project Budget showing sources and uses of Project funds, as in effect on the Closing Date.




          “Project Costs” means all costs associated with the development, design, engineering,
construction, testing, installation, equipping, assembly, inspection, completion, and start-up of
the Project incurred prior to the Term-Conversion Date and any Punchlist items incurred prior to
Final Completion, including: (a) all amounts payable under the Construction Contracts, any state
taxes on equipment, site acquisition and preparation costs, any interconnection costs payable by
Borrowers pursuant to the Interconnection Agreement and all water and wastewater disposal
interconnection and pumping station or water well costs; (b) financing, advisory, legal and other
fees; (c) all other Project-related costs and other development costs, insurance costs, management
services fees and expenses and expenses to complete the development, design, construction and
financing of the Project; (d) contingency funds, start-up costs and initial working capital costs;
(e) O&M Costs due and payable prior to Term-Conversion; (f) interest and fees incurred on or in
respect of any Construction Loan or the Construction Loan Commitment pursuant to the Credit
Agreement prior to Term-Conversion; (g) payments and fees under the Swap Agreements payable prior
to Term-Conversion; and (h) amounts necessary to fund the DSR Account in the amount of the DSR
Requirement.




          “Project Document Modification” has the meaning given in Section 6.12.




          “Project Documents” means, without duplication, the Major Project Documents, and any
other agreement or document relating to the development, construction or operation of the Project
to which any Borrower is a party.




          “Project Jurisdiction” means the State of Arizona.




          “Project Revenues” means, without duplication, all income and cash receipts of
Borrowers derived from the ownership or operation of the Project, including payments received by
Borrowers under each of the PPAs and the Construction Contracts, proceeds of any delay in start up
or business interruption or liability insurance (to the extent such liability insurance proceeds
represent reimbursement of third party claims previously paid by Borrowers), income derived from
the sale or use of electric capacity or energy transmitted or distributed or ancillary services
produced by the Project, and investment income on amounts in the Accounts (solely to the extent
deposited in the applicable Account), but excluding, solely for purposes of calculating Operating
Case Available for Debt Service, (a)any receipts derived from the sale of any property pertaining
to the Project or incidental to the operation of the Project, as determined in conformity with cash
accounting principles, (b) proceeds of casualty insurance, (c) performance liquidated damages under
the Construction Contracts, (d) the proceeds of any condemnation awards relating to the Project and
(e) proceeds from the Collateral Documents.




A-22









 








          “Project Schedule” has the meaning given in Section 3.1.32.




          “Proportionate Share” means:




          (a) in the context of voting in matters requiring the vote of all or a percentage of the
Lenders, with respect to each Lender at any time, a percentage equal to the quotient of (i) the sum
of (A) the percentage interest of such Lender in the Total Construction Loan Commitment (or, after
Term-Conversion, the Total Term Loan Commitment), multiplied by the Total Construction Loan
Commitment (or, after Term-Conversion, the Total Term Loan Commitment) plus (B) the percentage
interest of such Lender in the Total Renegy Term Loan Commitment, multiplied by the Total Renegy
Term Loan Commitment, plus (C) the percentage interest of such Lender in the Total Revolving Loan
Commitment, multiplied by the Total Revolving Loan Commitment, plus (D) the percentage interest of
such Lender in the Total LC Commitment, multiplied by the Total LC Commitment, plus (E) the
percentage interest of such Lender in the Swap Agreements, multiplied by the Swap Breaking Fees
actually payable (and not on a “marked to market” basis) at such time (determined upon the close of
the applicable voting period), divided by (ii) the sum of (A) the Total Construction Loan
Commitment (or, after Term-Conversion, the Total Term Loan Commitment), plus (B) the Total Renegy
Term Loan Commitment, plus (C) the Total Revolving Loan Commitment, plus (D) the Total LC
Commitment plus (E) such Swap Breaking Fees; and




          (b) with respect to each Lender at any time in the context of funding Construction Loans, Term
Loans, Renegy Term Loans, Revolving Loans, and LC Loans, the percentage participation of such
Lender in the Total Construction Loan Commitment, Total Term Loan Commitment, Total Renegy Term
Loans, Total Revolving Loans, or Total LC Loans, respectively;




          “Prudent Utility Practices” means those practices, methods, equipment, specifications
and standards of safety and performance, as the same may change from time to time, as are commonly
used by biomass-fired electric generation stations in the region and of a type and size similar to
the Project as good, safe and prudent engineering practices in connection with the design,
construction, operation, maintenance, repair and use of electrical and other equipment, facilities
and improvements of such electrical station, with commensurate standards of safety, performance,
dependability, efficiency and economy. “Prudent Utility Practices” does not necessarily mean one
particular practice, method, equipment specification or standard in all cases, but is instead
intended to encompass a broad range of acceptable practices, methods, equipment specifications and
standards.




          “Public Lender” has the meaning given in Section 12.30.1.




          “PUHCA” means the Public Utility Holding Company Act of 2005.




          “Punchlist” means work under the applicable Construction Contracts, the failure of
which to be completed does not, whether individually or in the aggregate, have, or otherwise cause,
a Material Adverse Effect.




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          “Rate Margin” means, for all LIBOR Loans, the applicable rate set forth below, and for
all Base Rate Loans, such rate minus 0.75%:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Time Period	 	During Construction	 	Years 1-5	 	Years 6-10	 	Years 11-Maturity
	Construction Loans and Term Loans
	 	 	2.00	%	 	 	1.50	%	 	 	1.75	%	 	 	2.00	%







(Rate Margin is also used to calculate LC Fees, so amounts are also shown for periods
after Loans will have been repaid.)



          At any time that the long-term unsecured senior debt of either APS or SRP is rated less than
BBB- by S&P or Baa3 by Moody’s, the otherwise applicable Rate Margin shall be increased by 0.25%;
and if rated less than BB+ by S&P or Ba1 by Moody’s shall be increased by an additional 0.25% (for
a maximum total increase of 0.50%). If there is any change in the Rate Margin during any quarter,
applicable interest rates and LC Fees shall be computed and multiplied by the Rate Margin
separately for each period during such quarter that such Rate Margin was in effect.




          “Real Property” means the real property, including the Site and the Improvements,
which is the subject of the Mortgage.




          “Register” has the meaning given in Section 2.10.




          “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve
System (or any successor).




          “Regulatory Change” means any change after the Closing Date in federal, state, local
or foreign laws, regulations, Legal Requirements or requirements under Applicable Permits, or the
adoption or making after such date of any interpretations, directives or requests of or under any
federal, state, local or foreign laws, regulations, Legal Requirements or requirements under
Applicable Permits (whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.




          “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.




          “Release” means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, pumping, pouring, emitting, escaping, emptying, seeping, placing or the like, into or upon
any land or water or air, or otherwise entering into the environment.




          “Remarketing Agent” means Thornton Farish, Inc. or such replacement remarketing agent
as shall replace Thornton Farish Inc.




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          “Remarketing Agreement” means that certain Remarketing Agreement, dated as of
September 1, 2006, between the Remarketing Agent and SWMP.




          “Renegy Fuel Business Revenues” means, without duplication, all income and cash
receipts of Renegy derived from or in connection with the operation of its lumber, wood and wood
products business.




          “Renegy Fuel Business Costs” means, for any period, cash amounts incurred and paid by
Renegy for the operation and maintenance of its lumber, wood and wood products business and for the
purchase of goods and services in connection therewith.




          “Renegy Holdings” means Renegy Holdings, Inc., a Delaware corporation.




          “Renegy Holdings Pledge Agreement” means that certain Pledge Agreement, dated as of
October 1, 2007, between Renegy Holdings and Collateral Agent, as amended by that certain First
Amendment to Pledge Agreement, dated as of January 1, 2009, between Renegy Holdings and Collateral
Agent.




          “Renegy Term Loan Amortization Schedule” has the meaning given in Section 2.1.3(c).




          “Renegy Term Note” has the meaning given in Section 2.1.6.




          “Renegy Term Loan” has the meaning given in Section 2.1.3(a).




          “Renegy Term Loan Commitment” means, at any time with respect to each Lender, such
Lender’s Proportionate Share of the Total Renegy Term Loan Commitment at such time.




          “Renegy Term Loan Maturity Date” means the earlier of (a) the five-year anniversary of
the Term-Conversion Date and (b) the date on which the entire outstanding principal balance of the
Renegy Term Loans, together with all unpaid interest, fees, charges and costs, becomes due and
payable under the Credit Agreement.




          “Repayment Period” means the three month period commencing on each Payment Date
following Term-Conversion and ending on the next Payment Date.




          “Required Lenders” means, at any time, Lenders having Proportionate Shares which in
the aggregate equal or exceed 662/3%.




          “Rescission Date” means the date upon which the rescission right provided for in
Section 12.03 of that certain Membership Interest Purchase Agreement, dated as of January 1, 2009,
between Renegy Holdings and AZ Biomass, is exercised by AZ Biomass.




          “Reserve Requirement” means, for any Interest Period for any LIBOR Loans, the average
maximum rate (expressed as a percentage) at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period therefor under
Regulation D by member banks of the Federal Reserve System in New York City



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with deposits exceeding $1,000,000,000 against “Eurocurrency liabilities” (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (a) any category of liabilities which includes deposits by reference to
which the LIBO Rate or LIBOR Loans is to be determined, (b) any category of liabilities or
extensions of credit or other assets which include LIBOR Loans or (c) any category of liabilities
or extensions of credit which are considered irrevocable commitments to lend. LIBOR Loans shall be
deemed to constitute Eurocurrency liabilities and to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or offsets which may be available from time
to time to any Lender under Regulation D.




          “Responsible Officer” means, as to any Person, its president, chief executive officer,
any vice president, treasurer, or secretary or any natural Person who is a managing general partner
or manager or managing member of a limited liability company (or any of the preceding with regard
to any such managing general partner, manager or managing member).




          “Restricted Payment Conditions” has the meaning given in Section 6.6.2.




          “Revenue Account” has the meaning given in Section 7.2(a).




          “Revolving Lender” means each Lender which holds a Revolving Loan Commitment.




          “Revolving Loan” has the meaning given in Section 2.1.4(a).




          “Revolving Loan Availability Period” means the period beginning on the Term-Conversion
Date and ending on the Revolving Loan Maturity Date.




          “Revolving Loan Commitment” means, at any time with respect to each Lender, such
Lender’s Proportionate Share of the Total Revolving Loan Commitment at such time.




          “Revolving Loan Maturity Date” has the same meaning as the Term Loan Maturity Date.




          “Revolving Note” has the meaning given in Section 2.1.6.




          “Rights of Way” has the meaning given in Section 3.1.25(f).




          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.




          “Schedule of Closing Date Consents” has the meaning given in Section 3.1.33.




          “Schedule of Security Filings” has the meaning given in Section 4.25.




          “Secured Parties” means Administrative Agent, the Lead Arranger, the Collateral Agent,
the LC Issuer, the Lenders, any Swap Bank, and each of their respective successors,



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transferees and assigns; provided, that no Affiliate of Sponsor shall be a “Secured
Party” under any Credit Document.




          “Securities Act” means the Securities Act of 1933, as amended from time to time, and
any successor statute.




          “Security Agreement” means the Security Agreement, dated as of the Closing Date, in
substantially the form of Exhibit D-2 to the Credit Agreement, between Borrowers and
Collateral Agent.




          “Settlement Agreement” means that certain Settlement and Release Agreement, dated as
of December 31, 2008, between Catalyst and SWMP.




          “Settlement Amount” has the meaning given in Section 5.11.6(b).




          “Site” means the “Real Property” as defined in the Ground Lease.




          “Site Survey” has the meaning given in Section 3.1.23.




          “SPC” has the meaning given in Section 12.17.7.




          “Sponsor” means Robert M. Worsley.




          “Sponsor Entity” means the Borrowers, any Pledgor and the Sponsor.




          “Sponsor Guaranty” means that certain Sponsor Guaranty, dated as of the Closing Date,
by and among the Sponsor, Christi Worsley and Administrative Agent, in substantially the form of
Exhibit D-5, as amended by that certain First Amendment to Sponsor Guaranty, dated as of
the date hereof.




          “SRP” means Salt River Project Agricultural and Improvement District.




          “SRP PPA” means the Second Amended and Restated Renewable Energy Purchase and Sale
Agreement, dated as of September 1, 2006, between the Salt River Project Agricultural and
Improvement District and SWMP.




          “Subject Claims” has the meaning given in Section 5.11.1(a).




          “Subsidiary” means, as to any Person, a corporation, partnership, limited liability
company or other entity of which such Person: (a) owns 10% or more of the shares of stock or other
ownership interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or other entity and/or
(b) controls the management, directly or indirectly through one or more intermediaries. Unless
otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall
refer to a Subsidiary or Subsidiaries of a Person.




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          “Swap Agreements” means one or more interest rate swap agreements, caps, collars, or
other master interest rate hedging mechanisms, in each case having a term that does not extend
beyond the Term Loan Maturity Date and otherwise in form and substance reasonably satisfactory to
Administrative Agent, which effectively hedge the Bonds and the greater of (a) $8,000,000 or (b)
75% of the Term Loans.




          “Swap Bank” means a Lender or any Affiliate thereof which is party to a Swap Agreement
with SWMP, in its capacity as counterparty to such Swap Agreement.




          “Swap Breaking Fees” has the meaning given in Section 5.20.2.




          “Target Average DSCR” means an average annual Debt Service Coverage Ratio of, for the
period until the earlier of repayment in full of the Renegy Term Loans and the fifth anniversary of
the Term-Conversion Date, 1.70:1 over the entirety of such period; and 1.95:1 over the entirety of
the period covered by the Base Case Project Projections which ends December 31 of the year in which
the Term Loan Maturity Date occurs.




          “Target Minimum DSCR” means for the period covered by the Base Case Project
Projections, a minimum annual Debt Service Coverage Ratio of 1.60:1, on an annual basis.




          “Tax Agreement” means that certain Tax Exemption Certificate and Agreement, dated
September 8, 2006, among the Bond Issuer, the Trustee and SWMP.




          “Taxes” has the meaning given in Section 2.5.4(a).




          “Tender Drawing” means any drawing under the Letter of Credit or Confirmation
accompanied by a demand in the form of Annex C to the Letter of Credit made to pay the
principal amount of those Bonds which the Remarketing Agent has been unable to remarket within the
time limits established in the Indenture.




          “Term-Conversion” means satisfaction or waiver of the conditions set forth in Section
3.4, causing conversion of Construction Loans to Term Loans. “Term-Convert” is the verb form of
“Term-Conversion.”




          “Term-Conversion Date” has the meaning given in Section 3.4.




          “Term Loan” has the meaning given in Section 2.1.2(a).




          “Term Loan Amortization Schedule” has the meaning given in Section 2.1.2(c).




          “Term Loan Commitment” means, at any time with respect to each Lender, such Lender’s
Proportionate Share of the Total Term Loan Commitment at such time.




          “Term Loan Maturity Date” means the earlier of (a) December 31, 2025, (b) the
18th anniversary of the Term-Conversion Date, and (c) the date on which the entire
outstanding principal balance of the Term Loans, together with all unpaid interest, fees, charges
and costs, becomes due and payable under the Credit Agreement.




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          “Term Note” has the meaning given in Section 2.1.6.




          “Term Title Policy” has the meaning given in Section 3.4.13.




          “Title Insurer” means Transnation Title Insurance Company.




          “Title Policy” means that certain policy of the title insurance issued by the Title
Insurer dated as of the Closing Date, as provided in Section 3.1.24, including all amendments
thereto, endorsements thereof and substitutions or replacements therefor.




          “Total Construction Loan Commitment” has the meaning given in Section 2.3.1(a).




          “Total LC Commitment” has the meaning given in Section 2.3.1(e).




          “Total Loan Commitment” means the Total Construction Loan Commitment and Total Renegy
Term Loan Commitment and additionally after Term-Conversion, the Total Revolving Loan Commitment.




          “Total Renegy Term Loan Commitment” has the meaning given in Section 2.3.1(c).




          “Total Revolving Loan Commitment” has the meaning given in Section 2.3.1(d).




          “Total Term Loan Commitment” has the meaning given in Section 2.3.1(b).




          “Transmission Agreement” means the Service Agreement for Firm Point-To-Point
Transmission Service Umbrella Short-Term, dated as of July 10, 2006, between APS and SWMP.




          “Trustee” means J.P. Morgan Trust Company, National Association, a national banking
association, acting under the Indenture, or any successor to such party as Trustee under the
Indenture.




          “Type” means the type of Loan, whether a Base Rate Loan or LIBOR Loan.




          “UCC” means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of New York; provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the perfection or priority of the security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than
the State of New York the term “UCC” means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions of the Credit Documents relating to such perfection or
priority and for purposes of definitions related to such provisions.




          “U.S.A. Patriot Act” has the meaning given in Section 4.30.1.




          “Unreimbursed Amount” has the meaning given in Section 2.2.3.




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          “Unsatisfied Condition” means a condition in a Permit that has not been satisfied and
that either (a) must be satisfied before such Permit can be come effective, (b) must be satisfied
as of the date on which a representation is made or a condition precedent must be satisfied under
the Credit Agreement, or (c) must be satisfied as of a future date but with respect to which facts
or circumstances exist which, to Borrowers’ knowledge, could reasonably be expected to result in a
failure to satisfy such Permit condition.




          “Utilities” means SRP and APS, together, with each individually being referred to as a
“Utility.”




          “Waterfall Level” has the meaning given in Section 7.2(b).




A-30









 








          RULES OF INTERPRETATION




          1. The singular includes the plural and the plural includes the singular. The definitions of
terms apply equally to the singular and plural forms of the terms defined.




          2. “or” is not exclusive.




          3. A reference to a Governmental Rule includes any amendment or modification to such
Governmental Rule, and all regulations, rulings and other Governmental Rules promulgated under such
Governmental Rule.




          4. A reference to a Person includes its permitted successors, permitted replacements and
permitted assigns.




          5. The words “asset” and “property” shall be construed to have the same meaning and effect and
to refer to any and all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.




          6. The words “include”, “includes” and “including” are not limiting.




          7. A reference in a document to an Article, Section, Exhibit, Schedule, Annex or Appendix is
to the Article, Section, Exhibit, Schedule, Annex or Appendix of such document unless otherwise
indicated. Exhibits, Schedules, Annexes or Appendices to any document shall be deemed incorporated
by reference in such document. In the event of any conflict between the provisions of the Credit
Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices thereto) and any Exhibit,
Schedule, Annex or Appendix thereto, the provisions of the Credit Agreement shall control.




          8. References to any document, instrument or agreement (a) shall include all exhibits,
schedules and other attachments thereto, (b) shall include all documents, instruments or agreements
issued or executed in replacement thereof, and (c) means such document, instrument or agreement, or
replacement or predecessor thereto, as amended, amended and restated, modified and supplemented
from time to time and in effect at any given time.




          9. The words “hereof”, “herein” and “hereunder” and words of similar import when used in any
document shall refer to such document as a whole and not to any particular provision of such
document.




          10. References to “days” means calendar days, unless the term “Business Days” shall be used.




          11. Whenever the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The word “will” has the same meaning and effect as the word “shall”.




          12. In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.




A-31









 








          13. If, at any time after the Closing Date, Moody’s or S&P shall change its respective system
of classifications, then any Moody’s or S&P “rating” referred to herein shall be considered to be
at or above a specified level if it is at or above the new rating which most closely corresponds to
the specified level under the old rating system.





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