LEASE AGREEMENT

Exhibit 10.1

 

LEASE AGREEMENT

between

THE CITY OF GRAND ISLAND, NEBRASKA

and

MICROGY GRAND ISLAND, LLC

relating to

$7,000,000

The City of Grand Island, Nebraska

Solid Waste Disposal Facilities Revenue Bonds

(Microgy Grand Island, LLC Project)

Series 2008

Dated as of June 1, 2008

 

The interest of The City of Grand Island, Nebraska in this Lease Agreement has been assigned (except for the rights of, and amounts payable to, The City of Grand Island, Nebraska under Sections 6.02(b), 6.08, 7.03 and 8.03(a) hereof) pursuant to the Trust Indenture dated as of the date hereof from The City of Grand Island, Nebraska to Wells Fargo Bank, National Association, as trustee, and is subject to the security interest of Wells Fargo Bank, National Association, as trustee.

TABLE OF CONTENTS

 

 

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LEASE AGREEMENT

THIS LEASE AGREEMENT , dated as of June 1, 2008 (this “Agreement”), by and between THE CITY OF GRAND ISLAND, NEBRASKA (the “Issuer”), a political subdivision duly organized and existing under the laws of the State of Nebraska, as lessor, and MICROGY GRAND ISLAND, LLC (the “Company”), a limited liability company organized under the laws of the State of Nebraska and qualified to do business in the State of Nebraska, as lessee:

W I T N E S S E T H :

WHEREAS, the Issuer is a political subdivision duly organized and existing under the laws of the State of Nebraska, as lessor; and

WHEREAS, pursuant to law, and particularly the Act (hereinafter defined), the Issuer is empowered to finance the acquisition, construction, improving and equipping of industrial solid waste disposal facilities, to be operated by the Company, and located within Grand Island, Nebraska, and to be leased hereunder to the Company, and to issue industrial development revenue bonds for such purpose; and

WHEREAS, the Company has requested that the Issuer issue its industrial development revenue bonds for the purpose of financing all or a portion of the Project Costs (hereinafter defined); and

WHEREAS, the Company is leasing the Project Site (hereinafter defined) from JBS Swift & Company (successor to Swift & Company) (“JBS Swift”) pursuant to that certain Lease Agreement dated as of September 1, 2006 (the “Site Lease”) between JBS Swift, as lessor, and the Company, as lessee, and the Company, as sublessor, and the Issuer, as sublessee, are entering into that certain Sublease Agreement dated as of June 1, 2008 (the “Sublease”) pursuant to which the Issuer will sublease the Project Site (hereinafter defined) from the Company; and

WHEREAS, the Company and JBS Swift have entered into that certain Biogas Purchase and Supply Agreement dated as of September 1, 2006 (including all amendments and supplements thereto, the “Biogas Agreement”) providing for the operation of the Facility (as hereinafter defined) and for the payment by JBS Swift to the Company of the purchase price of biogas to be manufactured by the Company at the Facility and supplied to JBS Swift; and

WHEREAS, the Company has agreed to make Rent Payments (hereinafter defined), and for such purpose has irrevocably assigned to the Trustee the biogas purchase price payments to be received by the Company under the Biogas Agreement, and other payments hereunder in consideration of the Issuer’s issuing the Bonds and providing to the Company the proceeds from the sale of the Bonds for the acquisition, construction, improving and equipping of the Project; and

WHEREAS, the City Council of the Issuer has approved this Agreement and the Sublease by ordinance; and

WHEREAS, this Agreement is authorized and executed pursuant to applicable laws, including the Act; and

WHEREAS, the Issuer and the Company have taken all action and have complied with all provisions of law with respect to the execution, delivery and performance of this Agreement and the due authorization of the consummation of the transactions contemplated hereby, and this Agreement has been duly executed and delivered by, and constitutes a valid and legally binding agreement of, the Issuer and the Company, enforceable against the respective parties in accordance with its terms;

NOW, THEREFORE, in consideration of the covenants and agreements herein made and subject to the conditions herein set forth, the Issuer and the Company contract and agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions . In addition to the terms defined in the recitals above, each of the following terms shall have the respective meanings assigned to them in this Section 1.01 whenever they are used in this Agreement, unless the context in which they are used clearly requires otherwise:

“ Accountant ” shall mean a firm of independent certified public accountants selected by the Company.

“ Acquired Debt ” shall mean, with respect to any specified Person:

(a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person; and

(b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“ Act ” shall mean the Nebraska Industrial Development Act, Chapter 13, Article 11, Reissue Revised Statutes of Nebraska, 1997, as amended.

“ Act of Bankruptcy ” shall mean any of the following events:

(a) the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of the Company or of all or any substantial part of its property, (ii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or (iii) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, winding up or composition or adjustment of debts; or

 

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(b) a proceeding or case shall be commenced without the application or consent of the Company in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding up, composition or adjustment of debts, of the Company, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or of all or any substantial part of its property or (iii) similar relief in respect of the Company under any law relating to bankruptcy, insolvency, winding up, composition or adjustment of debts.

“ Affiliate ” of any Person shall mean any other Person who, directly or indirectly, controls or is controlled by or is under common control with such other Person.

“ Agreement ” shall mean this Lease Agreement, dated as of June 1, 2008, by and between the Issuer and the Company, including all amendments hereof and supplements hereto.

“ Asset Sale ” shall mean the sale, lease, conveyance or other disposition of any assets.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company shall be governed by the provisions of Section 8.02 hereof.

(a) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than 5% of Tangible Assets of the Company;

(b) the sale or lease of products (including Credits), services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn out or obsolete assets or assets no longer used or useful in the Company’s business;

(c) the sale or other disposition of cash or Cash Equivalents;

(d) a Permitted Investment;

(e) a disposition resulting from any condemnation or other taking, or temporary or permanent requisition of, any property, any interest therein or right appurtenant thereto, or any change of grade affecting any property, in each case, as the result of the exercise of any right of condemnation or eminent domain, including any sale or other transfer to a Governmental Authority in lieu of, or in anticipation of, any of the foregoing events;

(f) a disposition of assets in connection with a foreclosure, transfer or deed in lieu of foreclosure or other exercise of remedial action; and

(g) a disposition of a contract relating to any Hedging Obligation or any collateral delivered under a Hedging Obligation.

“ Attributable Debt ” in respect of a sale and leaseback transaction shall mean, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

 

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“ Authorized Company Representative ” shall mean the Company’s Manager or the Chief Executive Officer, President, Chief Financial Officer, General Counsel, Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary of EPC or such Persons at any time designated to act on behalf of the Company, such designation in each case to be evidenced by a certificate furnished to the Issuer and the Trustee containing the specimen signature of such Person and signed on behalf of the Company by its Manager or such Chief Executive Officer, President, Chief Financial Officer, General Counsel, Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary authorized to act on behalf of the Company. Such certificate may designate an alternate or alternates.

“ Authorized Issuer Representative ” shall mean such Person or Persons at the time and from time to time designated by written certificate furnished to the Company and the Trustee containing the specimen signature of such Person and signed on behalf of the Issuer by its Mayor or Finance Director.

“ Biogas Agreement ” shall mean the Biogas Purchase and Supply Agreement dated as of September 1, 2006 by and between the Company and JBS Swift, including all amendments thereof and supplements thereto.

“ Board of Directors ” shall mean:

(a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(b) with respect to a partnership, the Board of Directors of each general partner of the partnership;

(c) with respect to a limited liability company, the managing member or members or any controlling committee of managing members or Managers, Board of Managers or Board of Directors thereof; and

(d) with respect to any other Person, the board or committee of such Person serving a similar function.

“ Bond Counsel ” shall mean Kutak Rock LLP or such other firm of attorneys of nationally recognized standing in the field of law relating to municipal bond law and the excludability of interest on state or local bonds from gross income of the owners of the Bonds for purposes of federal income taxation, selected by the Company and acceptable to the Trustee and the Issuer.

“ Bond Fund ” shall mean the fund by that name created and established in Section 6.02 of the Indenture.

 

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“ Bond Ordinance ” or “ Ordinance ” shall mean the Ordinance adopted by the City Council authorizing the issuance of the Bonds (including this Agreement, the Sublease, the Tax Regulatory Agreement and the Indenture prescribed and authorized to be executed in the Ordinance), together with any supplemental ordinances or amendments to the Ordinance or such Indenture.

“ Bond Owner ,” “ Bondowner ,” “ Owner ,” “ owner ,” “ Bondholder ,” “ bondholder ,” “ holder ,” “ Registered Owner ,” “ registered owner ” or “ owner of the Bonds ” shall mean the registered owner of any Bond.

“ Bond Registrar ” shall have the meaning as specified in Section 2.03 of the Indenture.

“ Bonds ” shall mean the $7,000,000 aggregate principal amount of The City of Grand Island, Nebraska Solid Waste Disposal Facilities Revenue Bonds (Microgy Grand Island, LLC Project) Series 2008, executed and delivered pursuant to the Indenture.

“ Business Day ” shall mean any day other than (a) a Saturday, Sunday or legal holiday or a day on which banking institutions in the City of New York, New York, or in the cities in which the Principal Offices of the Trustee or the Paying Agent are located are required or authorized by law or executive order to close or (b) a day on which The New York Stock Exchange is closed.

“ Capital Lease Obligation ” shall mean, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“ Capital Stock ” shall mean:

(a) in the case of a corporation, corporate stock;

(b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(c) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“ Cash Equivalents ” shall mean:

(a) United States dollars;

 

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(b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;

(c) deposit accounts with any bank that has a long-term debt rating of A+ or better by S&P and A1 or better by Moody’s (an “Approved Bank”);

(d) time deposits, certificates of deposit, acceptances or prime commercial paper issued by an Approved Bank at the time acquired or issued (as applicable and whichever is latest), in each case, having a maturity of not more than one year from the date of acquisition;

(e) repurchase obligations for underlying securities of the types described in clause (b) entered into with an Approved Bank at the time acquired, issued or entered into (as applicable and whichever is latest), in each case, having a maturity of not more than one year from the date of acquisition and secured by securities of the type described in clause (b), the market value of which (including accrued interest) is not less than the amount of the applicable repurchase agreement;

(f) commercial paper with a rating of A-1 by S&P and P-1 by Moody’s and, in each case, maturing within one year after the date of acquisition; and

(g) money market funds which invest primarily in Cash Equivalents of the kinds described in clauses (a) through (f) of this definition.

“ City Council ” shall mean the duly elected City Council of the Issuer.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the rulings and regulations (including temporary and proposed regulations) promulgated thereunder or, to the extent applicable, under the Internal Revenue Code of 1954, as amended.

“ Commercial Operation ” shall mean when used with respect to the Facility, the placing into service of such Facility for the production of the outputs for which it was designed at its design capacity.

“ Company ” shall mean Microgy Grand Island, LLC, a Nebraska limited liability company, and its successors and assigns as permitted by Section 8.02 hereof.

“ Company Agreements ” shall mean this Agreement, the Sublease, the Tax Regulatory Agreement, the Site Lease, the Biogas Agreement and the Pledge Agreement.

“ Completion Certificate ” shall mean a certificate of the Authorized Company Representative to the effect stated in Section 4.04(b) hereof.

 

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“ Consolidated Cash Flow ” means, for any period, the Consolidated Net Income of the Company for such period, without duplication:

(1) plus depreciation, depletion, amortization (including amortization of intangibles) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period) of the Company for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;

(2) less any non-cash items of income to the extent such non-cash items of income were included in computing such Consolidated Net Income;

(3) plus cash received during such period related to mark-to-market activities;

(4) less cash paid during such period related to mark-to-market activities;

provided, however , that for purposes of this definition, any mark-to-market earnings or losses shall be excluded from the calculation of Consolidated Cash Flow to the extent taken into account in calculating Consolidated Net Income for such period.

“ Consolidated Net Income ” shall mean, with respect to any specified Person for any period, the aggregate of the Net Income of the Company for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(a) the Net Income of any Person that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions (including pursuant to other intercompany payments) paid in cash to the specified Person;

(b) the cumulative effect of a change in accounting principles will be excluded; and

(c) any non-cash impairment charges incurred subsequent to the Issue Date shall be excluded.

“ Consolidated Net Worth ” shall mean, with respect to a specified Person as of any date, the assets of such Person less the liabilities of such Person all as determined on a consolidated basis in accordance with GAAP.

“ Construction Fund ” shall mean the fund by that name created and established in Section 5.01 of the Indenture.

“ Costs of Issuance ” shall mean all costs and expenses incurred by the Issuer or the Company in connection with the issuance and sale of the Bonds, including, without limitation, (a) fees and reasonable expenses of accountants, attorneys, engineers and financial advisors, (b) materials, supplies and printing and engraving costs, (c) recording and filing fees, (d) Rating Service fees, (e) compensation to the Underwriter, whether paid as a fee or as a discount from issue price, (f) Trustee’s fees and expenses and (g) the Issuer’s and the Governmental Unit’s administrative expenses as provided in Section 6.04 hereof.

 

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“ Credits ” shall mean any potentially tradeable environmental attributes, including, but not limited to, renewable energy credits, pollution offset credits, carbon sequestration credits and greenhouse gas offset credits.

“ Debt Service Reserve Fund ” shall mean the fund by that name created and established in Section 4.01 of the Indenture.

“ Debt Service Reserve Requirement ” shall mean the amount of $700,000.

“ Default ” shall mean any event which with the giving of notice or the lapse of time, or both, would constitute an Event of Default.

“ Disqualified Stock ” shall mean any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is manditorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the latest date on which any Indebtedness matures.

“ Environmental Claim ” shall mean any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“ Environmental Laws ” shall mean any and all current or future foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to the Company or the Facility.

“ EPC ” shall mean Environmental Power Corporation, a Delaware corporation.

“ Equity Interests ” shall mean Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“ Event of Default ,” when used with respect to this Agreement, shall mean any event specified in Section 7.01 hereof.

 

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“ Facility ” shall mean the solid waste disposal facilities described on Exhibit A to this Agreement.

“ Fair Market Value ” shall mean the value that would be paid by a willing buyer to a willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the chief financial officer or Board of Directors of the Company.

“ Favorable Opinion ” shall mean an opinion of Bond Counsel addressed to the Issuer, the Company and the Trustee and stating that the action proposed to be taken is authorized or permitted by the Act and the Indenture and will not, in and of itself, adversely affect the excludability from gross income for federal income tax purposes of interest on the Bonds (other than as held by a “substantial user” of the Project or a “related person” within the meaning of the Code).

“ Fitch ” shall mean Fitch Ratings or any successor thereto maintaining a rating on the Bonds.

“ Fixed Charge Coverage Ratio ” shall mean, for any period, the ratio of (x) the Consolidated Net Income without taking into account any unrealized gain or loss on mark-to-market hedging activities, plus depreciation, plus interest expenses, plus income taxes of the Company for such period, to (y) the interest expenses plus the principal payments related to the Bonds.

“ GAAP ” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time.

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government.

“ Guarantor ” shall mean (a) Microgy Grand Island, LLC, a Nebraska limited liability company, and its successors and assigns, and (b) any surviving, resulting or transferee entity as provided in the Guaranty.

“ Guaranty ” shall mean the Guaranty Agreement dated as of June 1, 2008 from the Guarantor, as guarantor, to the Trustee wherein the Guarantor guarantees the payment of principal of, premium, if any, and interest on the Bonds, including all amendments thereof or supplements thereto.

“ Hazardous Materials ” shall mean any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of the Facility or to the indoor or outdoor environment.

 

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“ Hazardous Materials Activity ” shall mean any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, release, threatened release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing.

“ Hedging Obligation ” shall mean the net obligations of the Company under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rate risk, and

(3) other agreements or arrangements designed to protect the Company against fluctuations in currency exchange rates or fluctuations in the prices of commodities which are inputs to or products of the Facility.

“ Indebtedness ” shall mean, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses or trade payables), whether or not contingent (without duplication):

(a) in respect of borrowed money;

(b) evidenced by bonds, debentures or similar instruments or letters of credit or reimbursement agreements in respect thereof or guarantees thereof;

(c) in respect of banker’s acceptances;

(d) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

(e) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or

(f) representing or entered into in connection with any Hedging Obligations,

if and to the extent any of the preceding items (other than guarantees, letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person.

 

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The amount of any Indebtedness outstanding as of any date will be:

(a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(b) the principal amount of and premium (if any) on the Indebtedness, in the case of any other Indebtedness; and

(c) in respect of Indebtedness of other Persons secured by a Lien on the assets of the specified Person, the lesser of:

(i) the Fair Market Value of such asset at such date of determination, and

(ii) the amount of such Indebtedness of such other Persons.

“ Indemnified Liabilities ” shall mean, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on Environmental Laws, on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of the Company.

“ Indenture ” shall mean the Trust Indenture, dated as of June 1, 2008, between the Issuer and the Trustee, including all amendments thereof or supplements thereto.

“ Independent Counsel ” shall mean an attorney duly admitted to practice law before the highest court of any state or the District of Columbia and who is not a full-time employee, director or shareholder of the Issuer or the Company.

“ Investment Grade Rating ” shall mean a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P or BBB (or the equivalent) by Fitch.

“ Investments ” shall mean, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or similar obligations), advances or capital contributions (excluding payroll, commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. “Investment” shall exclude extensions of trade credit by the Company in the ordinary course of business and the Bonds. The acquisition by the Company of a Person that holds an

 

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Investment in a third Person will be deemed to be an Investment by the Company in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person. The amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

“ Issue Date ” shall mean the date on which the Bonds are first authenticated and delivered to the Underwriter against payment therefor.

“ Issuer ” shall mean The City of Grand Island, Nebraska, a political subdivision duly organized and existing under the laws of the State of Nebraska, and its successors and assigns.

“ Lease Term ” shall mean the term of this Agreement as specified in Section 11.05 hereof.

“ Lien ” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement and any lease that constitutes a security interest.

“ Limited Offering Memorandum ” shall mean the final Limited Offering Memorandum dated July 22, 2008 of the Issuer relating to the Bonds.

“ Lockbox Account ” shall mean the account of the Bond Fund by that name created and established pursuant to Section 6.02 of the Indenture.

“ Maintenance Reserve Fund ” shall mean the fund by that name created and established in Section 7.01 of the Indenture.

“ Majority Holders ” shall mean the owners of a majority in principal amount of the Bonds Outstanding.

“ Management Services Agreement ” shall mean the Management Services Agreement dated July 24, 2008 between the Company and EPC, including all amendments thereof and supplements thereto.

“ Moody’s ” shall mean Moody’s Investors Service, Inc. or any successor thereto maintaining a rating on the Bonds.

“ Net Income ” shall mean the net income (loss) of the Company determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(a) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with (i) any Asset Sale; or (ii) the disposition of any securities by the Company or the extinguishment of any Indebtedness of the Company; and

 

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(b) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss).

“ Officer ” shall mean, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, Assistant Secretary, or any Vice-President of such Person.

“ Officer’s Certificate ” shall mean a certificate signed on behalf of the Company by an Officer of the Company, who must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 8.21 hereof.

“ Outstanding ” or “ outstanding ” shall mean, when used with reference to Bonds, as of the time in question, all Bonds authenticated and delivered under the Indenture, except:

(a) Bonds theretofore cancelled or required to be cancelled under Section 2.11 of the Indenture;

(b) Bonds which are deemed to have been paid in accordance with Article XVI of the Indenture;

(c) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article II of the Indenture and Bonds paid pursuant to Section 2.09(a) of the Indenture;

(d) Bonds registered in the name of the Issuer; and

(e) For purposes of any consent, request, demand, authorization, direction, notice, waiver or other action to be taken by the holders of a specified percentage of outstanding Bonds hereunder, all Bonds held by or for the account of the Issuer or the Company, except that, for purposes of any such consent, request, demand, authorization, direction, notice, waiver or action, the Trustee shall be obligated to consider as not being outstanding only Bonds known by a Responsible Officer of the Trustee by actual notice thereof to be so held.

“ Paying Agent ” shall mean the Trustee or any successor paying agent or co-paying agent serving as such under the Indenture. If at any time there is no qualified paying agent serving as such, the Trustee shall act as paying agent under the Indenture. “Principal Office” of the Paying Agent shall mean the office thereof designated in writing to the Trustee and the Issuer.

“ Permitted Business ” shall mean the business of recycling solid waste for the production of gas, energy and Credits and providing related services and products in the energy market and any businesses incidental or reasonably related thereto, and such other business as would not be material to the Company.

 

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“ Permitted Encumbrances ” shall mean, as of any particular time, (a) liens for taxes and assessments not then delinquent, or which the Company may, pursuant to the provisions of Section 4.10 hereof, permit to remain unpaid, (b) this Agreement, the Indenture, the Site Lease, the Sublease and any financing statements naming the Issuer or the Company as debtor and naming the Trustee or the Issuer as secured party filed to perfect the security interests granted by the Indenture and this Agreement, (c) utility access and other easements and rights of way, restrictions and exceptions that the Authorized Company Representative certifies will not interfere with or impair the Project, (d) any mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s lien, or right not filed or perfected in the manner prescribed by law and (e) such minor defects, irregularities, encumbrances and clouds on title as normally exist with respect to property similar in character to the Project and as do not, in the opinion of Independent Counsel, materially impair the property affected thereby for the purpose for which it was acquired or held by the Issuer.

“ Permitted Investment ” shall mean:

(a) any Investment in the Company;

(b) any Investment in Cash Equivalents;

(c) any Investment by the Company in a Person, if as a result of such Investment: such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company;

(d) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale;

(e) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(f) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(g) Investments represented by or entered into in connection with Hedging Obligations;

(h) any Investment acquired by the Company on account of any claim against, or interest in, any other Person (i) acquired in good faith in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of such other Person or (ii) as a result of a bona fide foreclosure by the Company with respect to any claim against any other Person;

(i) repurchases of the Bonds or pari passu Indebtedness;

(j) any Investments in the Debt Service Reserve Fund and the Maintenance Reserve Fund;

 

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(k) payment of consolidated taxes pursuant to the Tax Sharing Agreement, and any other tax allocation agreements between the Company and EPC;

(l) receivables owing to the Company, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company deems reasonable under the circumstances; and

(m) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (m) that are at the time outstanding not in excess of the Asset Percentage.

“ Permitted Liens ” shall mean:

(a) Liens securing obligations under sale leaseback transactions permitted by Section 8.14 hereof, covering only the assets subject to such transaction;

(b) Liens in favor of the Company;

(c) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(d) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ liens, in each case, incurred in the ordinary course of business;

(e) survey exceptions, encumbrances, easements or reservations, including those for licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines, mineral reservations and rights and leases, zoning restrictions and other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that (i) are permitted under the terms of this Agreement, the Indenture, Sublease and the Biogas Agreement or (ii) do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Company;

(f) financing statements (including precautionary statements) filed in connection with a Capital Lease Obligation or an operating lease, in each case, not prohibited hereunder; provided that no such financing statement extends to, covers or refers to as collateral, any property or assets of a the Company, other than the property or assets which are subject to such Capital Lease Obligation or such operating lease;

(g) Liens arising out of or in connection with any judgment that does not constitute an Event of Default or in connection with any litigation or other legal proceeding as to which an appeal to contest or review is timely commenced in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP; provided that any right to levy, seizure, attachment, sequestration, foreclosure or garnishment of any property and assets of the Company thereof arising out of or in connection with any such Lien has been and continues to be enjoined or effectively stayed;

 

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(h) inchoate statutory Liens arising under ERISA;

(i) Liens (i) on cash and short-term investments (A) deposited by the Company or any of its Subsidiaries in margin accounts with or on behalf of futures contract brokers or paid over to other counterparties or (B) pledged or deposited as collateral to a contract counterparty or issuer of surety bonds by the Company or any of its Subsidiaries, in the case of clause (A) or (B), to secure obligations with respect to (x) contracts for commercial and trading activities in the ordinary course of business and contracts (including without limitation, physical delivery, option (whether cash or financial), exchange, swap and futures contracts) for the purchase, transmission, distribution, sale, lease or hedge of any energy-related commodity or service or (y) interest rate, commodity price, or currency rate management contracts or derivatives and (ii) encumbering assets other than accounts or receivables arising out of contracts or agreements relating to the generation, distribution or transmission of energy; provided that all such agreements or contracts are entered into in the ordinary course of business;

(j) Liens arising by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff or similar rights, contractual rights of setoff or netting arrangements entered into in the ordinary course of business and similar rights with respect to deposit accounts, commodity accounts and/or securities accounts;

(k) Liens arising under Section 9-333 of the Nebraska Uniform Commercial Code or similar statutes of states other than Nebraska;

(l) pledges and deposits to secure the payment of workers’ compensation, unemployment insurance, social security benefits or obligations under similar laws, or to secure the payment or performance of statutory or public obligations (including environmental, municipal and public utility commission obligations and requirements), reimbursement or indemnity obligations arising out of surety, performance, or other similar bonds, and other obligations of a like nature, in each case incurred in the ordinary course of business;

(m) Liens granted by a Person in favor of a commercial trading counterparty pursuant to a netting agreement, which Liens encumber rights under agreements that are subject to such netting agreement and which Liens secure such Person’s obligations to such counterparty under such netting agreement; provided, that any such agreements and netting agreements are entered into in the ordinary course of business; and provided, further, that the Liens are incurred in the ordinary course of business and when granted, do not secure obligations which are past due;

(n) Liens on proceeds from the issuance of Bonds and Liens on Indebtedness or any assets of the Company held by a trustee securing the Bonds;

 

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(o) Liens created in connection with the indemnity and contribution obligations in favor of underwriters or Bond purchasers in connection with the Bonds; and

(p) Liens incurred in the ordinary course of business of the Company securing obligations that in the aggregate at any one time outstanding do not exceed the Asset Percentage.

“ Permitted Refinancing Indebtedness ” shall mean any Indebtedness of the Company issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company; provided that:

(a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses, costs and fees and premiums incurred in connection therewith);

(b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(c) such Indebtedness is incurred by the Company as obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“ Person ” shall mean an individual, a corporation, a partnership, a joint venture, an association, a joint-stock company, a trust, an unincorporated organization, a limited liability company, a governmental body, a political subdivision, a municipal corporation, a public corporation or any other group or organization of individuals.

“ Pledge Agreement ” shall mean the Pledge Agreement dated as of June 1, 2008 among the Company, the Trustee and JBS Swift, including all amendments thereof or supplements thereto.

“ Principal Office ” is defined in the definitions of Trustee and Paying Agent herein.

“ Project ” shall mean the Facility, to the extent financed with proceeds of the Bonds, as further described on Exhibit A to this Agreement.

“ Project Costs ” shall mean costs incurred by the Issuer or the Company, whether before or after the issuance of the Bonds, and reimbursed not later than three years after the payment thereof, with respect to the acquisition, construction, improving and equipping of the 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

 

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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;

(b) to the extent authorized by the Act, costs of all other items related to the acquisition, construction, improving and equipping of the Project; and

(c) all Costs of Issuance.

“ Project Site ” shall mean the real estate identified in Exhibit A attached hereto on which the Project is situated, which real estate is owned by JBS Swift, leased by JBS Swift to the Company pursuant to the Site Lease and subleased by the Company to the Issuer pursuant to the Sublease, and any other interests in real property, leasehold interests, easements, licenses and rights in real property hereafter acquired by the Issuer for use in connection with the Project, less any interests in real property, easements, licenses, rights of way or similar rights and privileges as may be released from this Agreement pursuant to Section 8.09 or 8.10 hereof, or taken by the exercise of the power of eminent domain.

“ Rebate Fund ” shall mean the fund by that name created and established in Section 8.05 of the Indenture.

“ Regulations ” shall mean the Income Tax Regulations promulgated pursuant to the Code.

“ Rent Payment ” shall mean each payment required to pay amounts due and owing on the Bonds issued pursuant to this Agreement, as described and defined in Sections 6.02 and 6.04 hereof and as provided for in the Indenture, including the principal of, redemption premium, if any, and interest on such Bonds.

“ Responsible Officer ” shall mean an officer of the Trustee who customarily handles corporate trusts and is assigned to supervise the Indenture, and any other officer of the Trustee to whom a matter is referred because of his knowledge of and familiarity with the particular subject in question.

“ SEC ” shall mean the United States Securities and Exchange Commission.

“ Site Lease ” shall mean the Lease Agreement dated as of September 1, 2006 between JBS Swift, as lessor, and the Company, as lessee, including all amendments thereof and supplements thereto.

 

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“ S&P ” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto maintaining a rating on the Bonds.

“ State ” shall mean the State of Nebraska.

“ Stated Maturity ” shall mean, with respect to any installment of interest or principal on any Indebtedness, the date on which the payment of interest or principal is scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“ Sublease ” shall mean the Sublease Agreement dated as of June 1, 2008 between the Company, as sublessor, and the Issuer, as sublessee, including all amendments thereof and supplements thereto.

“ Subsidiary ” shall mean, with respect to any specified Person:

(a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“ Support Agreement ” shall mean the Support Agreement dated July 24, 2008 from EPC to the Company, including all amendments thereof and supplements thereto.

“ Tangible Assets ” shall mean, as of any date the assets of the Company determined in accordance with GAAP.

“ Tax Regulatory Agreement ” shall mean the Tax Regulatory Agreement dated as of June 1, 2008 between the Issuer and the Company, including all amendments thereof or supplements thereto.

“ Tax Sharing Agreement ” shall mean the Tax Sharing Agreement dated July 24, 2008 between the Company and EPC, including all amendments thereof and supplements thereto.

“ Trustee ” shall mean Wells Fargo Bank, National Association, and any successor trustee or co-trustee serving as such under the Indenture. “Principal Office” of the Trustee shall mean the business address designated in writing by the Trustee to the Issuer and the Company as its principal office for its duties hereunder, which initially shall be as specified in Section 11.07 hereof.

 

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“ Unassigned Rights ” shall mean the rights of the Issuer under Sections 6.02(b), 6.08, 7.03 and 8.03(a) of this Agreement and the right to receive notices hereunder.

“ Underwriter ” shall mean the initial underwriter of the Bonds, B.C. Ziegler and Company d/b/a Ziegler Capital Markets.

“ Weighted Average Life to Maturity ” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(b) the then outstanding principal amount of such Indebtedness.

Section 1.02. Article and Section Headings . The headings or titles of the several Articles and Sections of this Agreement, and the Table of Contents appended hereto, are solely for convenience of reference and shall not affect the meaning or construction of the provisions hereof.

Section 1.03. Interpretation . The singular form of any word used herein shall include the plural, and vice versa, if applicable. The use of a word of any gender shall include all genders, if applicable. This Agreement and all of the terms and provisions hereof shall be construed so as to effectuate the purposes contemplated hereby and to sustain the validity hereof. All references to any Person or entity defined in Section 1.01 shall be deemed to include any Person or entity succeeding to the rights, duties and obligations of such Person or entity. Unless otherwise specified herein, all references to specific times shall be deemed to refer to New York time.

ARTICLE II

REPRESENTATIONS

Section 2.01. Representations by Issuer . The Issuer makes the following representations as the basis for the undertakings on its part herein contained:

(a) The Issuer is a political subdivision duly organized and existing under the laws of the State. Under the provisions of the Act and the Constitution of the State, the Issuer is authorized to enter into the transactions contemplated by this Agreement and the Indenture and to carry out its obligations hereunder and thereunder. The Issuer has been duly authorized to execute and deliver this Agreement and the Indenture.

(b) The Project is located on the Project Site. The Issuer has a leasehold interest in the Project site and has ownership of the Project, proposes to provide funds for the construction of the Project and has by this Agreement leased the Project to the Company as hereinafter provided. It is understood by the parties hereto that the Issuer shall have all right, title and interest in the Project until purchased by the Company as provided in this Agreement.

 

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(c) Heretofore, the Issuer and the Company did agree that the Issuer would finance the Project Costs. The Company has estimated that the Project Costs would not be less than $7,000,000.

(d) The Issuer now agrees to provide such financing to pay the costs of acquiring, constructing, improving and equipping the Project by the issuance of the Bonds on the date of delivery of the Bonds to the Underwriter.

(e) The execution and delivery of this Agreement, the Sublease, the Indenture and the Tax Regulatory Agreement by the Issuer do not, and consummation of the transactions contemplated hereby and thereby and fulfillment of the terms hereof or thereof by the Issuer will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is now a party or by which it is now bound.

(f) The Issuer has not and will not pledge the amounts derived from this Agreement other than to secure the Bonds and will not mortgage or encumber the Project other than as provided herein and in the Indenture.

(g) Nothing in this Agreement shall be construed to require the Issuer to operate the Project other than as lessor.

(h) A private sale of the Bonds would be advantageous to the Issuer.

Section 2.02. Representations by Company . The Company makes the following representations as the basis for the undertakings on its part herein contained:

(a) The Company (i) is a limited liability company duly organized and in good standing in the State of Nebraska, (ii) is not in violation of any provision of its operating agreement, (iii) has full power to own its properties and conduct its business, (iv) has full legal right, power and authority to enter into this Agreement and consummate, or cause to be consummated, all transactions contemplated by this Agreement and (v) by proper action has duly authorized the execution and delivery of the Company Agreements.

(b) Neither the execution and delivery of the Company Agreements, the consummation of the transactions contemplated thereby nor the fulfillment of or compliance with the terms and conditions of the Company Agreements conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Company is now a party or by which the Company is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Company contrary to the terms of any instrument or agreement.

(c) Except as may be disclosed in the Limited Offering Memorandum, there is no litigation or proceeding pending or, to the knowledge of the Company, threatened against the Company having a material adverse effect on the right of the Company to execute the Company Agreements, or, in its capacity as the Guarantor, the Guaranty, or the ability of the Company to make the payments required hereunder or under the Guaranty or to otherwise comply with the Company’s obligations contained in the Company Agreements or, in its capacity as the Guarantor, the Guaranty.

 

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(d) The Project is of the type authorized and permitted by the Act, and the estimated Project Costs are not less than $7,000,000.

(e) The proceeds of the Bonds will be used only for payment of Project Costs.

(f) The Company will operate the Project, and intends to operate the Project, or cause the Project to be operated, as a “project,” within the meaning of the Act, until the date on which all of the Bonds have been fully paid and are no longer outstanding.

(g) No changes shall be made in the Project and no actions will be taken by the Company which shall in any way affect the qualification of the Project as a “project” under the Act or impair the exclusion of interest on any of the Bonds from gross income for federal income tax purposes.

(h) Except as may be disclosed in the Limited Offering Memorandum, the Project, as designed, complies with all presently applicable building and zoning ordinances.

(i) The Project will not be moved during the Lease Term.

(j) The Company has irrevocably assigned to the Trustee all payments to be made to the account of the Company during the Lease Term under and pursuant to the Biogas Agreement for deposit into the Lockbox Account of the Bond Fund and application, in accordance with the Indenture, to the payment as and when due and payable of the Rent Payments.

ARTICLE III

DEMISING CLAUSE

Section 3.01. Acquisition . The Company hereby transfers or agrees to cause to be transferred, against payment therefor in accordance with Section 4.03(b) hereof, to the Issuer the Project as set forth or to be set forth in Exhibit A heretofore acquired or to be acquired on behalf of the Issuer, by bill of sale and special warranty deed free and clear of all liens, encumbrances, claims and servitudes except Permitted Encumbrances.

Section 3.02. Lease of Project . The Issuer demises and leases to the Company, and the Company leases from the Issuer, the Facility, including the Project, subject only to Permitted Encumbrances, in accordance with the provisions of this Agreement, to have and to hold for the Lease Term.

 

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ARTICLE IV

THE PROJECT

Section 4.01. Approvals and Permits . The Company agrees to obtain, or cause to be obtained, all permits and approvals necessary with respect to the acquisition, construction, equipping and furnishing of the Project.

Section 4.02. Acquisition and Construction .

(a) The Project shall be acquired, constructed, improved and equipped with all reasonable dispatch by the Company and shall belong to, and be the property of, the Issuer until purchased by the Company, provided that the Company is intended to be the owner of the Project for federal income tax purposes. The Company will use its best efforts to cause such acquisition, construction, improving and equipping to be completed as soon as reasonably commercially practicable, delays incident to strikes, riots, acts of God or the public enemy, or other causes beyond the reasonable control of the Company only excepted; but if for any reason there should be delays in such acquisition, construction, improving and equipping, there shall be no diminution in or postponement of the Rent Payments to be made by the Company hereunder, and no resulting liability on the part of the Issuer. The Company agrees, however, to use its best efforts to remedy with all commercially reasonable dispatch the cause or causes preventing it from carrying out its agreements, provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is, in the judgment of the Company, unfavorable to the Company.

(b) The Company shall acquire, construct, improve and equip the Project or cause the Project to be acquired, constructed, improved and equipped in the manner provided in the Act and this Agreement and in accordance with the Plans and Specifications on file and available to the Issuer at the Facility during the construction period (subject to the restrictions of subsection (c) below) and the Trustee shall have no responsibility or liability whatsoever with respect to the Project and the acquisition, construction, improving or equipping thereof. The Company may amend, or cause to be amended, such Plans and Specifications; provided, however, that such Plans and Specifications shall not be amended in any material respect except as provided in subsection (d) below. It is agreed and understood that the Company will cause to be entered into and executed all agreements and contracts necessary to assure and accomplish the actual acquisition, construction, improving, equipping and furnishing of the Project (and that the Issuer shall not execute any such agreements or contracts) and that the Company will cause to be carried out, paid, supervised and enforced all such agreements and contracts, and will cause to be provided such insurance on and in connection with the acquisition, construction, improving, equipping and furnishing of the Project as it deems necessary or advisable or as is required by law and this Agreement in accordance with its customary insurance practices, which may include self-insurance. The Company shall pay or cause to be paid, from proceeds from the sale and delivery of the Bonds

 

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provided to it pursuant to Section 5.02 of this Agreement, and from any available income or earnings derived therefrom, and if such proceeds or income or earnings derived therefrom are insufficient, from other funds of the Company or available to the Company to the extent necessary, all Project Costs. The Issuer shall provide the proceeds from the sale of the Bonds to the Company to be used by the Company to pay all or part of the Project Costs, in accordance with procedures established in Section 4.03 hereof for reimbursing the Company for paying all or any part of such Project Costs under the aforesaid agreements and contracts for the acquisition, construction, improving, equipping and furnishing of the Project prior to the Company’s receipt of the Bond proceeds as hereinafter provided. It is specifically provided, however, that none of the proceeds from the sale of the Bonds will be used to reimburse the Company for, or to pay (and the Company hereby covenants and agrees not to request reimbursement of or payment for) any part of the Project Costs if such use or payment would result in a violation of any of the Company’s representations contained in Section 2.02 or 8.04 hereof or the Tax Regulatory Agreement.

(c) The Company hereby grants to the Issuer, its employees and agents, at all reasonable times during normal business hours and upon reasonable notice, such necessary and reasonable rights of ingress and egress to the Project as are available to the Company and required in connection with the acquisition, construction, improving and equipping of the Project and the Company agrees that it will cooperate with the Issuer, its employees and agents, so that such Project shall be acquired, constructed and improved as provided in this Agreement. The Issuer, its employees and agents shall not unnecessarily disrupt or interfere with the operation of the Project and shall cooperate with and observe the reasonable regulations of the Company so as to avoid any unnecessary disruption or interference with said operation. Unless the Company shall be in default hereunder or under the Indenture, the Company may require that the rights of access hereby reserved to the Issuer, its employees and agents may be exercised only after such employees or agents have executed release of liability agreements in the form then used by the Company. The Issuer recognizes that the drawings, designs, specifications, material lists and other engineering documents and information contained in the Plans and Specifications or otherwise provided or made available to the Issuer in connection with the Project are proprietary to, and are the property of, the Company and/or its affiliates. The Issuer agrees to retain in confidence and not to disclose to others (except as required by applicable law) or to use or permit the use for the benefit of or by others, without the prior written consent of the Company in each such instance, any such drawings, designs, specifications, material lists and other engineering documents and information contained in the Plans and Specifications or otherwise provided or made available to the Issuer. Nothing in this Section or in any other provision of this Agreement shall be construed to entitle the Issuer or the Trustee to any information or inspection involving the confidential know-how of the Company.

(d) If the Plans and Specifications are materially amended at any time prior to the completion of the Project, the Company shall (i) deliver to the Issuer a certificate of the Authorized Company Representative stating that the Project constructed pursuant to the Plans and Specifications, as amended, will be “solid waste disposal facilities” within the meaning of Section 142(a)(6) of the Code or any substantially similar successor provision and (ii) furnish the Issuer with a Favorable Opinion with respect to such proposed amendment and the expenditure of moneys from the Construction Fund to pay the Project Costs as shown on the Plans and Specifications as so amended.

 

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(e) If, for any reason, the proceeds from the sale of the Bonds are not sufficient to pay all the Project Costs, the Company shall complete or cause to be completed the Project and pay or cause to be paid all Project Costs which are not or cannot be paid or reimbursed from proceeds of the Bonds from its own funds or other funds available to the Company or its affiliates, but it shall not be entitled to reimbursement from the Issuer therefor, or to any diminution in or postponement of any payments required to be made by the Company hereunder.

Section 4.03. Construct