Document:

Exhibit
10.2

 

FIRST AMENDMENT TO SECOND
AMENDED AND RESTATED

REVOLVING CREDIT AND TERM
LOAN AGREEMENT

 

This
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “First Amendment”)
is made and entered into as of the 27th day of May, 2010, by and among CASELLA WASTE SYSTEMS, INC., a Delaware corporation (the “Parent”),
its Subsidiaries (other than Excluded Subsidiaries and the Non-Borrower
Subsidiaries) listed on Schedule 1 (as amended from time to time) to the
Credit Agreement defined below (together with the Parent, collectively the “Borrowers”),
each lender from time to time a party to the Credit Agreement (collectively,
the “Lenders” and, individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”), Swing Line Lender and L/C Issuer.

 

WHEREAS, the Borrowers, the Lenders and the Administrative
Agent are party to that certain Second Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of July 9, 2009, (as the same may be
amended and in effect from time to time, the “Credit Agreement”),
pursuant to which the Lenders have extended credit to the Borrowers on the
terms set forth therein;

 

WHEREAS, the Borrowers have requested that each of the Administrative
Agent and the Lenders agree, and each of the Administrative Agent and the
Required Lenders have agreed, on the terms and subject to the conditions set
forth herein, to make certain amendments to the Credit Agreement;

 

NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

1.             Definitions.  Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement.  This First Amendment shall
constitute a Loan Document for all purposes of the Credit Agreement and the
other Loan Documents.

 

2.             Amendments to Section 1.01
(Defined Terms) of the Credit Agreement.  Section 1.01 of the Credit Agreement is
hereby amended by:

 

(a)           amending the definition of “Consolidated
Total Funded Debt” by deleting the reference therein to “face amount of” and
replacing it with the following: “principal obligations of the Borrowers under.”

 

(b)           amending the definition of “De
Minimis Subsidiaries” by inserting the words “(other than an Excluded
Subsidiary)” immediately following the reference therein to “any Subsidiary of
the Parent”.

 

 

(c)           amending the definition of “Excluded
Subsidiaries” by inserting the words “(other than a De Minimis Subsidiary)”
immediately following the reference therein to “any Subsidiary”.

 

(d)           amending the definition of “Senior
Subordinated Debt” to read in its entirety as set forth below:

 

““Senior Subordinated Debt” means (i) the existing senior
subordinated Indebtedness of the Borrowers evidenced by the 2003 Senior
Subordinated Notes in the original aggregate principal amount of $195,000,000
and (ii) any other senior subordinated Indebtedness permitted under Section 7.03(k).”

 

(e)           amending the definition of “Senior
Subordinated Debt Documents” to read in its entirety as set forth below:

 

““Senior Subordinated Debt Documents” means, collectively, (i) the
2003 Senior Subordinated Notes Documents and (ii) all documents,
instruments, agreements and indentures entered into or executed in connection
with any other Senior Subordinated Debt incurred by any Borrower from time to
time.”

 

(f)            amending the definition of “Senior
Subordinated Notes” to read in its entirety as set forth below:

 

““Senior Subordinated Notes” means, collectively, (i) the
2003 Senior Subordinated Notes and (ii) all promissory notes or other
instruments issued in connection with any other Senior Subordinated Debt
incurred by any Borrower from time to time.”

 

(g)           amending the definition of “Senior
Subordinated Notes Indenture” to read in its entirety as set forth below:

 

““Senior Subordinated Notes Indenture” means, collectively, (i) the
2003 Senior Subordinated Notes Indenture and (ii) all indentures or other
debt instruments entered into in connection with any other Senior Subordinated
Debt incurred by the Borrowers from time to time.”

 

(h)           amending the definition of “Term B
Loan” to read in its entirety as set forth below:

 

““Term B Loan” means, collectively, (i) the term loan
advanced on the Closing Date pursuant to Section 2.01(a) in
the original principal amount of $130,000,000, as such amount may be reduced or
increased pursuant to the terms hereof and (ii) any additional term loan
advanced pursuant to Section 2.14.”

 

(i)            inserting in the appropriate
alphabetical order the following new definitions:

 

2

 

““2003 Senior Subordinated Notes” means the 9.75% Senior
Subordinated Notes due 2013 issued by the Parent pursuant to the 2003 Senior
Subordinated Notes Indenture.”

 

““2003 Senior Subordinated Notes Documents” means the 2003
Senior Subordinated Notes Indenture, the 2003 Senior Subordinated Notes and all
other documents, instruments and agreements entered into or executed in
connection therewith.”

 

““2003 Senior Subordinated Notes Indenture” means the Indenture,
dated as of January 24, 2003, among the Parent, certain of its
Subsidiaries as guarantors and U.S. Bank National Association as trustee, with
respect to the 2003 Senior Subordinated Notes.”

 

““Excess Interim Sub Debt” has the meaning set forth in Section 7.03(k) hereof.”

 

““Excluded Asset Disposition” means (i) the sale of
inventory by any Borrower or Non-Borrower Subsidiary (with such inventory to
include solid waste, recyclables and other by-products of the wastestream
collected by the Borrowers and the Non-Borrower Subsidiaries), (ii) the
licensing of intellectual property or (iii) the disposition or replacement
of equipment of the Borrowers or the Non-Borrower Subsidiaries that has become
worn out, obsolete or damaged or otherwise unsuitable for use in connection
with the business of the Borrowers and the Non-Borrower Subsidiaries, in each
case in the ordinary course of business consistent with past practices.”

 

““Sub Debt Repayment” means any payment on Senior Subordinated
Debt, whether in the form of a payment when due, prepayment, redemption,
repurchase (including open market repurchases, whether or not in connection
with a tender offer), retirement, other acquisition or legal defeasance (such
defeasance, in whole) thereof. 
Derivatives of such term have corresponding meanings.”

 

3.             Amendment to Section 2.05(b)(ii) (Dispositions)
of the Credit Agreement.  Section 2.05(b)(ii) of
the Credit Agreement is hereby amended by adding the parenthetical “(other than
in connection with an Excluded Asset Disposition)” directly following the
reference therein to: “If any Borrower or Non-Borrower Subsidiary Disposes of
any assets.”

 

4.             Amendment to Section 2.05(b)(iii) (Equity
Interests) of the Credit Agreement.  Section 2.05(b)(iii) of the Credit
Agreement is hereby amended by adding the following new language at the end
thereof:

 

“,
except that, notwithstanding the foregoing, the Borrowers may elect to apply,
on one or more occasions after the date hereof, up to $150,000,000, in the
aggregate, of the Net Cash Proceeds realized from one or more sales or
issuances of its Equity Interests to one or more Sub Debt Repayments (to the
extent permitted under Sections 7.16(d)(ii) and 7.14) and/or
payment with respect to the Second Lien Notes, so long as, in each case, such
Sub Debt Repayment or payment with respect to the Second Lien Notes is made
within six (6) months of the date of the applicable sale or issuance of Equity
Interests (as

 

3

 

certified by the Borrowers in writing to the Administrative Agent), it
being understood that Net Cash Proceeds realized from any sale or issuance by
the Borrowers of its Equity Interests (x) in excess of the $150,000,000
basket described above, (y) not intended to be applied to a Sub Debt
Prepayment, or (z) intended to be applied to one or more Sub Debt
Repayments but not so applied within the required six (6) month period
shall be subject to the 50% prepayment requirement as set forth in this Section 2.05(b)(iii).”

 

5.             Amendment to Section 2.07(c) (Repayment
of Loans; Term B Loans) of the Credit Agreement.  Section 2.07(c) of the Credit
Agreement is amended by deleting the reference therein to “Senior Subordinated
Notes” and replacing it with the following: “2003 Senior Subordinated Notes.”

 

6.             Amendments to Section 2.14
(Increase in Aggregate Commitments; Term B Loans) of the Credit Agreement.  Section 2.14 of the Credit Agreement is
hereby amended by:

 

(a)           amending clause (a) to read in its entirety as set forth below:

 

“(a)         Request for Increase in the Committed Loans; Term B
Loan.  Provided there exists no Default, upon notice
to the Administrative Agent (which shall promptly notify the Lenders as set
forth in this Section), and subject to the terms of this Section, the Borrowers
may from time to time, (i) request an increase in the Aggregate
Commitments in respect of Committed Loans (which such increase in the
Aggregate Commitments and the proceeds of any Committed Loans to be advanced
thereunder may be used, in whole or in part, to prepay the then outstanding
Term B Loan pursuant to Section 2.05(a)(i)), (ii) request an increase to the Term
B Loan (which such increase to the Term B Loan may, at the election or the
Borrower, be in the form of an increase to the existing Term B Loan or a new
Term B Loan) and/or (iii) request a replacement Term B Loan (whether or
not the principal amount of the Term B Loan is increasing) the proceeds of which
shall be used to prepay the Term B Loan then outstanding in full in accordance
with Section 2.05(a)(i); provided that the aggregate amounts so
requested under clauses (i) and (ii) above after the
date hereof shall not exceed $42,500,000; and provided, further,
that, after giving effect to any such increase and/or the aggregate amounts so
requested under clauses (i), (ii) and (iii) above
(including any replacement contemplated under clause (iii) above),
the Total Facility Amount shall not exceed $350,000,000 (minus any and
all previously effected reductions of the Aggregate Commitments or previously
effected prepayments of the Term B Loan (other than prepayments made in
connection with a replacement Term B Loan pursuant to clause (iii) above)).  With respect to any increase in the Term B
Loan pursuant to clause (ii) above or any replacement Term B Loan
pursuant to clause (iii) above, such increase or replacement shall
be subject to prevailing market terms (including prevailing market rates) for
Borrowers with similar credit profiles and ratings, and otherwise acceptable to
the Borrowers, the Administrative Agent and any new and increasing Term B
Lenders, as set forth in any applicable Conforming Amendment (which such terms
shall, if applicable, also apply to the outstanding Term B Loan, subject, if
applicable, to the provisions of Section 10.01 regarding the
consent of each Lender directly affected thereby to any change described in Sections
10.01(b), (c) or (d)).”

 

4

 

(b)           amending clause (c) contained
therein by inserting the following sentence at the end thereof:

 

“Subject to the
approval of the Administrative Agent (which approval shall not be unreasonably
withheld), and notwithstanding clause (b) above and the second
sentence of this clause (c), in connection with a replacement Term B
Loan described in subclause (a)(iii) above, the Borrowers may
invite one or more commercial banks or other financial institutions or other
Persons to become party to this Agreement as a Term B Lender by entering into
an Instrument of Accession or similar agreement (which agreement shall for all
purposes of this Agreement be deemed to be an Instrument of Accession) with the
Borrowers and the Administrative Agent and assuming thereunder the rights and
obligations of a Term B Lender with respect to the obligation to fund a portion
of such replacement Term B Loan and such replacement Term B Loan shall be
funded by the amount of such Lender’s interest in accordance with the
provisions of this Section.”

 

(c)           amending
clause (d) contained therein by: (i) inserting the language “or the
funding of a replacement Term B Loan” immediately following the reference
therein to “or an increase to the Term B Loan,” and (ii) deleting each
reference to “such increase” contained therein and replacing it with a
reference to “such increase or replacement;”

 

(d)           amending clause (e) by: (i) inserting
the language “or the funding of a replacement Term B Loan” immediately
following the reference therein to “Term B Loan,” and (ii) inserting the
following sentence at the end thereof:

 

“For the avoidance of
doubt, in connection with the funding of an additional or replacement Term B
Loan in accordance with the terms of this Section 2.14, the related
Conforming Amendment may include, without limitation, provisions for the
Lenders funding such additional facilities (i) to share ratably in the
benefits of this Agreement and the other Loan Documents with the obligations
and liabilities from time to time outstanding in respect of the existing
facilities hereunder, and (ii) to participate in any required vote or
action required to be approved by the requisite Lenders hereunder.”

 

(e)           amending clause (f) by deleting
each reference to “such increase” contained therein and replacing it with “such
increase or replacement.”

 

7.             Amendments to Section 2.16 (Designation of Senior Debt) of the
Credit Agreement.  Section 2.16 of the Credit
Agreement is hereby amended by: (a) deleting the reference to “Senior
Subordinated Notes Indenture” contained therein and replacing it with the
following: “2003 Senior Subordinated Notes Indenture;” and (b) inserting
the following new language at the end thereof:

 

“and,
simultaneously with the incurrence of any other Senior Subordinated Debt permitted
hereunder, the Borrowers shall take any and all actions necessary to designate
the Obligations as “designated senior debt” (or the equivalent term) under (and
as defined in) the applicable Senior Subordinated Debt Document”.

 

5

 

8.             Amendment to Section 5.04
(Use of Proceeds) of the Credit Agreement.  Section 5.04 of the Credit Agreement is
hereby amended by inserting the following parenthetical at the end of the first
sentence thereof:

 

“(including Sub Debt Repayments (to the extent
permitted under Sections 7.14 and 7.16) or payments of the
Obligations)”.

 

9.             Amendment to Section 5.22 (Obligations Constitute Senior Debt) of
the Credit Agreement.  Section 5.22
of the Credit Agreement is hereby amended by deleting clause (i) thereof
in its entirety and substituting in lieu thereof the following:

 

“(i) are and will continue to be “Senior Debt”
and “Designated Senior Debt” (or substantively equivalent terms) under and as
defined in the 2003 Senior Subordinated Notes Indenture and the Senior
Subordinated Debt Documents governing any other Senior Subordinated Debt
incurred by the Borrowers from time to time in accordance with the terms of Section 7.03(k).”

 

10.          Amendment to Section 7.02 (Investments) of the Credit Agreement.  Section 7.02 of the Credit Agreement is
hereby amended by inserting the following new clause (m) at the end
thereof (and the word “and” is deleted from the end of clause (k) thereof
and is inserted at the end of clause (l) thereof):

 

“(m) Investments in connection with (i) the
acquisition of and Subdebt Repayment of the Senior Subordinated Notes (solely
to the extent permitted under Sections 7.14 and 7.16) and (ii) the
acquisition of and payments with respect to the Second Lien Notes, in each case
whether or not in connection with a tender offer, so long as any notes that
have been acquired by a Borrower (in any manner) are terminated, retired or
otherwise satisfied in accordance with the terms of the applicable Senior
Subordinated Notes Indenture or the Second Lien Notes Indenture, as applicable,
substantially contemporaneously with the consummation of such acquisition.”

 

11.          Amendment to Section 7.03(k) (Indebtedness)
of the Credit Agreement.  Section 7.03(k) of
the Credit Agreement is hereby amended to read in its entirety as follows:

 

“(k) (i) the Senior Subordinated Debt
evidenced by the 2003 Senior Subordinated Notes and (ii) any additional
Senior Subordinated Debt, so long as (A) the aggregate outstanding
principal amount of all Senior Subordinated Debt under subclauses (i) and
(ii) shall not at any time exceed $350,000,000 and (B) any
Senior Subordinated Debt issued by the Borrowers (other than the 2003 Senior
Subordinated Notes) shall (1) bear interest at a rate not in
excess of the then applicable market interest rate, (2) have a final
maturity date that is not earlier than the final maturity date of the 2003
Senior Subordinated Notes, (3) include terms of subordination no less
favorable to the Lenders than the subordination terms contained in the 2003
Senior Subordinated Notes Documents, and (4) contain other terms, taken as
a whole, that shall not be less favorable to the Lenders than those
contained  in the 2003 Senior
Subordinated Notes Documents as reasonably determined by the Administrative
Agent; provided, that, if in connection with the refinancing of any
tranche of Senior Subordinated Notes from the proceeds of an 

 

6

 

issuance of Senior Subordinated Debt permitted under Section 7.16(d)(iii) (a
“Sub Debt Refinancing”), and subject in all events to Section 7.14,
certain of the outstanding existing Senior Subordinated Notes in such tranche
are not tendered to, discharged by or otherwise satisfied by, the Borrowers
substantially simultaneously with (and, in any event within one (1) Business
Day after) the issuance of such new Senior Subordinated Debt, as contemplated
by the Borrowers in such Sub Debt Refinancing (the aggregate outstanding
principal amount of such existing Senior Subordinated Notes not so tendered,
discharged or satisfied, the “Interim Sub Debt”):

 

(A) the
Borrowers may elect to designate all or any portion of such Interim Sub Debt as
“Excluded Interim Sub Debt” for purposes of Section 7.11(b) so
long as the Deposit Conditions (defined below) are met (and continue to be met)
with respect to such Interim Sub Debt (and in the event that any of the Deposit
Conditions cease to be met on any date, including that such Interim Sub Debt is
outstanding for more than ninety (90) days, such Interim Sub Debt shall no
longer be excluded from the covenants under Section 7.11(b) as
of such date and shall no longer constitute Excluded Interim Sub Debt); and

 

(B) the
aggregate outstanding principal amount of the Senior Subordinated Debt (including
all Interim Sub Debt)
may exceed $350,000,000 so long as (w) the aggregate outstanding principal
amount of the Senior Subordinated Debt (including all Interim Sub
Debt) may not exceed
$400,000,000 (any amount of Senior Subordinated Debt in excess of $350,000,000,
the “Excess Interim Sub Debt”), and (x) the Deposit Conditions are
met with respect to such Excess Interim Sub Debt.  Any Excess Interim Sub Debt shall be included
within the calculation of “Excluded Interim Sub Debt” for purposes of Section 7.11(b) for
so long as the Deposit Conditions (defined below) are met (and continue
to be met) with respect to such Excess Interim Sub Debt (and in the event that
any of the Deposit Conditions cease to be met on any date, including that such
Excess Interim Sub Debt is outstanding for more than ninety (90) days, such
Excess Interim Sub Debt shall no longer be permitted Indebtedness under this Section 7.03(k)).

 

The “Deposit Conditions”
shall mean, with respect to any Excluded Interim Sub Debt, the satisfaction
(and continued satisfaction) of each of the following conditions with respect
to such Indebtedness: (x) Net Cash Proceeds of the related new issuance of
Senior Subordinated Debt in an amount equal to such Excluded Interim Sub Debt
is deposited by the Borrowers with the Administrative Agent and maintained in a
blocked deposit account at Bank of America pending the redemption, repayment,
discharge or other satisfaction thereof and such deposit account is pledged to
the Administrative Agent for the benefit of the Lenders to secure the
Obligations (it being acknowledged that such funds shall be released in
connection with the redemption, repayment, discharge or other satisfaction of
such Excluded Interim Sub Debt in a manner that does not violate the terms of the
Senior Subordinated Debt Documents governing such Excluded Interim Sub Debt); (y) the
Borrowers shall commence the redemption, repayment, discharge or other
satisfaction of such Excluded Interim Sub Debt in a manner that does not
violate the terms of the Senior Subordinated Debt Documents governing such
Excluded Interim Sub Debt (subject to any contractual notice periods required
therein) within five (5) Business Days following the consummation of the
applicable Sub Debt Refinancing resulting in 

 

7

 

such Excluded
Interim Sub Debt; and (z) such Excluded Interim Sub Debt is in fact
redeemed, repaid, discharged or otherwise satisfied as soon as practicable
under the Senior Subordinated Debt Documents governing such Excluded Interim
Sub Debt and, in any event, within ninety (90) days following the consummation
of the related issuance of Senior Subordinated Debt that resulted in such
Excluded Interim Sub Debt;

 

The failure of any of the
foregoing conditions to be met at any time with respect to any Interim Sub Debt
shall cause such Interim Sub Debt to cease to be Excluded Interim Sub Debt; and

 

In connection with the
issuance of any new Senior Subordinated Debt (including any Sub Debt
Refinancing), the Borrowers hereby agree to provide the Administrative Agent
with all consents and other documentation as the Administrative Agent shall
reasonably require.”

 

12.          Amendments to Section 7.04(b) (Dispositions
of Assets) of the Credit Agreement.  Section 7.04(b) is hereby amended
as follows:

 

(i)            Inserting the language “of any Subsidiaries of the Parent”
immediately following the reference therein to “Equity Interests.”

 

(ii)           Inserting the language “(other than an Excluded Asset
Disposition which shall be deemed to be permitted by this Section 7.04(b))”
directly following the reference therein to “any disposition of assets.”

 

(iii)          Amending the language “in each case for fair and reasonable
value, as determined” to read in its entirety as follows:

 

“in each case
for fair and reasonable value, which shall, solely in connection with a sale or
transfer of assets (or a series of related sales or transfers) after the date
hereof having a fair market value in excess of $5,000,000, be determined to be
fair and reasonable”

 

(iv)          Deleting the last sentence thereof in
its entirety.

 

13.          Amendment to Section 7.10
(Use of Proceeds) of the Credit Agreement.  Section 7.10 of the Credit Agreement is
hereby amended by inserting the following new sentence at the end thereof:

 

“None
of the Borrowers shall use the proceeds of any Credit Extension, whether
directly or indirectly, to make any payment of Senior Subordinated Notes at any time
except as expressly permitted under Section 7.16(d)(iv).”

 

14.          Amendment to Section 7.11(b) (Maximum
Consolidated Total Funded Debt to Consolidated EBITDA) of the Credit Agreement.  Section 7.11(b) of the Credit
Agreement is hereby amended by adding the following sentence at the end
thereof:

 

8

 

“Notwithstanding
the foregoing, solely for the purposes of calculating Consolidated Total Funded
Debt to Consolidated EBITDA pursuant to this Section 7.11(b),
Excluded Interim Sub Debt shall not be included in Consolidated Total Funded
Debt during any period in which (and for so long as) such Excluded Interim Sub
Debt is properly designated as such under and in accordance with Section 7.03(k).”

 

15.                               Amendment
to Section 7.13 (No Other Senior Debt) of the Credit Agreement.  Section 7.13 of the Credit Agreement is
hereby deleted its entirety and replaced in its entirety with the following:

 

“7.13                  No Other Senior Debt. 
Except for the Second Lien Notes, none of the Borrowers or the
Non-Borrower Subsidiaries (a) have designated, or will designate, any
Indebtedness of the Borrowers or the Non-Borrower Subsidiaries as “Designated
Senior Debt” (or any substantively equivalent term) for purposes of (and as
defined in) the 2003 Senior Subordinated Notes Indenture or any other Senior
Subordinated Debt Documents, other than the Obligations and (b) have “Senior
Debt” (or any substantively equivalent term) as such term is defined in the
2003 Senior Subordinated Notes Indenture or any other Senior Subordinated Debt
Documents other than the Obligations and any Indebtedness permitted under Section 7.03
which ranks pari passu (other than by virtue of any lien subordination) with
the Obligations.”

 

16.                               Amendment
to Section 7.16 (Prepayments of Certain Obligations; Modifications of
Subordinated Debt) of the Credit Agreement.  Section 7.16 is hereby amended to read in its entirety as set forth
below:

 

“7.16                     Prepayments of Certain Obligations;
Modifications of Subordinated Debt.  None
of the Borrowers or the Non-Borrower Subsidiaries shall, directly or
indirectly: (a) amend, supplement or otherwise modify the terms of any
Subordinated Debt; provided, that the Borrowers may amend, supplement or
otherwise modify the terms of any Seller Subordinated Debt with the consent of
the Administrative Agent if, in the judgment of the Administrative Agent, such
amendments, supplements or modifications do not adversely affect the rights of
the Lenders; and provided, further, that, with
the prior consent of the Administrative Agent, such consent not to be
unreasonably withheld, the Borrowers may amend any Senior Subordinated Notes
Document to eliminate covenants or otherwise make such instruments less
restrictive on the Borrowers, (b) prepay, redeem or repurchase or issue any notice or offer of
redemption with respect to, elect to make, or effect, a defeasance with respect
to, or take any other action which would require the Borrowers or any of their
Subsidiaries to, prepay, redeem or repurchase any of the Subordinated Debt (other than
Senior Subordinated Debt to the extent expressly permitted under clause (d) below), (c) make any payments with respect
to any Seller Subordinated Debt other than scheduled payments of principal and
interest as and to the extent permitted under the applicable Subordination
Agreements, provided that no Default or Event of Default shall have
occurred or be continuing on the date of such payment, nor would be created by
the making of such payment, or (d) subject in all cases to Section 7.14,
make any payments
with respect to any Senior Subordinated Debt other than (i) scheduled
payments of interest as and to the extent permitted under the Senior
Subordinated Notes Indenture, (ii) subject to the
prior compliance with
the mandatory 

 

9

 

prepayments
required by Section 2.05(b)(iii), Sub Debt Repayments of
principal, interest, premium (including, in the case of an open market
repurchase (whether or not pursuant to a tender offer), premium above the rate
specified in the related indenture as applicable to optional redemptions) and related
costs and expenses made
from the Net Cash Proceeds of the sale or issuance by any Borrower or any
Non-Borrower Subsidiary of any of its Equity Interests after the Closing Date, (iii) payments
in connection with any refinancing or replacement of the Senior Subordinated
Notes otherwise permitted hereunder, it being acknowledged that
the term “payment” as used in this clause (iii) and the proviso at
the end of this Section 7.16 means and includes any payment of
principal, interest, premium (including, in the case of an open market
repurchase (whether or not pursuant to a tender offer), premium above the rate
specified in the related indenture as applicable to optional redemptions) and
related costs and expenses, whether directly or by way of redemption, tender
offer or other Sub Debt Repayment (in all cases subject to the other terms of
this Agreement) and/or (iv) Sub Debt Repayments of principal, interest,
premium (including, in the case of an open market repurchase (whether or not
pursuant to a tender offer), premium above the rate specified in the related
indenture as applicable to optional redemptions) and related costs and expenses
made from Credit
Extensions hereunder in an aggregate amount not to exceed $50,000,000
during the term of this Agreement so long as the following are satisfied with
respect to any Sub Debt Repayments under this subclause (iv): (w) both
before and after giving effect to such Sub Debt Repayment, no Default has
occurred and is continuing or would result therefrom, (x) both before and
immediately after giving effect to such Sub Debt Repayment, the ratio of
Consolidated Senior Fund Debt to Consolidated EBITDA is less than or equal to
3.15:1.00; (y) immediately after giving effect to the proposed Sub Debt
Repayment, the ratio of Consolidated Senior Funded Debt to Consolidated EBITDA
is at least 0.50 lower than the level otherwise required under Section 7.11(c) at
the applicable time of reference; and (z) both before and immediately
after giving effect to the drawdown of the proceeds of any Credit Extension
made in order to fund such Sub Debt Repayment, the Borrowers have at least
$50,000,000 in unused Aggregate Commitments, provided, in each case under this clause (d),
that no Default or Event of Default shall have occurred or be continuing on the
date of such payment, nor would be created by the making of such payment.”

 

17.                               Amendment
Fee.  The Borrowers hereby promise to
pay to each existing Lender which consents to this First Amendment on or before
the Amendment Date, in consideration of each such Lender entering into this
First Amendment, a fee in an amount equal to five (5) basis points on the
aggregate of such consenting Lender’s Commitment and its outstanding amount of
the Term B Loan (the “Amendment Fees”). 
The Amendment Fees shall be fully-earned as of the Amendment Date (as
herein defined) and shall be non-refundable.

 

18.                               No
Waiver.  Except as a result of the
amendments set forth in Sections 2 through 14 of this First
Amendment, nothing contained herein shall be deemed to (i) constitute a
waiver of any Default that may heretofore have occurred and be continuing or
shall hereafter occur or to otherwise modify any provision of the Credit
Agreement or any other Loan Document, or (ii) give rise to any defenses or
counterclaims to the Administrative Agent’s or any of the Lenders’ right to
compel payment of the Obligations when due or to otherwise enforce their
respective rights and remedies under the Credit Agreement and the other Loan
Documents.

 

10

 

19.                               Conditions to Effectiveness.

 

(a)  This First Amendment shall become effective
as of the date (the “Amendment Date”) when each of the following
conditions is met:

 

(1)                                  receipt by the Administrative Agent of
this First Amendment duly and properly authorized, executed and delivered by
the Borrowers and the Required Lenders;

 

(2)                                  receipt by the Administrative Agent, for
the benefit of the consenting Lenders, of the Amendment Fees required in Section 16
above;

 

(4)                                  payment of all of the Administrative
Agent’s reasonable legal fees and expenses incurred in connection with the
preparation and negotiation of this First Amendment;

 

(5)                                  [Reserved.]

 

(6)                                  receipt by the Administrative Agent of a
certificate dated as of the Amendment Date signed by a Responsible Officer of
the Parent certifying that before and after giving effect to the First
Amendment, no default under the Senior Subordinated Debt Documents or Second
Lien Notes Documents has occurred and is continuing or would result after giving
effect to the execution, delivery and performance of this First Amendment and
that each of the amendments (and the consummation of the transactions
contemplated by the amendments) is permitted under the terms of the Senior
Subordinated Debt Documents and the Second Lien Notes Documents and that no
consents under any of such documents and agreements is necessary or required
pursuant to the terms thereof in connection with this First Amendment or the
consummation of the transactions contemplated hereby.

 

20.                               Representations and Warranties. 
The Borrowers represent and warrant to the Administrative Agent and the
Lenders as follows:

 

(a)                                  The execution, delivery and performance
of this First Amendment have been duly authorized by all necessary corporate
(or other) proceedings.  The execution,
delivery and performance of this First Amendment and the transactions
contemplated hereby (i) do not conflict with or result in any material
breach or contravention of any provision of law, statute, rule or
regulation to which any of the Borrowers is subject or any judgment, order,
writ, injunction, license or permit applicable to any of the Borrowers so as to
materially adversely affect the assets, business or any activity of the
Borrowers, and (ii) do not conflict with any provision of the corporate
charter, articles or bylaws (or equivalent other company or partnership
documents) of the Borrowers or any agreement or other instrument binding upon
the Borrowers, including, without limitation, the Senior Subordinated Debt
Documents and the Second Lien Notes Documents.

 

11

 

(b)                                 The execution, delivery and performance
of this First Amendment will result in valid and legally binding obligations of
the Borrowers enforceable against each in accordance with the respective terms
and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief or other equitable remedy is subject to the discretion of the court
before which any proceeding therefor may be brought.

 

(c)                                  The execution, delivery and performance
by the Borrowers of this First Amendment do not require any approval or consent
of, or filing with, any governmental agency or authority other than those
already obtained or to be obtained in connection with such transactions, if
any.  The Borrowers hereby agree to
provide the Administrative Agent with duly executed copies of any such
approvals required in connection with the consummation of any transaction
contemplated by this First Amendment prior to the Borrowers’ consummation of
any such transaction and the Borrowers shall not consummate any such
transaction without first obtaining all necessary consents thereto.

 

(e)                                  The representations and warranties
contained in Article V of the Credit Agreement are true and correct as of
the date hereof as though made on and as of the date hereof, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date and except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement (as amended by the First
Amendment) and changes occurring in the ordinary course of business which
singly or in the aggregate do not have a Material Adverse Effect.  For purposes of this Section 19(e),
the representations and warranties contained in Section 5.05(a) of
the Credit Agreement shall be deemed to refer to the most recent statements
furnished pursuant to Section 6.04(a) of the Credit Agreement.

 

(f)                                    After giving effect to this First
Amendment, no Default under (and as defined in) the Credit Agreement has
occurred and is continuing.

 

21.                               Ratification, etc. 
Except as expressly amended hereby, the Credit Agreement, the other Loan
Documents and all documents, instruments and agreements related thereto are
hereby ratified and confirmed in all respects and shall continue in full force
and effect.  This First Amendment and the
Credit Agreement shall hereafter be read and construed together as a single
document, and all references in the Credit Agreement, any other Loan Document
or any agreement or instrument related to the Credit Agreement shall hereafter
refer to the Credit Agreement as amended by this First Amendment.

 

22.                               GOVERNING LAW.  THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

23.                               Counterparts. 
This First Amendment may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts
taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of a 

 

12

 

signature page of this First Amendment by
telecopy shall be as effective as delivery of an original executed counterpart
of this First Amendment.

 

13

 

 

IN WITNESS
WHEREOF, each of the undersigned has duly executed this First Amendment to
Second Amended and Restated Revolving Credit and Term Loan Agreement as a
sealed instrument as of the date first set forth above.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  CASELLA WASTE SYSTEMS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  ATLANTIC COAST FIBERS,
  INC.

  
	
   

  	
  CASELLA WASTE MANAGEMENT
  OF MASSACHUSETTS, INC.

  
	
   

  	
  CASELLA WASTE MANAGEMENT
  OF N.Y., INC.

  
	
   

  	
  CASELLA WASTE MANAGEMENT
  OF PENNSYLVANIA, INC.

  
	
   

  	
  FAIRFIELD COUNTY
  RECYCLING, LLC

  
	
   

  	
  FCR CAMDEN, LLC

  
	
   

  	
  FCR FLORIDA, LLC

  
	
   

  	
  FCR GREENSBORO, LLC

  
	
   

  	
  FCR GREENVILLE, LLC

  
	
   

  	
  FCR MORRIS, LLC

  
	
   

  	
  FCR REDEMPTION, LLC

  
	
   

  	
  FCR TENNESSEE, LLC

  
	
   

  	
  FCR, LLC

  
	
   

  	
  K-C INTERNATIONAL, LTD.

  
	
   

  	
  KTI BIO FUELS, INC.

  
	
   

  	
  KTI ENVIRONMENTAL GROUP,
  INC.

  
	
   

  	
  KTI NEW JERSEY FIBERS,
  INC.

  
	
   

  	
  KTI OPERATIONS, INC.

  
	
   

  	
  KTI SPECIALTY WASTE
  SERVICES, INC.

  
	
   

  	
  KTI, INC.

  
	
   

  	
  NORTHERN PROPERTIES
  CORPORATION OF PLATTSBURGH

  
	
   

  	
  PERC, INC.

  
	
   

  	
  RESOURCE RECOVERY SYSTEMS,
  LLC

  
	
   

  	
  RESOURCE TRANSFER SERVICES,
  INC.

  
	
   

  	
  RESOURCE WASTE SYSTEMS,
  INC.

  
	
   

  	
  SOUTHBRIDGE
  RECYCLING & DISPOSAL PARK, INC.

  
	
   

  	
  U.S. FIBER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name: John Casella

  
	
   

  	
   

  	
  Title: President and
  Secretary

  

 

 

	
   

  	
  ALL CYCLE WASTE, INC.

  
	
   

  	
  B. AND C. SANITATION
  CORPORATION

  
	
   

  	
  BRISTOL WASTE MANAGEMENT,
  INC.

  
	
   

  	
  C.V. LANDFILL, INC.

  
	
   

  	
  CASELLA ALBANY RENEWABLES,
  LLC

  
	
   

  	
  CASELLA MAJOR ACCOUNT
  SERVICES, LLC

  
	
   

  	
  CASELLA RECYCLING, LLC

  
	
   

  	
  CASELLA RENEWABLE SYSTEMS,
  LLC

  
	
   

  	
  CASELLA TRANSPORTATION,
  INC.

  
	
   

  	
  CASELLA WASTE MANAGEMENT,
  INC.

  
	
   

  	
  CASELLA WASTE SERVICES OF
  ONTARIO LLC

  
	
   

  	
  CHEMUNG LANDFILL LLC

  
	
   

  	
  COLEBROOK LANDFILL LLC

  
	
   

  	
  FOREST ACQUISITIONS, INC.

  
	
   

  	
  GRASSLANDS INC.

  
	
   

  	
  HAKES C&D DISPOSAL,
  INC.

  
	
   

  	
  HARDWICK LANDFILL, INC.

  
	
   

  	
  HIRAM HOLLOW REGENERATION
  CORP.

  
	
   

  	
  LEWISTON LANDFILL LLC

  
	
   

  	
  NEW ENGLAND WASTE SERVICES
  OF MASSACHUSETTS, INC.

  
	
   

  	
  NEW ENGLAND WASTE SERVICES
  OF ME, INC.

  
	
   

  	
  NEW ENGLAND WASTE SERVICES
  OF N.Y., INC.

  
	
   

  	
  NEW ENGLAND WASTE SERVICES
  OF VERMONT, INC.

  
	
   

  	
  NEW ENGLAND WASTE
  SERVICES, INC.

  
	
   

  	
  NEWBURY WASTE MANAGEMENT,
  INC.

  
	
   

  	
  NORTH COUNTRY ENVIRONMENTAL
  SERVICES, INC.

  
	
   

  	
  PINE TREE WASTE, INC.

  
	
   

  	
  SCHULTZ LANDFILL, INC.

  
	
   

  	
  SUNDERLAND WASTE
  MANAGEMENT, INC.

  
	
   

  	
  TRILOGY GLASS LLC

  
	
   

  	
  WASTE-STREAM INC.

  
	
   

  	
  WINTERS BROTHERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name: John Casella

  
	
   

  	
   

  	
  Title: Vice President and
  Secretary

  

 

 

	
   

  	
  BLUE
  MOUNTAIN RECYCLING, LLC

  
	
   

  	
   

  
	
   

  	
  By: FCR, LLC, its sole
  manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  President and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CWM ALL WASTE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  President and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GROUNDCO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  Vice President and
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE HYLAND FACILITY
  ASSOCIATES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  President and Secretary —
  Casella Waste

  Management of N.Y., Inc. (90% owner)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAINE
  ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  KTI Environmental Group, Inc.,
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President and Secretary

  
						

 

 

	
   

  	
  NEWS
  OF WORCESTER LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Casella Waste
  Systems, Inc., its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEWSME LANDFILL OPERATIONS
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  Vice President and
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PERC
  MANAGEMENT COMPANY LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  PERC, Inc., general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEMPLETON LANDFILL LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Casella

  
	
   

  	
   

  	
  Name:

  	
  John Casella

  
	
   

  	
   

  	
  Title:

  	
  President and Secretary

  
						

 

 

	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maria F. Maia

  
	
   

  	
   

  	
  Name:

  	
  Maria
  F. Maia

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

 

	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as a
  Revolving Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maria F. Maia

  
	
   

  	
   

  	
  Name:

  	
  Maria
  F. Maia

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

 

	
   

  	
  BANK
  OF AMERICA, N.A.,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maria F. Maia

  
	
   

  	
   

  	
  Name:

  	
  Maria
  F. Maia

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

 

	
   

  	
  COMERICA
  BANK, as a

  
	
   

  	
  Revolving
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Christopher Morley

  
	
   

  	
   

  	
  Name:

  	
  Christopher
  Morley

  
	
   

  	
   

  	
  Title:

  	
  Corporate Banking Officer

  

 

 

	
   

  	
  Crédit
  Agricole Corporate & Investment Bank, as a

  
	
   

  	
  Revolving
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pamela Donnelly

  
	
   

  	
   

  	
  Name:

  	
  Pamela
  Donnelly

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Yuri Muzichenko

  
	
   

  	
   

  	
  Name:

  	
  Yuri Muzichenko

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

 

	
   

  	
  JPMorgan
  Chase Bank, NA, as a

  
	
   

  	
  Revolving
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Scott A. McNamara

  
	
   

  	
   

  	
  Name:

  	
  Scott
  A. McNamara

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

	
   

  	
  TD
  Bank, N.A. as a

  
	
   

  	
  Revolving
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  E. Kirke Hart

  
	
   

  	
   

  	
  Name:

  	
  E.
  Kirke Hart

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

	
   

  	
  TD
  Bank, N.A.,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  E. Kirke Hart

  
	
   

  	
   

  	
  Name:

  	
  E.
  Kirke Hart

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

Ariel Reinsurance Company Ltd.

BlackRock Senior High Income Fund, Inc.

BlackRock Floating Rate Income Trust

BlackRock Defined Opportunity Credit Trust

BlackRock Limited Duration Income Trust

BlackRock Senior Income Series

BlackRock Senior Income Series II

BlackRock Senior Income Series IV

BlackRock Senior Income Series V Limited

BlackRock Debt Strategies Fund, Inc.

BlackRock Diversified Income Strategies Fund, Inc.

BlackRock Floating Rate Income Strategies Fund, Inc.

BlackRock Floating Rate Income Strategies Fund II, Inc.

BlackRock Global Investment Series: Income
Strategies Portfolio

Master Senior Floating Rate LLC

Missouri State Employees’ Retirement System

BlackRock Senior Floating Rate Portfolio

Senior Loan Portfolio

 

	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  C. Adrian Marshall

  
	
   

  	
   

  	
  Name:
  C. Adrian Marshall

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  

 

 

	
   

  	
  CIFC
  Funding 2006-II, Ltd.

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:
  Commercial Industrial Finance Corp., its Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert C. Milton, III

  
	
   

  	
   

  	
  Name:
  Robert C. Milton, III

  
	
   

  	
   

  	
  Title:
  Secretary

  

 

 

	
   

  	
  CIFC
  Funding 2007-II, Ltd.

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:
  Commercial Industrial Finance Corp., its Collateral Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert C. Milton, III

  
	
   

  	
   

  	
  Name:
  Robert C. Milton, III

  
	
   

  	
   

  	
  Title:
  Secretary

  

 

 

	
   

  	
  CIFC
  Funding 2007-III, Ltd.

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:
  Commercial Industrial Finance Corp., its Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert C. Milton, III

  
	
   

  	
   

  	
  Name:
  Robert C. Milton, III

  
	
   

  	
   

  	
  Title:
  Secretary

  

 

 

	
   

  	
  Cratos
  CLO I Ltd.

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
  By:
  Cratos CDO Management, LLC

  
	
   

  	
  As
  Attorney-in-Fact

  
	
   

  	
   

  	
  By:
  Cratos Capital Partners, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Banks

  
	
   

  	
   

  	
  Name:
  Ronald Banks

  
	
   

  	
   

  	
  Title:
  Managing Director

  

 

 

	
   

  	
  Ballyrock
  CLO 2006-1 Limited, By:

  
	
   

  	
  Ballyrock
  Investment Advisors LLC,

  
	
   

  	
  as
  Collateral Manager,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lisa Rymut

  
	
   

  	
   

  	
  Name:
  Lisa Rymut

  
	
   

  	
   

  	
  Title:
  Assistant Treasurer

  

 

 

	
   

  	
  Ballyrock
  CLO III Limited, By:

  
	
   

  	
  Ballyrock
  Investment Advisors LLC,

  
	
   

  	
  as
  Collateral Manager,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lisa Rymut

  
	
   

  	
   

  	
  Name:
  Lisa Rymut

  
	
   

  	
   

  	
  Title:
  Assistant Treasurer

  

 

 

	
   

  	
  Fidelity
  Advisor Series I: Fidelity Advisor

  
	
   

  	
  Floating
  Rate High Income Fund,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffrey Christian

  
	
   

  	
   

  	
  Name:
  Jeffrey Christian

  
	
   

  	
   

  	
  Title:
  Deputy Treasurer

  

 

 

	
   

  	
  Fidelity
  Central Investment Portfolios LLC; Fidelity Floating Rate Central

  
	
   

  	
  Investment
  Portfolio,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffrey Christian

  
	
   

  	
   

  	
  Name:
  Jeffrey Christian

  
	
   

  	
   

  	
  Title: Deputy Treasurer

  

 

 

	
   

  	
  Franklin
  Floating Rate Daily Access Fund,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Hsu

  
	
   

  	
   

  	
  Name:

  	
  Richard
  Hsu

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  Franklin
  Floating Rate Master Series,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Hsu

  
	
   

  	
   

  	
  Name:

  	
  Richard
  Hsu

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  Franklin
  Templeton Series II Funds

  
	
   

  	
  Franklin
  Floating Rate II Fund,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Hsu

  
	
   

  	
   

  	
  Name:

  	
  Richard
  Hsu

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  Franklin
  CLO V, Limited,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Ardini

  
	
   

  	
   

  	
  Name:

  	
  David
  Ardini, Franklin Advisers, Inc. as 

  
	
   

  	
   

  	
   

  	
  Collateral
  Manager

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  Blue
  Shield of California,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David Ardini

  
	
   

  	
   

  	
  Name:

  	
  David
  Ardini

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  Ballyrock
  CLO 2006-2 Limited, By:

  
	
   

  	
  Ballyrock
  Investment Advisors LLC,

  
	
   

  	
  as
  Collateral Manager,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lisa Rymut

  
	
   

  	
   

  	
  Name:

  	
  Lisa
  Rymut

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Treasurer

  

 

 

	
   

  	
  Goldman
  Sachs Asset Management CLO, Public Limited Company

  
	
   

  	
   

  
	
   

  	
  By:
  Goldman Sachs Asset Manager, L.P., as Manager,

  
	
   

  	
   

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sandra L. Stullberger

  
	
   

  	
   

  	
  Name:

  	
  Sandra
  L. Stullberger

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

 

	
   

  	
  Grand
  Horn CLO Ltd.

  
	
   

  	
  By:
  Seix Investment Advisors LLC, as

  
	
   

  	
  Collateral
  Manager

  
	
   

  	
   

  
	
   

  	
  Mountain
  View Funding CLO 2006-I Ltd.

  
	
   

  	
  By:
  Seix Investment Advisors LLC, as

  
	
   

  	
  Collateral
  Manager

  
	
   

  	
   

  
	
   

  	
  Mountain
  View CLO II Ltd.

  
	
   

  	
  By:
  Seix Investment Advisors LLC, as

  
	
   

  	
  Collateral
  Manager

  
	
   

  	
   

  
	
   

  	
  as Term
  B Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  George Goudelias

  
	
   

  	
   

  	
  Name:

  	
  George
  Goudelias

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  

 

 

	
   

  	
  Max
  Bermuda Ltd., as a Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:
  Wellington Management Company, LLP,

  
	
   

  	
  as investment adviser

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert J. Toner

  
	
   

  	
   

  	
  Robert
  J. Toner

  
	
   

  	
   

  	
  Vice
  President & Counsel

  

 

 

	
   

  	
  Rosedale
  CLO II Ltd.

  
	
   

  	
  By:
  Princeton Advisory Group, Inc.

  
	
   

  	
  the
  Collateral Manager,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ashish Sood

  
	
   

  	
   

  	
  Name:

  	
  Ashish
  Sood

  
	
   

  	
   

  	
  Title:

  	
  Analyst

  

 

 

	
   

  	
  Rosedale
  CLO Ltd.

  
	
   

  	
  By:
  Princeton Advisory Group, Inc.

  
	
   

  	
  the
  Collateral Manager,

  
	
   

  	
  as a
  Term B Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ashish Sood

  
	
   

  	
   

  	
  Name:

  	
  Ashish
  Sood

  
	
   

  	
   

  	
  Title:

  	
  AnalystExhibit 10.1

 

Manufacturing Agreement

 

AGREEMENT made this 19th day of May, 2010 by and between SHBV  (Hong Kong)  Ltd  (“SHBV”), a
Company with its principal place of business at Unit 3208, 32/F Office Tower,
Convention Plaza No. 1 Harbour Road, Hong Kong and WASTE2ENERGY
GROUP company registered in Isle of Man Corporation (Company
Registration No. 0038V) whose registered office is at Stanley House, Lord
Street, Douglas, Isle of Man 1M1 2BF (“W2EGH”), WASTE2ENERGY ENGINEERING LIMITED, a company registered in Scotland
(Company Registration No. SC360321) of Hestan House, Crichton Business
Park, Bankend Road, Dumfries, DG1 4TA, United Kingdom (“W2EE”)
and WASTE2ENERGY TECHNOLOGIES  INTERNATIONAL LIMITED, a company registered in Isle of Man
(Company Registration No. 003615V) whose registered office is at Stanley
House, Lord Street, Douglas, Isle of Man 1M1 2BF (“W2ETI”).
W2EGH,  W2EE
and W2ETI are hereinafter collectively
referred to as “W2E”).

 

Summary

 

W2E
is comprised of companies involved in the licensing processes and the supply of
certain equipment for waste and energy plants as well as developing, marketing
and supporting certain Proprietary Technology Products (the “Products”)
protected by patents and patents pending known as sBOSTM, cBOSTM and CORTM as
defined below.

 

SHBV
wishes to provide raw materials procurement and manufacturing services for
these Products and assures W2E that it has the facilities, personnel, and
technical expertise necessary to effectively and properly manufacture the
Products.

 

SHBV
is willing to assure W2E that SHBV will produce the “Products” exclusively for
W2E.

 

In
consideration for the mutual promises, covenants, and agreements made below,
the parties, intending to be legally bound, agree as follows:

 

1.            Definitions

 

For
purposes of this Agreement, the following terms will have the indicated
definitions:

 

“Agreement” This Agreement is by and between W2E, W2EGH, W2EE,
W2ETI and SHBV.

 

“Effective Date” Date of execution of this agreement, or its
schedules if executed at a later date.

 

“End-User” Any person or entity who ultimately obtains the
Product as a result of a sale by or on behalf of W2E.

 

Exclusivity is a right that has a variable value based on the
volume realised through Purchase Orders under this agreement for SHBV to accept
such Purchase Orders for all W2e “Products”

 

SHBV (HONG KONG) Ltd. and Waste2energy Group Holdings Plc

 

1

 

that
may be procured within agreed “Territories” over the term of the agreement and
shall be qualified over the term of the agreement subject to the provisions
within Schedule 2 of this Manufacturing Agreement.

 

Exclusivity Formula and Volume Rebate are inextricably linked and shall be
mutually agreed against a proposed forecast pursuant as detailed in schedule 1.

 

“Information” The documentation, technical information
and/or business information, either oral or written that W2E or SHBV furnishes
to the other marked as proprietary or confidential or simply treated as such by
the disclosing party. The Information includes research, development or
business activities, including any unannounced Products and services, as well
as any information relating to services, developments, services, processes,
plans, financial information, customer and supplier lists, forecasts and
projections. Information shall also include the terms of this Agreement. A
party’s information shall be deemed confidential under this Agreement unless
the information (i) is in the public domain through no act of the other
party; (ii) is lawfully known by the other party from a source other than
the first party with no restriction of confidentiality; or (iii) must be
disclosed by requirement of law or generally accepted accounting principles.

 

“Intellectual Property Rights” The intangible legal rights
or interests evidenced by or embodied in any idea, design, concept, technique, invention,
discovery, or improvement regardless of patentability, but including patents,
patent applications, trade secrets and know-how; any work of authorship,
regardless of copyright-ability, but including copyrights and any moral rights
recognized by law; and any other similar rights, in each case on a worldwide
basis.

 

“Product(s)” The W2E Proprietary Technology Products have been
developed or are owned by W2E, along with all options to the Products; all
future versions of the Products; and all enhancements, revisions, derivative
works and/or modifications made to the Products by W2E. There are three brand
names for W2E Proprietary Technology Products: sBOSTM, cBOSTM and CORTM that may
be increased or changed in the future either through development or technology
acquisition. For the purposes of this manufacturing agreement, the term “Products”
means either a complete assembly or a sub-assembly or a part of a sub-assembly
of any of the W2E Proprietary Technology Range under existing or future brand
names. Any fabricated steel part under this Agreement shall be referenced by a
W2E drawing number and a completed drawing for manufacture by W2E. Full
manufacturing specifications and drawings will be issued prior to manufacture
of any part, a schedule of which shall be maintained by both Parties and agreed
to for future production quotas

 

“Quota” Specified minimum quantities of the Products as set
forth in Schedule A (attached to the end of this Agreement).

 

“Term” The duration of this Agreement is established in
accordance with Section 2 hereof.

 

2

 

“Territory” The world with the exception of Italy, Brazil,
Canada and any other mutually agreed exceptions

 

“Trademarks” The Trademarks specified in Exhibit A
(attached to the end of this Agreement).

 

2.            Term

 

This
Agreement shall commence on the Effective Date above and shall terminate ten (10) years
from the Effective Date, unless (i) it is extended pursuant to an option
being granted herein to W2E to extend this Agreement for an additional term of (5) years,
in its discretion; or (ii) it terminates sooner according to the
provisions of this Agreement. Anything to the contrary herein notwithstanding,
the Parties may renew this Agreement in writing upon mutual Agreement.

 

3.            Relationship

 

3.1          Exclusive Territory Manufacturer

 

Subject
to the limitations set forth in Section 4 herein, W2E grants SHBV, and
SHBV accepts from W2E, for the Term of this Agreement, an irrevocable and
non-transferable right and license to manufacture the Products exclusively for
W2E for use in the Territory and to deliver finished Products ready to be
shipped as directed by W2E to W2E and/or its End-Users as set forth in orders
for the Products..

 

3.2          Use of Trademarks and Trade Names

 

No
right, title or interest in or to any Trademarks, trade names, slogans, labels
and designs used by either W2E or SHBV, nor the goodwill connected thereto, is
conveyed by this Agreement.

 

3.3          Joint and Several Assumptions

 

All  representations,
warranties, undertakings, agreements, covenants, indemnities and obligations
made or given or entered into by W2E (or each of W2EGH, W2EE and W2ETI) under
this Agreement and all rights, benefits, causes of action and any other
entitlements of W2E (or any of W2EGH, W2EE or W2ETI) under or arising out of
the Agreement are assumed by W2EGH, W2EE and W2ETI jointly and severally. Any
act by or notice given by or event that occurs in relation to any one of such
companies comprising W2E shall be deemed to be an act by or notice given by or
event occurring in relation to all such companies comprising W2E. Save as
expressly stated otherwise in any order, the giving of any notice under or in
connection with this Agreement by any of W2EGH, W2EE or W2ETI in respect of W2E
shall be deemed to be the giving of notice in respect of all of the companies
comprising W2E.

 

3

 

4.            Manufacturer’s Rights and Responsibilities

 

In
recognition of the investment to be made by SHBV for the exclusive right to
manufacture the Products for use in the Territory, the parties agree to each of
the following provisions:

 

4.1          Exclusivity and Related Consideration.

 

4.1.1       As
consideration for the exclusive right to manufacture the Products for use in
the Territory, SHBV agrees to pay to W2E the amounts set forth on Schedule 2
hereto.

 

4.1.2       W2E
hereby grants SHBV the exclusive right to manufacture the Products for use in
the Territory, subject to the limitations set forth below.

 

4.1.3       The
exclusive nature of the rights and licences granted pursuant to Sections 3.1
and 4.1.2 shall not apply where:

 

(a)   an End-User is entitled to
force W2E to use an alternative supplier in relation to a specific order
pursuant to the terms of the agreement between the End-User and W2E; and

 

(b)  W2E’s refusal to use an
alternative supplier would put W2E in breach of such agreement with the
End-User.

 

W2E
shall take all steps reasonably practicable and within its control to prevent
an End-User being entitled to force W2E to use an alternative supplier. In the
event of such a request by an End-User, W2E shall liaise and co-operate with
SHBV throughout and SHBV and W2E shall each use reasonable endeavours to take
such steps and implement such proposals as may be reasonably practicable
without entailing additional cost or expense for either Party to seek to
prevent the End-User’s right to require the use of an alternative supplier
becoming effective.

 

4.1.5   It is an essential
part of this Agreement that the payment of the consideration for the exclusive
rights set out in Schedule 2 to this agreement is based on W2E achieving the
specified minimum Quota set out in Schedule 1 to this Agreement. Should in any
year of operation of this Agreement W2E fail to achieve all or part of the said
Quota, it shall within 90 days from the end of that year, or from letter of
demand, whichever the latter, repay SHBV the proportion of the above
consideration in the amount corresponding to the percentage of the shortfall of
the Quota.

 

4.1.6   Prior to any
payments by SHBV to W2E of the consideration under Schedule 2 to this Agreement
W2E shall provide SHBV with an acceptable Parent Company Guarantee which shall
act as a security for the agreed amount of the consideration to be paid by
SHBV. The above guarantee shall at all times cover the agreed amount
potentially repayable to SHBV under Clause

 

4

 

4.2          Modifications

 

SHBV
shall have no right, unless agreed to in writing by W2E, to modify W2E’s
Products and may not combine such Products with other products or material to
form derivative works. All rights in improvements made by W2E and/or SHBV shall
be held exclusively by W2E; SHBV may not use, reproduce or distribute W2E’s
Products or derivative works in any manner except as otherwise expressly
provided under this Agreement.

 

4.3          Other Products

 

SHBV
shall not produce or sell to any third parties or utilize any of the Products
being fabricated for W2E in any Products purchased from SHBV by third parties,
unrelated to this Agreement, without the prior written consent of W2E.

 

4.4          Reports

 

4.4.1       SHBV shall
deliver to W2E no later than fifteen (15) days after the end of each month
during the term of this Agreement and for fifteen (15) days thereafter, a
written report showing for the preceding month any relevant information from
the prior month, as agreed from time to time with W2E. SHBV shall cooperate
with W2E to make the format of its monthly records compatible with W2E’s
record-keeping system.

 

4.4.2.      During the
Term, W2E shall give SHBV not less than 5 Business Days before the beginning of
each quarter, a forecast of the Products and services it expects to purchase
during the twelve months following that month. The first forecast shall be
supplied on the Effective Date. W2E shall act in good faith when forecasting
its requirements for Products. Forecasts provided under this 4.4.2 shall not
constitute orders. If SHBV anticipates that it will be unable to meet W2E’s
forecasted requirements provided in accordance with this Clause 4.4.2, SHBV
shall inform W2E in writing as soon as possible.

 

4.5          Compliance with Laws

 

SHBV
shall comply with applicable laws, ordinances and regulations relating to the
sale of the Products as well as the manufacture of the Products.

 

5.            SHBV’S
Responsibilities

 

5.1           In
consideration of W2E performing its obligations under this Agreement, SHBV
shall regularly and diligently carry out and complete the manufacture and
supply of the Products and provide the services.

 

5

 

5.1.1     All
Products and services provided by SHBV shall be manufactured and carried out
with sound workmanship and materials, safely and in accordance with good engineering
practice and applicable law.

 

5.1.2     SHBV shall
at all times have and maintain adequate resources available for the proper and
timely provision of the Products and the services, including financial
resources, and competent, appropriately experienced and physically capable
staff and labour whether employed by SHBV or any third parties appointed by
SHBV in respect of its obligations under this Agreement.

 

5.1.3. SHBV shall obtain and maintain in force for the
Term all licenses, permissions, authorizations, consents and permits needed to
supply the Products and services in accordance with the terms of this
Agreement.

 

5.2          Implementation of
Enhancements

 

W2E
shall cooperate with SHBV in evaluating, reviewing, and aggressively
implementing enhancements and refinements to the Products.

 

5.3          Technical Support

 

W2E
shall provide the following technical support during its’ normal business
hours:

 

·     engineering support in relation to
technical drawings for W2E’s Product at no charge to SHBV’s engineering
personnel in the form of telephone consultation, and

 

·     field support at no charge to SHBV’s field engineering personnel
in the form of telephone consultation.

 

6. W2E’s Rights

 

6.1          W2E and its
End-User, as the case may be, shall have the right to enter SHBV’s premises to
inspect the Products and SHBV shall seek to facilitate inspection of any
manufacturing facilities owned by sub-contractors to SHBV for the Products.
Inspections carried out pursuant to this Section 6.1 shall be carried out
during business hours on reasonable notice to SHBV. If following any
inspection, W2E reasonably considers that the Products are not or are not
likely to be as provided in accordance with the terms of this Agreement, W2E
shall inform SHBV and SHBV shall take such action as is necessary to ensure
that the Products are or will be as provided under the terms of this Agreement.
W2E shall have the right to re-conduct inspections after SHBV has carried out
its remedial actions.

 

6

 

6.2          In relation
to any defects in materials and workmanship under this Section, SHBV shall have
a 12 month defects notification period from the deliver date in which to repair
any defects in materials and workmanship notified by W2E to SHBV which shall be
the sole remedy of W2E for such defects. If during such defects notification
period W2E gives notice of a defect (setting out the particulars of such
alleged defect), SHBV shall as soon as reasonably practicable make good the
defect so notified and W2E shall so far as may be necessary place the Products
at SHBV’s disposal for this purpose.

 

6.3          If a
defect noticed by W2E pursuant to this Agreement arises from any breach by SHBV
of this Agreement, SHBV shall bear its own cost of making good such defect. If
SHBV fails to remedy a defect noticed pursuant to this Agreement which arises
from any breach by SHBV of this Agreement, then W2E may, on giving not less
than 14 days written notice to SHBV, procure the rectification of such defect
by a third party.

 

7. Purchase Orders

 

7.1          Manufacturing Orders

 

All
orders shall be in writing and shall specify: (i) this Agreement; (ii) the
quantity and description of the Products; (iii) the requested delivery
dates and applicable price; and (iv) any special instructions. All orders
shall be governed by the terms and conditions of this Agreement and shall be
binding upon confirmation of receipt and acceptance by SHBV.

 

7.2          Controlling Terms

 

The
terms and conditions of this Agreement shall apply to each order that becomes
binding on the Parties under this Agreement unless both parties expressly agree
in a separate writing to be bound by such separate or additional terms and
conditions.

 

7.3          Cancellation of
Orders

 

W2E
may within 180 days of placing an order amend or cancel an order by written
notice to SHBV. If W2E amends or cancels an order, and the order is for a
standard Product, W2E has the right to substitute another order for the order
being cancelled without penalty. In the event the cancellation is for a
non-standard Product, W2E’s liability to SHBV shall be limited to payment to
SHBV of the costs reasonably incurred by SHBV including sub-contractors or
third party costs plus a mark up of 25% of such costs in fulfilling the order
up and until the date of receipt of the amendment or cancellation.

 

7

 

7.4          Manufacturer
Cancellation

 

SHBV
reserves the right to cancel or suspend any orders placed by W2E and accepted
by SHBV, or refuse or delay shipment thereof, if W2E fails (1) to make any
payment as provided in this Agreement or in any order placed by W2E; (2) to
meet credit or financial requirements established by SHBV; or (3) otherwise
to comply with the terms and conditions of this Agreement.

 

7.5          Rescheduling of
Delivery

 

At
no charge, W2E may at any time with at least fifteen (15) days’ prior written
notice to SHBV, reschedule and extend for up to fifteen (15) days the delivery
of any Products. Further extensions to be subject to agreement of SHBV.

 

7.6          Acceptance Tests

 

SHBV
shall formulate, subject to W2E’s approval, Acceptance Test Procedures. W2E has
the right to conduct acceptance tests on any of the Products and may reject
those that fail to pass that test. Such rejection shall be evidenced by notice
of rejection to SHBV, together with an indication of the basis for that
rejection. W2E shall have no obligations with respect to any Products properly
rejected by it pursuant to this Agreement.

 

8.            Payment

 

8.1          Payment

 

W2E
shall pay for Products from each order by order on a draw down basis as
determined between the Parties at the time of each order.

 

8.2          Freight Charges

 

SHBV
shall pay initially the cost of freight and any taxes, levies, duties or fees
of any kind, nature or description whatsoever applicable to the delivery of raw
materials or bought in items to SHBV’s fabrication facilities and W2E shall
reimburse SHBV for all such sums within the final payments for finished
products. Freight charges will be agreed and recorded on an “open book” basis
where W2E has the right to examine the costs of freight and where it is deemed
to be uncompetitive to seek a change in the terms of freight on a competitive
tendering basis.

 

8

 

8.3          Manufacturer’s
Financial Condition

 

SHBV
represents and warrants that it is and at all times during the term of this
Agreement shall remain in good financial condition, solvent and able to pay its
bills when due. SHBV shall maintain and employ in connection with SHBV’s
business under this Agreement such working capital and net worth as may be
required in the reasonable opinion of W2E to enable SHBV to carry out and
perform all of SHBV’s obligations and responsibilities under this Agreement.
From time to time, on reasonable notice by W2E, SHBV shall furnish financial
reports as necessary to determine SHBV’s financial condition. W2E shall have
the right to change its financial requirements at any time.

 

9.            Shipment, Risk of
Loss and Delivery.

 

9.1          Risk of Loss

 

Except
as provided below, title to the Products purchased pursuant to this Agreement
will pass upon the earlier of delivery to W2E or to a W2E End-User or payment.
When contractually responsible for freight SHBV assumes the risk of loss and
damage of the Products in transit from SHBV’s shipping point to the point of
destination.

 

9.2          Shipment

 

The
Parties agree to collaborate on finding the most economical fully insured
shipping channel for the “Product” on a draw down order by order basis and in
so doing to use an “open book” pricing procedure at cost for any and all
shipping requirements either intergroup by SHBV or to a destination required by
W2E.

 

Shipping
costs are variable and fluctuate day to day and over the course of the
Agreement are likely to be a major factor in the overall economic
competitiveness of this Agreement.

 

SHBV
has the right to fulfill the Agreement either from fabrication with the PRC or
the UK.

 

9.3          Insurance

 

9.3.1 SHBV shall, during the term of this Agreement,
maintain in force the following insurance policies with reputable insurance
companies; (i) public liability insurance with a limit of at least U.S. $10
million per claim; (ii) professional indemnity insurance with a limit of
at least U.S. $10 million in the aggregate; and (iii) product liability
insurance with a limit of at least U.S. 10 million for claims arising from a
single event or series of related events in a single calendar year, provided
such insurance remains available in the European insurance market at commercially
reasonable rates to parties carrying out business equivalent to that of SHBV.

 

9

 

9.3.2       On the
taking out and on renewing of each policy, SHBV’s shall promptly send a copy of
the receipt for the premium to W2E. Upon W2E’s written request, SHBV shall
provide it with copies of the insurance policy certificates and details of the
coverage provided.

 

9.3.3      SHBV
shall ensure that any sub-contractors also maintain adequate insurance having
regard to their obligations under their respective sub-contracts and SHBV’s
obligations under this Agreement.

 

9.3.4      SHBV
shall notify W2E if any policy is (or will be) cancelled, or its terms are (or
will be) subject to any material change or such insurance is no longer
available at commercially reasonable rates for the purpose of Section 9.3.1
hereof.

 

9.3.5   SHBV’s
liabilities under this Agreement shall not be deemed to be released or limited
by its taking out of the insurance policies referred to in Section 9.3.1
hereof

 

9.4          Delivery Schedule and
Delays

 

Any
penalties for late delivery will be negotiated and agreed on a contract by
contract basis.

 

10.          Limited Warranty

 

10.1        Warranty to W2E’s
End-Users

 

SHBV
hereby warrants to W2E and/or its End-Users, as the case may be, the following
one (1) year limited warranty:

 

“For
one year after the date of shipment to End-User, SHBV will at its sole
discretion, replace, repair or furnish credit for any Product purchased by
End-User that has a defect in material or workmanship provided further that the
Product has not been misused, improperly operated, or subject to unauthorized
repairs or modifications. This provision does not extend the original warranty
period of any Product that has been repaired or replaced by W2E.”

 

10.2        Manufacturer Duties

 

SHBV
agrees to honor all reasonable “make good” or replacement requests received by
W2E and/or its End-Users pursuant to the terms of this Agreement pertaining to
defective units. W2E shall instruct all of its End-Users to submit all replacement
requests to W2E, to be forwarded to SHBV.

 

10

 

10. 3       Additional Protection

 

If,
within any twelve (12) month period, ten (10%) percent or more of the Products,
while within the warranty period specified in this Agreement, exhibit defects
of the same kind and nature, particularly, without limitation, welded joints
and such defects are the result of faulty workmanship on the part of SHBV or
defects in materials arising from any cause for which SHBV is responsible, then
SHBV agrees to render assistance, at SHBV’s sole expense to W2E and/or its
End-User as specified:

 

·     Delivery of replacement Products found to be defective to the
place designated by W2E;

 

·                Field service for the
replacement or repair of such defective Products or reimbursement to W2E of W2E’s
labor costs in replacing such defective Products at such rates as may be
mutually agreed upon from time to time;.

 

The
warranty provided in this section shall be subject to SHBV’s satisfaction of
the following conditions:

 

·                 The specifies concerning the
failure of the Products alleged or found to be defective shall be furnished to
SHBV in writing within six (6) weeks of discovery by W2E of such defect;

 

·                 The defects so specified
shall be subject to SHBV’s verification;

 

·                 No Products alleged or found
to be defective shall be disposed of by W2E for at least eight (8) weeks
after SHBV receives the written details concerning such defects; and

 

·                 Such defective Products
shall forthwith be returned to SHBV by W2E, freight payable at destination, if
SHBV so requests.

 

10.4        Notice Requirements

 

W2E
shall advise SHBV in writing of all warranty claims within thirty (30) business
days of receipt of such claims from its End Users.

 

10.5        Product Liability

 

10.5.1     Indemnification

 

SHBV
shall indemnify and hold harmless W2E for damages or expenses resulting from
any claim, suit or proceeding brought against W2E on the issue of SHBV designed
and owned product. W2E agrees that SHBV has the right to defend, or at its
option to settle, and SHBV agrees, at its own expense, to defend or at its
option to settle, any claim, suit or proceeding brought against W2E on the
issue of SHBV designed and owned product, subject to the

 

11

 

limitations
set forth in this Agreement. SHBV shall have sole control of any such action or
settlement negotiations, and SHBV agrees to pay, subject to the limitations of
this Agreement, any final judgment entered against W2E on such issue in any
such suit or proceeding defended by SHBV.

 

W2E
agrees that SHBV shall be relieved of the foregoing obligations unless W2E notifies
SHBV promptly in writing of such claim, suit or proceeding and gives SHBV
authority to proceed as contemplated herein, and, at W2E’s expense, gives SHBV
proper and full information and assistance to settle and/or defend any such
claim, suit or proceeding.

 

10.5.2     Limitations of
Liability

 

10.5.2.1   Except for
claims under Section 14 for which liability shall be unlimited, this Section sets
out the financial liability of the Parties (including any liability for the
acts or omissions of their respective employees, agents and subcontractors) to
each other in respect of: (i) any breach of this Agreement or any order
including any deliberate breach of this Agreement or any order by a Party, or
its employees, agents or subcontractors; (ii) any use made or resale of
the Products by W2E, or of any products incorporating any of the Product parts;
and (iii) any representation, statement or tortuous act or omission
(including negligence) arising under or in connection with this Agreement.

 

10.5.2.2   Nothing in
this Agreement shall limit or exclude the liability of either Party for: (i) death
or personal injury resulting from negligence; or (ii) fraud or fraudulent
misrepresentation; or (iii) breach of the terms implied by Section 12
of the Sale of Goods Act of 1979; or (iv) breach of Section 2 of the
Consumer Protection Act of 1987

 

10.5.2.3   Without
prejudice of Section 10.5.2.1, neither Party shall be liable to the other,
whether in contract, tort (including negligence) or restitution or for breach
of statutory duty or misrepresentation or other for any: (i) loss or
corruption of data or information; or (ii) special, indirect or
consequential damage suffered by the other Party that arises under or in
connection with this Agreement.

 

11.          Ownership, Warranty
and Indemnification

 

11.1        W2E Ownership Warranty

 

W2E
represents and warrants to SHBV that: (i) the Products do not infringe
upon any patent, copyright, trade secret or other proprietary rights of others;
(ii) W2E has full power and authority to grant the rights granted within
this Agreement to SHBV; and (iii) W2E has not previously or otherwise
granted any other rights in the Products to any third party that conflict with
the rights in this Agreement granted to SHBV.

 

12

 

11.2        Indemnification

 

W2E
agrees to defend at its expense and hold SHBV harmless from any claim, demand,
or suit against SHBV resulting from a breach of any of the warranties set forth
above in Section 11.1 and to pay any costs, damages, or expenses (including
attorneys’ fees) arising from any such claim, demand, or suit. W2E shall have
sole control of the defense of such action and all negotiations for its
compromise or settlement. SHBV shall timely notify W2E in writing of any such
claim, demand, or suit, and, at W2E’s request and expense, provide W2E with all
available information, assistance and authority to enable W2E to defend the
same. W2E shall indemnify SHBV for all such costs, damages, and expenses as
they are incurred.

 

11.3        Continued Use

 

Following
notice of a claim or demand or a threatened or actual suit, W2E shall
immediately, at its own expense, use its reasonable efforts to procure for SHBV
the right to continue the use of the Products subject to such claim, demand or
suit, or, having failed to obtain such right, replace or modify such Products
to make them non-infringing. If SHBV elects to replace or modify any of the
Products, such replacement or modification shall substantially meet the
performance and interface specifications of the replaced or modified Products.

 

11.4        Survival of Warranties

 

The
warranties and indemnities stated in this Section 11 shall survive the
expiration or termination of this Agreement.

 

12.          Limitation of
Liability

 

12.1        Limitation of
Liability

 

The
warranties contained in Sections 11 above are in lieu of all other warranties
and conditions expressed or implied, including, but not limited to, those
governing merchantability or fitness for a particular purpose. In the event
that, despite Section 11, W2E is found liable for damages based upon any
defect of nonconformity in the Products, its total liability for each defective
Product shall not exceed the discounted price of such defective Product.

 

13.      Termination

 

13.1.1 Termination Events

 

Subject
to Section 13.1.4 below, a Party shall be entitled to terminate this
Agreement and all orders which have not been completed if the other Party (i) fails
to pay any undisputed amount due under this Agreement on the due date for
payment; or (ii) commits a material beach of its

 

13

 

obligations
under this Agreement; or (iii) passes a resolution for voluntary winding
up or a court of competent jurisdiction makes an order that such Party be wound
up except for the purposes of bona fide reconstruction while solvent; or (iv) makes
a composition or arrangement with its creditors; or (v) has a receiver or
manager or provisional liquidator or administrator appointed over the whole or
a substantial part of its business or undertaking or circumstances arise which
would entitle a court of competent jurisdiction or a creditor to appoint the
same; or (vi) is unable to pay its debts within the meaning of Section 123
of the Insolvency Act of 1986; or (vii) any Force Majeure Event prevents
the other Party from performing its obligations under this Agreement for a
continuous period of six months.

 

13.1.2   Termination
of this Agreement shall not prejudice any of the Parties’ rights and remedies
which have accrued as at termination.

 

13.1.3   In the event
that W2E does not purchase the Minimum Purchase Order each year as defined in
Schedule A SHBV may also terminate this Agreement.

 

13.1.4   In the event
of the occurrence of one of the grounds set forth in Sections 13.1.1 (i) or
13.1.1(ii) or unless specifically provided otherwise in this Agreement, (i) the
affected Party shall give the defaulting Party not less than ten (10) business
days’ notice of the occurrence of the event; (ii) the defaulting Party
shall within a further ten (10) business days from the expiration of the
period referred to in Section 13.1.4(i) remedy the default; and (iii) in
the event that the default is not remedied within the period referred to in Section 13.1.4(ii) or
their remains a dispute as to whether a default has occurred, the Parties shall
refer the matter to non-binding mediation in accordance with the then current
CEDR Model Mediation Procedure or such other procedure as is agreed between the
parties within thirty (30) days thereafter and termination on such grounds
shall not be effective until such time as the conditions set out in this Section 13.4
shall have been satisfied and complied with and the relevant default remains
unremedied.

 

13.1.5   Termination
on the grounds set forth in Section 13.1.1 (iii), 13.1.1 (iv), 13.1.1 (v),
13.1.1 (vi) and 13.1.1 (vii) shall be effective immediately on a Party
having given notice to the other.

 

13.2        Fulfillment of
Obligations

 

The
termination of this Agreement shall not otherwise release either party from its
obligation to pay any sum that may be then or thereafter owing to the other
party nor operate to discharge any liability that had been incurred by either
party prior to any such termination. Except as qualified by the preceding
sentence, neither party shall, by reason of the termination of this Agreement,
be liable to the other for any damages (whether direct, consequential or
incidental to and including loss of profit or prospective profits of any kind)
sustained or arising out of any such termination.

 

14

 

13.3        Effect of Termination
and Survival

 

Upon
termination of this Agreement, SHBV shall discontinue all further promotion and
marketing of the Products. Without limiting the generality of the foregoing,
SHBV shall cease all advertising, if any and use of all W2E names, trademarks,
logos, and designations and will not thereafter use, advertise, or display any
such names, trademarks, logos, or designations. Upon termination of this
Agreement, the due date of all outstanding invoices for the Products shall automatically
be accelerated and all such invoices shall become due and payable. All orders
or portions remaining unshipped as of the effective date of termination
may be canceled by W2E, at its option, to the extent they call for delivery
more than one hundred eighty (180) days after the date of termination. Upon
termination of this Agreement, W2E shall have the option, exercisable at any
time in its discretion, to repurchase some or all of the entire remaining
uncommitted inventory of the Products held by SHBV. W2E shall pay SHBV for all
Products so repurchased an amount equal to the discounted price paid by W2E to
SHBV. Upon receipt of any Products so reacquired from SHBV, W2E shall issue an
appropriate credit to SHBV’s account. Despite any termination of this
Agreement, the provisions in Sections 5.4, 7.4 through 7.6, and 8 through 13
shall remain in full force and effect.

 

14.          Confidential
Information, Trademarks and Intellectual Property Rights

 

14.1        Confidentiality
Regarding Proprietary Information; Retention of Property; Contract

 

Each
party acknowledges that it may be furnished with or may otherwise receive or
have access to information or material that relates to past, present or future
Products, data, designs, development, inventions, letters, notes, media,
original artwork, creative notebooks, research, software, techniques or
technical information and, including various trade secrets like accounts,
customer lists and information, inventions, innovations, methods, marketing
plans, pricing structure, payment histories, Production processes, records, and
specifications. (The “Proprietary Information”). Each party agrees to preserve
and protect the confidentiality of the Proprietary Information and all of its
physical forms, whether disclosed to the other party before this Agreement is
signed or afterward.

 

Both
parties agree that neither will disclose or disseminate any such Proprietary
Information or trade secret information, directly or indirectly, or use any
such information, for any purpose except for the furtherance of the business
contemplated by this Agreement.

 

Within
three (3) days after the termination of this Agreement (or any other time
at the other party’s request), a party shall return to the other party all such
Proprietary Information that are in their possession or under their control.
Despite any other provisions of this Agreement, the requirements of this Section shall
survive termination of this Agreement.

 

15

 

The
parties agree to preserve the confidentiality of the terms of this Agreement
while it is in effect, and thereafter. They may disclose its terms only to
their attorneys, or tax preparers, and then only on the condition that the
attorneys, or tax preparers agree to preserve the confidentiality of this
contract.

 

14.2    Protection of Information

 

Each
party acknowledges that the Information is proprietary to the other party and
has been developed as a trade secret at their expense. Each party agrees that
it will exercise the same efforts to hold and use such Information in
confidence (except as otherwise permitted by this Agreement) as it uses to
protect its own most confidential business information.

 

The
previously stated obligations do not apply to any information that (1) is
publicly known; (2) is given to a party by someone else who is not
obligated to maintain confidentiality; or (3) a party had already
developed prior to the day this Agreement is signed, as evidenced by documents.
Neither party shall retain, take or cause to be taken any physical forms of
Proprietary Information (nor make copies of same) without the other party’s
written permission.

 

14.3    Right to Injunction

 

If
any party shall attempt to use or dispose of any Information or any of its
aspects or components or any duplication or modification thereof in a manner
contrary to the terms of this Section, the other -party shall have the right,
without the necessity of filing a bond or other security, in addition to such
other remedies that may be available to it, to injunctive relief enjoining such
acts or attempts, it being acknowledged that legal remedies are inadequate.

 

14.4    Press Releases

 

No
press releases or other like publicity or advertising of any nature regarding
this Agreement that mentions this Agreement or the other party by name shall be
released by a party without the prior written Agreement of the other party.

 

14.5    Trademarks

 

W2E
shall have and retain sole ownership of the Trademarks, including the goodwill
pertaining thereto. Subject to SHBV’s compliance with the terms of this
Agreement, , W2E hereby grants to SHBV the right to use and display the
Trademarks solely in connection with and solely to the extent reasonably
necessary for the marketing, Manufacturing, and support of the Products within
the Territory according to the terms and conditions of this Agreement. SHBV
shall market, distribute, and support the Products only under the Trademarks,
and not any other trademark or logo. SHBV shall not use the Trademarks or any
other trademarks or trade names of W2E or any word, symbol, or design
confusingly similar thereto, as part of its corporate name, or as part of

 

16

 

the name of any Product
of SHBV. SHBV shall not remove or alter the Products’ copyright notices,
trademarks. To protect and preserve the goodwill and image of the Products,
SHBV shall (1) conduct business in a manner that reflects favorably at all
times on the Products and the reputation of W2E; (2) avoid deceptive,
misleading, or unethical practices that are or might be detrimental to W2E, the
Products or the public, including any disparagement of W2E or the Products; (3) make
no false or misleading representations with regard to W2E or the Products; (4) refrain
from publishing or employing any misleading or deceptive advertising material;
and (5) refrain from making any representations, warranties, or guarantees
to the trade with respect to the specifications, features, or capabilities of
the Products that are inconsistent with the literature distributed by W2E,
including all warranties and disclaimers contained in such literature.

 

14.6    No Copying

 

Without the prior written
consent of W2E, SHBV shall refrain from copying, reverse engineering,
disassembling, decompiling, translating, or modifying the Products, or granting
any other person or entity any right to do so.

 

14.7    Notification

 

SHBV shall promptly
notify W2E of (1) any claims, allegations, or notification that its
marketing, licensing, support, or service of the Products may or will infringe
the Intellectual Property Rights of any other person or entity; and (2) any
determination, discovery, or notification that any person or entity is or may
be infringing the Intellectual Property Rights of W2E. SHBV shall not take any
legal action relating to the protection of any Intellectual Property Rights
pertaining to the Products without the prior written approval of W2E. SHBV
shall assist in the protection of such Intellectual Property Rights.

 

14.8    Infringement

 

14.8.1        If
notified promptly in writing of and given sole control of the defense and all
related negotiations and settlements, W2E shall defend SHBV against any claim
based on an allegation that a Product supplied under this Agreement infringes
any United States Intellectual Property Rights. W2E shall pay any resulting
costs, damages, and attorney fees finally awarded by a court with respect to
any such claims.

 

14.8.2       If
the Products in the inventory of SHBV, or the Manufacturing or use thereof,
become, or in W2E’s opinion could seriously be contended to be, the subject of
such a claim, and if W2E cannot offer reasonable proof that such claim is
without merit, SHBV shall permit W2E, at W2E’s option and expense, either to
procure the right for SHBV to continue marketing and using such Products, or to
replace or modify them so that they become non-infringing. If neither of the foregoing
alternatives is available on terms that W2E in its sole discretion deems
reasonable, SHBV shall return such Products on written request from W2E, in
which event W2E shall grant

 

17

 

SHBV a credit equal to
the amounts paid by SHBV for such returned Products, provided that such
returned Products are in an undamaged condition.

 

14.8.3         Despite
any other provision of this Section 9.5, W2E shall not be liable to SHBV
for any claim arising from or based upon the combination, operation, or use of
any Product with equipment, data, or programming not supplied by W2E, or
arising from any alteration or modification of Products.

 

14.8.4       W2E
shall have no obligation to SHBV with respect to any infringement involving or concerning
the Products except as stated in this Section 13.8.

 

15. General
Provisions

 

15.1    Independent Contractors. The relationship between both parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to give either party the power
to direct and control the day-to-day activities of the other. Neither party is
an agent, representative or partner of the other party. Neither party shall
have any right, power or authority to enter into any agreement for, or on
behalf of, or incur any obligation or liability of, or to otherwise bind, the
other party. This Agreement shall not be interpreted or construed to create an
association, agency, joint venture or partnership between the parties or to
impose any liability attributable to such relationship upon either party.

 

15.2    Governing Law and Jurisdiction. This agreement and the parties’ actions
under this Agreement shall be governed by and construed under English Law and
the Parties submit to the jurisdiction of the courts of England and Wales,
without reference to conflict of law principles. Each party hereby irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth in the preamble of this Agreement, or by
fax which is automatically confirmed by the sender’s fax machine to have been
sent without error to the recipient’s fax number, such service to become
effective five 55) days after such mailing or the next business day after
confirmation by fax receipt.

 

15.3    Entire Agreement. This Agreement, including the any orders
instructed under it, attached schedules and exhibits, documents or other
agreements referred to or referenced in this Agreement, constitutes the entire
Agreement between both parties concerning this transaction, and replaces all
previous communications, representations, understandings, and Agreements,
whether verbal or written between the parties to this Agreement or their
representatives. No representations or statements of any kind made by either
party, which are not expressly staled in this Agreement, shall be binding on
such parties.

 

Any changes to this
Agreement must be in writing and signed by the party against whom that writing
is to be used,

 

18

 

Schedules 1, 2 and A
constitute integral parts of this Agreement. This agreement does not come into
effect until such time that the parties have agreed and signed the above
Schedules. Should Schedules I, 2 or A be not duly agreed and signed by the
parties at the time of execution of this Agreement, the Effective Date of this
Agreement shall be the date of the execution of the Schedule executed last.

 

15.4    All Amendments in Writing. No waiver, amendment or modification of
any provisions of this Agreement shall be effective unless in writing and
signed by a duly authorized representative of the party against whom such
waiver, amendment or modification is sought to be enforced. Furthermore, no
provisions in either party’s purchase orders, or in any other business forms employed
by either party will supersede the terms and conditions of this Agreement.

 

All notices between the
parties must be in writing and either delivered in person or by certified or
registered mail, return receipt requested.

 

15.5       Notices. All notices required or permitted under this
Agreement shall be in writing and shall be given by delivering such notice or
mailing such notice by pre-paid registered mail to the addresses first set
forth above or by facsimile transmission to the facsimile number set forth below
each parties respective name on the signature page hereof. Any such notice
or other communication shall, if delivered, be deemed to have been given or
made and received on the date delivered (or the next business day if the day of
delivery is not a business day), and if mailed, shall be deemed to have been
given or made and received on the fifth business day following the day on which
it was so mailed and if faxed (with confirmation received) shall be deemed to
have been given or made and received on the day on which it was so faxed (or
the next business day if the day of sending is not a business day). The parties
may give from time to time written notice of change of address in the manner aforesaid.

 

15.6     Inadequate Legal Remedy. Both parties understand and acknowledge
that violation of their respective covenants and Agreements may cause the other
irreparable harm and damage, that may not be recovered at law, and each agrees
that the other’s remedies for breach may be in equity by way of injunctive
relief, as well as for damages and any other relief available to the non-breaching
party, whether in law or in equity.

 

15.7. Dispute
Resolution. If a
dispute arises under this Agreement then the Parties will attempt to settle it
by mediation in accordance with the Centre for Effective Dispute Resolution (“CEDR”)’s
Model Mediation Procedure and the following shall prevail in the event of a
conflict with that procedure: (i) the mediation shall be conducted by a
single mediator who shall be appointed by agreement in writing between the
Parties or, if the Parties are unable to agree on the identity of the mediator
within ten (10) business days of the date of the request that the Dispute
be determined by a mediator, or if the mediator appointed is unable or
unwilling to act, shall be appointed by the CEDR; (ii) the mediation shall
be conducted in London and in the English language; (iii) the mediation
shall be conducted in private and without prejudice to the

 

19

 

rights of the Parties in
any future proceedings; and (iv) the mediation shall be held within thirty
(30) business days of the appointment of the mediator pursuant to this Section 15.7(i).
Nothing in this Clause shall prejudice the right of either Party to (x) apply
to a Court for interim relief to prevent the violation by a Party of any
proprietary interest, or any breach of either Party[s obligations which could
cause irreparable harm to the other Party; or (y) to bring proceedings
intended to result in the enforcement of a settlement agreement or of a binding
determination of a dispute between the parties.

 

15.8    Delay is Not a Waiver. No failure or delay by either party in
exercising any right, power or remedy under this Agreement, except as
specifically provided in this Agreement, shall operate as a waiver of any such
right, power or remedy.

 

15.9  Force Majeure

 

15.9.1    Neither Party (or any person acting on its
behalf) shall have any liability or responsibility for failure to fulfill any
obligation under this Agreement so long as and to the extent to which the
fulfillment of such obligation is prevented, frustrated, hindered or delayed as
a consequence of a Force Majeure Event, as that term is defined below.

 

15.9.2    A party claiming the benefit of this
provision shall as soon as reasonably practicable after the occurrence of a
Force Majeure Event: (i) notify the other Party of the nature and extent
of such Force Majeure Event; and (ii) use all reasonable endeavours to
remove or reduce the effect of any such causes and resume performance under
this Agreement as soon as feasible.

 

15.9.3    For the purposes of this Agreement, a force
majeure event means an event beyond the control of a Party (or any person acting
on its behalf) or, if it could have been foreseen, was unavoidable, and
includes, without limitation, acts of God, storms, floods, riots, fires,
sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) or armed hostilities or other
national or international calamity or one or more acts of terrorism or failure
of energy sources (“Force Majeure Event”)

 

15.10   Assignability and Binding Effect. Except as expressly set forth within
this Agreement, neither party may transfer or assign, directly or indirectly,
this Agreement or its rights and obligations hereunder without the express
written permission of the other party, not to be unreasonably withheld; provided,
however, that both parties shall have the right to assign or otherwise
transfer this Agreement to any parent, subsidiary, affiliated entity or
pursuant to any merger, consolidation or reorganization, provided that all such
assignees and transferees agree in writing to be bound by the terms of this
Agreement prior to such assignment or transfer. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their successors and assigns.

 

20

 

15.11      Certain Sections Invalid. If any provisions of this Agreement are
held by a court of competent jurisdiction to be invalid under any applicable
statute or rule of law, they are to that extent to be deemed omitted and
the remaining provisions of this Agreement shall remain in full force and
effect.

 

15.12      Headings. The titles and headings of the various sections and
sections in this Agreement are intended solely for convenience of reference and
are not intended for any other purpose whatsoever, or to explain, modify or
place any construction upon or on any of the provisions of this Agreement.

 

15.13           Survival of Certain Provisions. The warranties and the indemnification
and confidentiality obligations set forth in the Agreement shall survive the
termination of the Agreement by either party for any reason.

 

Understood, Agreed and
Approved

 

We have carefully
reviewed this contract and agree to and accept all of its terms and conditions.
We are executing this Agreement as of the Effective Date above.

 

SHBV
(Hong Kong) Ltd

 

	
  By:

  	
  

  	
   

  	
  

  

 

21

 

	
  (Name and Title) 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facsimile Number:

  	
   

  	
  Witness

  
	
   

  	
   

  	
   

  
	
  WASTE2ENERGY GROUP HOLDINGS
  PLC,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
  

  
	
   

  	
   

  	
  Witness

  
	
   

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facsimile Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WASTE2ENERGY ENGINEERING
  LIMITED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
  

  
	
   

  	
   

  	
  Witness

  
	
   

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facsimile Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WASTE2ENERGY TECHNOLOGIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INTERNATIONAL LIMITED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  	
  

  
	
   

  	
   

  	
  Witness

  

 

(Name and Title)

 

Facsimile Number:

 

22

 

Waste2energy Group Holdings Plc & SHBV
(Hong Kong) Ltd.

 

Manufacturing Agreement

 

Schedule 1 - Quota

 

This manufacturing
agreement is based upon an annual quota of Purchase Orders for the manufacture
of W2e “Products” either in whole or in part based upon individually agreed
Purchase Orders.

 

It is envisaged that a
matrix of drawing numbers and quantities for the forecasted Purchase Orders
will be developed through time and experience in the Agreement therefore this
Schedule is a working document and subject to quarterly review in line with
forecast revisions.

 

However, the Cumulative
Minimum Annual Orders shall not be less than $60M USD (Sixty Million USD) in
any one of the ten years and for not less than a total of $600M USD (Six
Hundred Million USD) for the total of the ten years compound unless agreed by
written mutual consent.

 

 

Waste2energy Group Holdings Plc & SHBV
(Hong Kong) Ltd.

 

Manufacturing Agreement

 

Schedule 2 - Commercial and Terms of Payment

 

1.            W2e require and SHBV agree that W2e
equipment will be manufactured in batches to be held in stock for draw down by
W2e, the batch sizes to be determined as a number related to efficiency and
economies of scale in manufacture.

 

2.            W2e require and SHBV agree that cost of
manufacture is critical to the success of W2e’s sales strategies and therefore
all efforts will be made to keep the costs of manufacturing to a minimum, it is
envisaged that a reduction in manufacturing costs will be of the order of 20%
of the last quoted price based on the ex works Newbie, when manufacturing at
Chinese SHBV Facilities commence, every endeavour will be made mutually to
realise this cost saving.

 

3.            W2e agree that subject to 4 and 5 above
that a minimum annual value of orders will be maintained, this value to be
agreed at the time of closing on 18th May 2010.

 

4.            A payment mechanism shall be put in place
with formulas and mechanisms for payments against order draw down, work in
progress, percentage of completion of individual units and delivery of bought
in components all against a quality schedule and subject to specific mutually
agreed Purchase Orders, as per specific Purchase Order.

 

5.            Both parties agree to collaborate on a
design for manufacture to aid these objectives.

 

6.            Warranty and Latent Defects for the
quality of manufacture of the equipment, components and parts will apply.

 

7.            There will be a consideration from SHBV
to W2e for the agreement to manufacture this minimum annual volume of equipment
as per Schedule 1 of the Manufacturing Agreement between SHBV and W2e:

 

A)         An initial payment of $1 Million USD
payable within 30 days of 18th May 2010 for the right to exclusivity as
per the agreement.

 

B)           A further second payment of $1 Million
USD from SHBV within 60 days of 18th May 2010 against the right to exclusivity
as per the agreement.

 

C)           A further payment in kind of the
necessary replacement equipment for the Dargavel EfW facility to complete the
waste heat recovery system subject to 10 below.

 

D)          The balance of an amount up to $5 Million
USD from A) B) and C) above to be payable within 120 days of 18th May 2010
in the event of non conformance to point C) listed above.

 

E)            The further sum of not less than $5
Million USD shall be paid in equal instalments annually over the remaining term
of the agreement within 30 days of 18th May
subject to all other terms pertained within this document. This sum being
calculated in accordance with the “exclusivity formula”.

 

F)            On the anniversary in years 4, 7 and 10
respectively there will be a review of the preceding 3 years trading period to
ensure volume versus payments is in alignment with annual minimum production
volumes to be agreed by 18th May 2010 with regard to the $8 Million
USD referred to above.

 

8.            A Purchase Order will be placed on SHBV for
the equipment referred to in 10 C) subject to a final agreed design and
detailed proposal including specifications, operating parameters and pricing.

 

9.            W2e shall provide on or before closure of
the agreement a duly signed parent company guarantee.

 

10.  Governing law for the agreements will be
English Law.

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