ADES » Topics » SECURITY

These excerpts taken from the ADES 10-Q filed Nov 7, 2008.

SECTION 25. SECURITY

25.1 Seller Guarantee. Prior to or concurrently with the execution and delivery of this Agreement, Seller shall procure a parent company guarantee from ADA-ES, Inc. guaranteeing Seller’s performance hereunder in a form as specified in Exhibit 6 hereto. This parent guarantee (a) shall be replaced by a $1 million letter of credit in the form set forth in Exhibit 7A1 to cover the early termination liquidated damages set forth in Exhibit 9 no later than January 15, 2009 and (b) shall expire upon Financial Close and the posting of the Seller’s Letter of Credit as set forth below in Section 25.2.

SECURITY

14.1 Guarantees. Owner shall furnish to Contractor the Owner Guaranty on the Commencement Date. Contractor shall furnish to Owner the Contractor Guaranty on the Commencement Date. The Owner Guaranty shall remain in effect until the earlier of (a) Financial Closing and (b) the date on which Owner has fully performed all of its obligations to Contractor under this Agreement. The Contractor Guaranty shall remain in effect until Contractor has fully performed all of its obligations to Owner under this Agreement.


This excerpt taken from the ADES 10-K filed Mar 14, 2008.

SECURITY

14.1 Guarantees. Owner shall furnish to Contractor the Owner Guaranty on the Effective Date. Contractor shall furnish to Owner the Contractor Guaranty, a Performance Bond in the principal amount equal to the total Phase 2 Compensation (“Contractor Security”) prior to the issuance of the Phase 2 Notice to Proceed. The Owner Guaranty shall remain in effect until Owner has fully performed all of its obligations to Contractor under this Agreement. The Contractor Security shall remain in effect until Contractor has fully performed all of its obligations to Owner under this Agreement.

14.1.1 The Contractor’s Performance Bond shall be in the face amount of                  Dollars ($        ) and the Contractor’s Payment Bond shall be in the face amount of                  Dollars ($        ). Contractor shall maintain Performance Bonds and Payment Bonds for each of its Subcontractors in the amount of that portion of Subcontractor’s work that is are attributable to the Contractor’s entire scope of Work.

14.1.2 The Payment and Performance Bonds of the Contractor and each such Subcontractor shall also meet the following requirements:

a. Comply with Applicable Legal Requirements,

b. Be executed to and for the benefit of the Owner and the Contractor as co-obligees with the Owner having the exclusive first right to all such benefits over that of the Contractor. The Contractor, at its sole cost and expense, may proceed against Subcontractors’ Payment and Performance Bonds without being required to secure the Owner’s consent but shall deposit all proceeds it receives thereof in the appropriate fund account established to reflect the Owner’s exclusive first rights and shall notify the Owner of any actions taken against the issuing sureties. The Owner shall give Notice to the Contractor of the fund into which such proceeds shall be deposited.

c. Secure such entity’s performance of its scope of Work in the time and manner prescribed in, as applicable, this Agreement or the Subcontractor’s or Subcontractors’ contract(s) with the Contractor, and

d. be and provide that it is unconditionally assignable to the Owner and (iv) be maintained throughout the period of Contractor’s performance of its obligations under the Contract, including any warranty periods.

e. be substantially in the form attached hereto as Appendix I-9.

 

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14.1.3 No Subcontractor shall perform any Work unless and until its Payment and Performance Bonds are filed with the Contractor, together with an executed copy to the Owner.

14.1.4 The Contractor’s Payment and Performance Bonds shall remain effective until the Final Completion Date unless this Agreement is terminated earlier in accordance with its terms. In the event that any Payment or Performance Bond will expire pursuant to its terms prior to the Final Completion Date, it must be renewed no later than 90 days prior to its scheduled expiration. All renewals of the Payment and Performance Bonds shall be filed with Contractor, together with an executed copy to the Owner. The Contractor shall cause the applicable Subcontractor(s) to maintain its/their Payment and Performance Bonds until the completion of each such applicable Subcontractor’s obligations, including any warranty period under their contracts with the Contractor.

14.1.5 The Payment and Performance Bonds shall be underwritten by a surety authorized to do business in the State of Louisiana and otherwise acceptable to the Owner; provided, however, that the surety shall be rated as “A” or better by S&P or rated as “A3” or better by Moody’s and have an A.M. Best rating of “A” or better and Class XII or higher as to financial size category.

14.1.6 If the surety for a bond is declared bankrupt, becomes insolvent, has its right to do business in the State of Louisiana terminated or it ceases to meet the requirements described above, the Contractor and, as applicable, the Subcontractor, shall, within 30 Days thereafter, substitute other Payment and Performance Bonds, subject to Owner approval that such substitute bonds satisfy the security requirements above.

14.1.7 The Payment and Performance Bonds shall expressly state that it includes the obligation of Contractor to pay delay damages to Owner in the event such damages become due and owing under the terms of this Agreement. All Payments and Performance Bonds required to be secured and maintained under this Section 14.2 shall specify that such bonds shall be subject to and governed by Louisiana law.

 

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