Member Interest Pledge
Agreement
Member Interest
Pledge Agreement (“Pledge Agreement”) dated as of
January 1, 2009 between Renegy Holdings, Inc., a Delaware
corporation (the “Pledgor”), and AZ Biomass LLC, a
Delaware limited liability company
(“Pledgee”).
A. Pledgor
and Pledgee have entered into that certain Member Interest Purchase
Agreement dated January 1, 2009 (the “Purchase
Agreement”), pursuant to which Pledgee has purchased all the
outstanding Class A membership interests of Snowflake White
Mountain Power, LLC, an Arizona limited liability company
(“Snowflake” or the “Company”) and Pledgor
remains the owner of all the outstanding Class B membership
interests of Snowflake, which membership interests (the
“Member Interest”) have the rights, preferences and
privileges set forth in the Amended and Restated Limited Liability
Company Agreement of the Company dated as of January 1, 2009
(the “Operating Agreement”).
B. The
Pledgor may have certain payment obligations to the Pledgee under
the terms of Section 11.01 of the Purchase Agreement. As security
for due and punctual performance of all such payment obligations to
Pledgee under the terms of the Purchase Agreement, the Pledgor has
agreed to pledge the Member Interest (and all of Pledgor’s
rights, privileges, authority and power thereunder as a member of
the Company) to the Pledgee pursuant to the terms of this Pledge
Agreement.
C. Pledgee is
entering into the Purchase Agreement in reliance on the execution
and delivery by Pledgor of this Pledge Agreement.
NOW
THEREFORE, in consideration of the following premises and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. The
Pledgor hereby pledges and grants to the Pledgee a continuing lien
on and a perfected security interest in the Member Interest (and
all of Pledgor’s rights, privileges, authority and power as a
member of the Company) as security for the due and punctual
performance of all its payment obligations to Pledgee under the
terms of Section 11.01 of the Purchase Agreement, including
any extensions, modifications, substitutions, amendments and
renewals thereof, which lien and security interest shall be
subordinate, in all respects, to the lien and security interest in
the Member Interest granted to CoBank, ACB, as Administrative Agent
and Collateral Agent (“CoBank”) pursuant to that
certain Pledge Agreement dated as of October 1, 2007 between
Pledgor and CoBank (as amended, the “RH CoBank
Pledge”), in accordance with the terms of that certain
Subordination Agreement dated as of January 1, 2009 among
Pledgor, Pledgee and CoBank (the “Subordination
Agreement”).
2. The
Pledgee hereby accepts the Pledgor’s pledge of the Member
Interest as security for the due and punctual performance of all
Pledgor’s payment obligations to Pledgee under the terms of
Section 11.01 of the Purchase Agreement.
3. An
“Event of Default” shall occur hereunder if the Pledgor
fails to perform any payment obligations of the Pledgor to the
Pledgee when required under Section 11.01 of the Purchase
Agreement, and such failure continues for 10 days after the
Pledgee delivers written notice of such failure to the Pledgor.
Unless and until there occurs an Event of Default that is
continuing, the Pledgor is entitled with respect to the Member
Interest:
(a) to
(i) exercise any and all voting rights and powers relating or
pertaining to the Member Interest at meetings of members of the
Company, (ii) exercise any and all consensual rights and
powers in respect of the Member Interest and (iii) consent to,
ratify or waive notice of meetings of the members of the Company or
otherwise take any action permitted by a member of the Company;
and
(b) to
receive, collect, have paid over and retain all distributions to
which it is entitled under the terms of the Operating Agreement (as
then in effect), except (i) distributions paid in the form of
additional membership interests (or similar securities) in the
Company (or any subsidiary or Affiliate thereof), including without
limitation any such interests issued in a Split,
(ii) distributions in property other than cash,
(iii) proceeds from a sale by or on behalf of Pledgor of the
Member Interest (or any portion thereof) and (iv) liquidation
dividends (either partial or complete) (collectively,
“Excepted Dividends”), and whether regular, special or
made in connection with a partial or total liquidation of the
Company, and whether attributable to profits, the return of any
contribution or investment or otherwise attributable to the Member
Interest. All Excepted Dividends shall constitute additional
security for the Pledgee’s performance of its payment
obligations to Pledgee under Section 11.01 of the Purchase
Agreement and shall be pledged to Pledgee by the Pledgor. The
Pledgor shall have all of the same powers and rights with respect
to all Excepted Dividends as it has in respect of the Member
Interest and such Excepted Dividends shall be considered part of
the Member Interest pledged hereunder. As used in this Pledge
Agreement, the term “Split” means any transfer
(including, without limitation, payment, issuance or other
awarding) of any securities, property or rights to any person or
entity by virtue or in respect of its ownership of Member Interests
and shall include, without limitation, (i) payment of
dividends or other distributions in the form of units, debt
instruments or other property the value of which depends materially
on the future results of the Company’s operations,
(ii) membership interests splits or reverse splits,
(iii) unit exchanges and (iv) transfers, payments,
issuances and awards resulting from any consolidation,
reorganization, recapitalization, merger or combination.
4. During the
term of this Pledge Agreement, (a) if any distributions in the
form of equity ownership interests in the Company,
reclassification, readjustment, or other change is declared or made
in the capital structure of the Company, or any subscription,
warrant or other option is issued with respect to the Member
Interest (including without limitation any equity interest or right
issued in connection with a
2
Split), all
new, substituted, or additional interests or other securities
issued by reason of this change or option shall be considered as
part of the Member Interest; and (b) Pledgor shall not
(i) subject the Member Interest (or any portion thereof) to
any lien, security interest, encumbrance, pledge, charge or
preferential arrangement, other than any lien that is herein
created or otherwise permitted by this Section 4 or
(ii) transfer, assign or grant any other person or entity any
right or interest in the Member Interest (or any portion thereof),
including any option therein (other than as contemplated by this
Section 4). Pledgor represents that it has the full right,
power and authority to pledge the Member Interest to Pledgee
hereunder and that it is the sole legal, record and beneficial
owner of the Member Interest free and clear of any lien, right or
option ( collectively, “Liens”) other than the security
interest granted herein, Liens under the Operating Agreement in
favor of Pledgee and arising by, through or under Pledgor, and
Liens existing on or prior to the date hereof, including without
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