Support Agreement
This Support Agreement (the "Agreement") is made as of the 29th day of
November, 1994, by and between GSF Energy Inc., a Delaware corporation
("GSF"), and Ridgewood Electric Power Trust I, a Delaware business trust
("Ridgewood").
BACKGROUND
[Capitalized terms used herein are defined, unless otherwise
indicated, in Section 1 of this Agreement]
WHEREAS, GSF and Ridgewood are limited partners in the Partnership;
and
WHEREAS, the Partnership will contract with GSF for the supply of fuel
to the Partnership, and the Partnership will acquire business assets of
GSF's and succeed to a portion of GSF's business; and
WHEREAS, as a condition to Ridgewood's becoming a limited partner in
the Partnership, Ridgewood is requiring GSF to indemnify Ridgewood against
certain environmental and fuel supply matters, all as more fully set forth
in this Agreement; and
WHEREAS, GSF anticipates deriving certain economic benefits from
Ridgewood's becoming a limited partner in the Partnership and is willing to
undertake such indemnification obligations.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. DEFINED TERMS. The following capitalized terms shall have the
following meanings when used in this Agreement.
"Contamination" shall mean any Hazardous Material that actually or
allegedly as of the date hereof is, or at any time prior to the date hereof
was, located on or at the Facility Site or emanates or has emanated from
the Facility Site, and any Hazardous Material that actually or allegedly
has migrated or migrates onto the Facility Site from the Landfill either
before or after the date hereof; provided however, that "Contamination"
shall not include any Hazardous Material that is located on or at the
Facility Site or has emanated or emanates from the Facility Site (including
without limitation any Hazardous Material that actually or allegedly has
migrated or migrates onto the Facility Site from the Landfill), to the
extent resulting from either (a) an act by Ridgewood, its successors or
assigns, or (b) the operation of the Facility after the date of the
partnership's formation, other than the operation of the Selexol Equipment
(as more fully described on Schedule A to the Bill of Sale dated even date
herewith between GSF and the Partnership).
"Distribution Payment" shall have the meaning given such term in
Section 2(a)(ii) hereof.
"Environmental Losses" shall mean any and all damages, fines,
penalties, liabilities and expenses (including reasonable attorneys' fees
and investigation and court costs) arising out of claims, suits, awards of
damages and orders that arise or are alleged to have arisen from any
Contamination; provided however, that the term "Environmental Losses" shall
not include, or be deemed to include, any damage, fine, penalty, liability
or expense arising out of any claim, suit, award of damage or order brought
against Ridgewood or any affiliate of Ridgewood by one or more investors in
Ridgewood or its affiliates, in its or their capacity as such, including
without limitation any claims or suits involving a violation of any state
or federal securities law.
"Facility" shall mean the electric generating facility, fired by
landfill or other gas, and related equipment, located on the Facility Site
and owned by the Partnership.
"Facility Site" shall mean have the meaning given such term in the Gas
Supply contract.
"Fiscal Year" shall have the meaning given such term in the
Partnership Agreement.
"Gas Supply Contract" shall mean the Gas Sale and Purchase Agreement
dated even date herewith between the Gas Supplier and the Partnership,
pursuant to which the Partnership purchases landfill gas from the Gas
Supplier to fuel the Facility.
"Gas Supplier" shall mean GSF Energy Inc., in its capacity as supplier
of landfill gas under the Gas Supply Contract and not in its capacity as a
partner in the Partnership.
"GSF Obligations" shall have the meaning given such term in Section 2
hereof.
"Hazardous Material" shall mean any substance or waste that is
regulated by any federal, state or local law as a substance or waste that
may present a risk of endangering human health or safety or of degrading
the environment, and shall include, but is not limited to, the following
materials, including those specified in the regulations adopted pursuant to
the following laws:
"Hazardous substance," as defined in Section 9601 of title 42
of the United States Code, and in Section 25281 of the
California Health and Safety Code, including, but not limited
to, petroleum products.
"Waste," as defined in Subdivision (d) of Section 13050 of the
California Water Code, that is discharged or deposited where it
is, or probably will be, discharged into the waters of the
state and which creates or threatens to create, a condition of
pollution or nuisance, as specified in Section 13304 of the
California Water Code.
"Indemnification Payment" shall have the meaning given such term in
Section 2(a)(i) hereof.
"Landfill" shall mean the municipal solid waste landfill located in
Orange County, California, and referred to as the Olinda/Olinda Alpha
Sanitary Landfill, as described more fully in Appendix B to the Gas Supply
Contract.
"Maximum Liability Cap" shall have the meaning given such term in the
Gas Supply Contract.
"Net Cash Flow" shall have the meaning given such term in the
Partnership Agreement.
"Operating Agreement" shall mean the Operating, Maintenance and
Administrative Services Agreement dated even date herewith, between the
Partnership and the Operator, pursuant to which the Operator operates,
maintains and provides administrative services for the Facility, all for
the benefit of the Partnership.
"Operator" shall mean GSF Energy Inc., in its capacity as operator
under the Operating Agreement and not in its capacity as partner in the
Partnership.
"Partnership" shall mean Brea Power Partners, L.P., a Delaware limited
partnership.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership dated 12 October 1994, among Ridgewood, GSF and Brea Power (I),
Inc., pursuant to which the Partnership was formed and is governed.
"Ridgewood Interest" shall mean the interests in the Partnership owned
by Ridgewood.
"Ridgewood Interest Purchase Price" shall have the meaning given such
term in Section 3(b) hereof.
2. OBLIGATIONS OF GSF.
(a) GSF hereby undertakes the following obligations with respect to
Ridgewood (collectively, the "GSF Obligations"):
(i) GSF shall indemnify, defend and hold Ridgewood harmless from and
against any Environmental Losses asserted or levied against Ridgewood
in its capacity as a limited partner of the Partnership (the
"Indemnification Payment");
(ii) If the Partnership suffers any Environmental Losses for a
Fiscal Year, GSF shall, subject to Section 2(c) hereof, make payments
to Ridgewood calculated in accordance with Section 2(b) hereof (the
"Distribution Payment"); and
(iii) GSF shall purchase the Ridgewood Interest under the scenarios
set forth at, and in accordance with the provisions of, Section 3
hereof.
(b) The Distribution Payment shall equal the following:
(i) The amount that would have been distributed to Ridgewood,
calculated for the fourth quarter of the Fiscal Year, in accordance
with Article V of the Partnership Agreement, if Net Cash Flow during
the fourth quarter of such Fiscal Year had been increased by the
amount of Environmental Losses suffered by the Partnership during
such Fiscal Year; less
(ii) the amount actually distributed to Ridgewood, calculated for
the fourth quarter of the Fiscal Year, in accordance with Article V
of the Partnership Agreement.
The Distribution Payment shall be calculated annually, promptly after the
close of the Partnership's Fiscal Year (as determined in accordance with
the Partnership Agreement), and shall be paid in full within thirty (30)
calendar days of such calculation.
(c) If Environmental Losses, in the aggregate, either cumulative from time
to time or at one time, asserted or levied against the Partnership from
equals or exceeds Four Million Dollars ($4,000,000), GSF shall have the
option to terminate its obligation to pay any further Distribution Payment.
GSF shall exercise such option by giving written notice to Ridgewood.
3. RIDGEWOOD PUT OPTION.
(a) Ridgewood may require GSF to purchase the Ridgewood Interest in the
following situations, for the Ridgewood Interest Purchase Price calculated
in accordance with Section 3(b) hereof:
(i) GSF has notified Ridgewood of its election to terminate its
Distribution Payment obligation in accordance with Section 2(c)
hereof;
(ii) The Partnership has terminated the Gas Supply Contract in
accordance with Section 10.03 thereof; or
(iii) The Gas Supplier has fully expended the Maximum Liability Cap
(as such Cap may have been increased in accordance with Section 10.04
of the Gas Supply Contract); or
(iv) The Gas Supplier has terminated the Gas Supply Contract in
accordance with Section 10.05 thereof and the Partnership is unable
to secure an adequate supply of landfill or other gas for use by the
Facility on terms substantially similar to the material terms of the
Gas Supply Contract.
Ridgewood's option must be exercised within sixty (60) calendar days of
notice to Ridgewood of the occurrence of the event triggering such option
right, which notice shall expressly state that an even triggering such
option right has occurred and that Ridgewood must exercise its right within
sixty (60) days, after which time such option, if unexercised, shall
expire.
(b) The purchase price for the Ridgewood Interest (the "Ridgewood Interest
Purchase Price") shall be an amount such that the sum of the discounted
present values, discounted to the date of
the Partnership's formation, of the following three amounts equals Three
Million One Hundred Thousand Dollars ($3,100,000), which amount shall, once
calculated, be adjusted to reflect any reductions in Ridgewood's interest
in Partnership distributions subsequent to the formation of the Partnership
to arrive at the final Ridgewood Interest Purchase Price:
(i) The Ridgewood Interest Purchase Price; and
(ii) Distributions made to Ridgewood (including its successors and
assigns) in accordance with Article V of the Partnership Agreement;
and
(iii) Distribution Payments made to Ridgewood, if any.
For purposes of calculating the Ridgewood Interest Purchase Price, the
applicable discount rate shall equal 1.17% per month, and each cash flow
shall be deemed to have occurred at the end of the month in which it was
received.
4. GSF CALL OPTION.
(a) GSF may require Ridgewood to sell the Ridgewood Interest to GSF in the
following situations, for a purchase price calculated in accordance with
Paragraph (b) of this Section 4:
(i) The Fuel Contract is terminated; or
(ii) The Power Contract is terminated.
GSF's option must be exercised within sixty (60) calendar days of the
occurrence of the event triggering such option right, after which time such
option, if unexercised, shall expire.
(b) If GSF exercises its right to purchase the Ridgewood Interest, it
shall pay Ridgewood a purchase price equal to the greater of (i) the fair
market value, on the date of transfer, of the Ridgewood Interest or (ii)
the Ridgewood Interest Purchase Price, as calculated in accordance with
Section 3(b) hereof.
5. TERM. This Agreement shall commence as of the date set forth above
and shall continue in full force and effect until such time as Ridgewood
(or any successor or assign thereof) no longer owns the Ridgewood Interest,
at which time this Agreement shall terminate. Upon such termination, all
obligations of GSF hereunder not yet due and owing shall cease and be of no
further force and effect, except for any indemnification obligation, which
shall continue in full force and effect.
6. NOTICE OF CLAIMS. The provisions of Section 12.4 of the Operating
Agreement, "Obligations of the Indemnitor and Indemnitee," are hereby
incorporated into this Agreement as if set forth in full herein, and shall
govern all aspects of Ridgewood's assertion of a claim for indemnification
hereunder.
7. NOTICES. Any notice, demand, request or other communication given
hereunder shall be deemed sufficient if in writing and delivered personally
against receipt or by private carrier or registered or certified mail,
return receipt requested, postage prepaid, or telecopied, delivered to the
addresses or telecopy numbers set forth below or such other address or
telecopy numbers as shall be designated by notice given in accordance with
this Section 7. Any notice given pursuant to this Section 7 shall be
effective (i) if given by U.S. postal service, upon the fifth (5th)
business day after posting and (ii) if given by overnight or personal
courier service or telecopied, upon the business day immediately following
posting or telecopying.
To GSF: GSF Energy Inc.
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
Attention: Corporate Secretary
Telecopy: (610) 481-5765
Copy to: Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
Attention: Vice President and General Manager,
Environmental and Energy Systems
Telecopy: (610) 481-5084
To Ridgewood: Ridgewood Electric Power Trust I
c/o Ridgewood Power Corporation
947 Linwood Avenue
Linwood, New Jersey 07450
Attention: President
Telecopy: (201) 447-0474
8. ASSIGNMENT. This Agreement may not be assigned by either party
hereto without the prior written consent of the other, which consent may be
withheld in such party's sole discretion; provided however, that
notwithstanding the foregoing, Ridgewood shall have the right to assign its
right, title and interest hereunder for collateral security purposes in
connection with debt financing without the consent of GSF. Ridgewood is
the sole beneficiary of this Agreement, it being expressly understood that
no third-party beneficiary rights are or shall be deemed to be created
hereby.
9. SEVERABILITY. If any provision of this Agreement is held for any
reason to be invalid or unenforceable, the invalidity or unenforceability
of such provision shall not affect any of the remaining provisions hereof,
and this Agreement shall be enforced as if such invalid and unenforceable
provision had not been contained herein.
10. HEADINGS. The Section headings contained in this Agreement are for
convenience and ease of reference only and in no way define, describe,
extend or limit the scope or intent of this Agreement or of any provision
hereof.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.
12. AMENDMENT. No amendment, alteration, modification or waiver of any
terms or provisions of this Agreement shall in any event be effective
unless the same shall be in writing and signed by each of the parties
hereto.
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws (but not the law of conflict of laws) of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Support
Agreement to be executed as of the day and year first above written.
GSF ENERGY INC.
By: /s/ Wayne A. Hinman
Name: Wayne A. Hinman
Title: President
RIDGEWOOD ELECTRIC POWER TRUST I,
by Ridgewood Power Corporation, its managing
shareholder
By: /s/ Robert E. Swanson
Name: Robert E. Swanson
Title: President