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Exhibit 10.3
EXECUTION VERSION
SUPPLEMENTAL GUARANTEE AGREEMENT
SUPPLEMENTAL GUARANTEE AGREEMENT (this "Supplemental Guarantee
Agreement"), dated as of August 1, 2008, among MICROGY
HANFORD, LLC, a California limited liability company, MICROGY
RIVERDALE, LLC, a California limited liability company (together,
the "California Subsidiary Guarantors"), subsidiaries of MICROGY
HOLDINGS, LLC (or its permitted successor), a Delaware limited
liability company (the "Company"), the Company, the Texas
Subsidiary Guarantors (those Subsidiary Guarantors party to the
Guarantee Agreement defined below) and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as trustee under the indentures referred to below (the
"Trustee").
WITNESSETH
WHEREAS, the Company and the Subsidiary Guarantors have
heretofore executed and delivered to the Trustee a Guarantee
Agreement (the "Guarantee Agreement"), dated as of October 1,
2006, providing for the Company’s guarantee of the Guaranteed
Obligations (as defined in the Guarantee Agreement), which include
the Gulf Coast Industrial Development Authority Environmental
Facilities Revenue Bonds (Microgy Holdings Project), Series 2006
(the "Series 2006 Bonds"), and the Subsidiary Guarantors’
guarantees of the Guaranteed Obligations;
WHEREAS, pursuant to the Guarantee Agreement, the Company
provided a financial feasibility study and a preliminary term sheet
to the holders of the Series 2006 Bonds regarding the
Company’s proposal to guarantee indebtedness to finance
certain solid waste disposal facilities to be located in California
(the "California Facilities"); and
WHEREAS, the holder of at least a majority of the Series 2006
Bonds (the "Majority Holder") exercised its one-time right to waive
the limitation on incurring additional Indebtedness as set forth in
Section 3.07 of the Guarantee Agreement and add the California
Facilities into the collateral pool; and
WHEREAS, the California Statewide Communities Development
Authority has authorized the issuance of its Environmental
Facilities Revenue Bonds (Microgy Holdings Project) Series 2008A
(the "Series 2008A Bonds"), in an aggregate principal amount of
$62,425,000 to finance the California Facilities;
WHEREAS, the Majority Holder and the Company entered into a
Consent and Waiver Agreement dated as of June 26, 2008 (the
"Consent and Waiver Agreement") pursuant to which the parties
agreed that the Company’s ownership interests in such
California Subsidiary Guarantors will become part of the Collateral
(as defined in the Guarantee Agreement), the assets comprising the
California Facilities will become part of the Collateral, and
Obligations issued to fund the California Facilities will be
Guaranteed Obligations; and
WHEREAS, the Guarantee Agreement provides that under certain
circumstances the California Subsidiary Guarantors shall execute
and deliver to the Trustee a supplemental guarantee agreement
pursuant to which the California Subsidiary Guarantors shall
unconditionally guarantee the Guaranteed Obligations as set forth
in the Guarantee Agreement; and
WHEREAS, in connection with the issuance of the
Series 2008A Bonds, the parties wish to amend certain sections of
the Guarantee Agreement; and
WHEREAS, pursuant to Section 3.15 of the Guarantee
Agreement, the Trustee, the Company and the Texas Subsidiary
Guarantors are authorized to execute and deliver this Supplemental
Guarantee Agreement.
NOW THEREFORE, in consideration of the foregoing and for good
and valuable consideration, the receipt of which is hereby
acknowledged, the California Subsidiary Guarantors, the Trustee,
the Company and the Texas Subsidiary Guarantors mutually covenant
and agree for the equal and ratable benefit of the Holders of the
Series 2006 Bonds, the 2008 Bonds and other Guaranteed Obligations
as follows:
1. Capitalized Terms . Unless otherwise defined in
this Supplemental Guarantee Agreement, capitalized terms used
herein without definition shall have the meanings assigned to them
in the Guarantee Agreement.
2. Agreement to be Bound; Guarantee . The
California Subsidiary Guarantors hereby become parties to the
Guarantee Agreement as Subsidiary Guarantors and hereby agree to be
bound by all of the provisions of the Guarantee Agreement
applicable to Subsidiary Guarantors and to perform all of the
Obligations and agreements of the Subsidiary Guarantors under the
Guarantee Agreement. In furtherance of the foregoing, the
California Subsidiary Guarantors shall be deemed Subsidiary
Guarantors for purposes of Article 10 of the Guarantee Agreement,
including, without limitation, Section 10.02 thereof.
3. Amendment to Article 1 . Article 1 is hereby
amended as follows:
(a) The following terms are hereby amended and restated in their
entirety:
"Guaranteed Obligations" means:
(1) the Series 2006 Bonds and the Series 2008A Bonds; and
(2) Obligations that are designated by the Company, in an
Officers’ Certificate delivered to the Collateral Trustee as
Guaranteed Obligations under the Guarantee entitled to share
equally and ratably in the Guarantee and the benefits and proceeds
of all Liens held by the Collateral Trustee in the Collateral.
" Issue Date " means the date of original issuance and
delivery of any specified Guaranteed Obligations.
(b) The following new terms are hereby added to Article I:
"Cash Collateral Funds" means, collectively, the Series
2006 Cash Collateral Fund and the Series 2008 Cash Collateral
Fund.
2
"Credits" means any potentially
tradeable environmental attributes, including, but not limited to,
renewable energy credits, pollution offset credits, carbon
sequestration credits and greenhouse gas offset credits.
"Fitch" means Fitch, Inc., dba Fitch Ratings, or any
successor thereto maintaining a rating on the Bonds at the request
of the Company.
" Project Costs " means costs incurred by the Issuer or
the Company, whether before or after the issuance of the Series
2008A Bonds, and reimbursed not later than three years after the
payment thereof, with respect to the acquisition, construction,
improving and equipping of the California Project, including, but
not limited to, the following items:
(a) the cost of acquisition, cleanup, construction,
reconstruction, improvement and expansion, including the cost of
the acquisition of all land, rights-of-way, property rights,
easements, and interests, the cost of all machinery and equipment,
financing charges, inventory, raw materials and other supplies,
research and development costs, interest prior to and during
construction and for six months after completion of construction,
whether or not capitalized, necessary reserve funds, cost of
estimates and of engineering and legal services, plans,
specifications, surveys, estimates of cost and of revenue, other
expenses necessary or incident to determining the feasibility and
practicability of acquiring, cleaning, constructing,
reconstructing, improving, and expanding any such project,
administrative expense and such other expenses as may be necessary
or incident to the acquisition, cleanup, construction,
reconstruction, improvement and expansion thereof, the placing of
the same in operation and the financing or refinancing of any such
project, including the refunding of any outstanding obligations,
mortgages or advances issued, made or given by any Person for any
of the aforementioned costs; and
(b) to the extent authorized by the Joint Exercise of Powers
Act, constituting Title 1, Chapter 5 of the Government Code of the
State of California, as now in effect and as it may from time to
time hereafter be amended or supplemented, costs of all other items
related to the acquisition, construction, improving and equipping
of the California Project.
" Series 2006 Issue Date " means November 9,
2006.
" Series 2008A Issue Date " means the date of original
issuance and delivery of the Series 2008A Bonds.
(c) "Cash Collateral Fund" is hereby deleted from Article
I. References to "Cash Collateral Fund" in Sections 3.18, 3.23 and
the definitio
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