CONSENT AND SECOND OMNIBUS AMENDMENT
Exhibit 10.24
CONSENT AND SECOND OMNIBUS AMENDMENT
This CONSENT AND SECOND OMNIBUS AMENDMENT (the “Amendment”), dated as of August 27, 2025, is executed by Natixis, New York Branch, in its capacity as the administrative agent for the Lenders (as defined below) (together with its successors, designees and assigns in such capacity, “Administrative Agent”), Natixis, New York Branch, in its capacity as the collateral agent for the Secured Parties (together with its successors, designees and assigns in such capacity, “Collateral Agent”), MN8 DevCo 3 LLC, a Delaware limited liability company (the “Devco Borrower”), MN8 FMG Class B LLC, a Delaware limited liability company (the “Opco Borrower 1”), MN8 Bleeker 2 LLC, a Delaware limited liability company, (the “Opco Borrower 2”, and together with the Devco Borrower and the Opco Borrower 1, the “Borrowers”), American Beech Solar LLC, a North Carolina limited liability company (the “American Beech Project Company”), American Beech Solar Holdings LLC, a Delaware limited liability company (the “American Beech TE Partnership”), Bluebird Solar LLC, a Kentucky limited liability company (the “Bluebird Project Company”), Bluebird Solar Investments LLC, a Kentucky limited liability company (“Bluebird Solar Investments”), Prairie Solar Holdings LLC, a Delaware limited liability company (“Prairie Solar Holdings”), Prairie Solar 1, LLC, a Delaware limited liability company (the “Prairie Project Company”) MN8 FMG LLC, a Delaware limited liability company (the “HoldCo (Bluebird)”), American Beech Class B LLC, a Delaware limited liability company (the “Class B Member (American Beech)”) and Prairie Class B LLC, a Delaware limited liability company (the “Class B Member (Prairie)”, and collectively with the Borrowers, American Beech Project Company, American Beech TE Partnership, Bluebird Project Company, Bluebird Solar Investments, Prairie Solar Holdings, Prairie Project Company, HoldCo (Bluebird) and Class B Member (American Beech), the “Borrower Entities”), and the Lenders party hereto. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement (as defined below).
RECITALS
A. WHEREAS, the Borrowers have entered into that certain Credit Agreement, dated as of December 31, 2024, as amended by that certain First Amendment to Credit Agreement, dated as of May 6, 2025, that certain Second Amendment to Credit Agreement, dated June 12, 2025, that certain Consent and Omnibus Amendment, dated as of June 13, 2025, that certain Consent and Amendment, dated as of June 23, 2025, and that certain Release, Joinder, Consent and Fifth Amendment, dated as of July 9, 2025 (the “Existing Credit Agreement” and the Existing Credit Agreement, as amended by this Amendment and as may be further amended, amended and restated, modified or supplemented from time to time, the “Credit Agreement”), with the financial institutions from time to time party thereto as lenders (the “Lenders”) and as issuers of letters of credit, Administrative Agent, Collateral Agent, and the other agents and persons from time to time party thereto.
B. WHEREAS, the Borrower Entities have entered into that certain Amended and Restated Guaranty, Pledge and Security Agreement (the “Existing Security Agreement”), dated as of July 9, 2025, with the Collateral Agent and the other persons from time to time party thereto.
C. WHEREAS, the applicable Project Group Members wish to enter into (or cause their Affiliates to enter into) (i) that certain Membership Interest Purchase Agreement, by and between Devco Borrower and American Beech TE Partnership, substantially in the form attached hereto as Exhibit A (the “MIPA”), (ii) that certain Amended and Restated Limited Liability Company Agreement of American Beech TE Partnership by and between Tenaska American Beech Holdings, LLC, a Delaware Limited Liability Company (the “Tax Equity Investor”) Class B Member (American Beech), substantially in the form attached hereto as Exhibit B (the “LLCA”), (iii) that certain Equity Capital Contribution Agreement, by and among American Beech TE Partnership, Tax Equity Investor and Class B Member (American Beech), substantially in the form attached hereto as Exhibit C (the “ECCA”), (iv) that certain Class A Guaranty by Tenaska Energy, Inc., a Delaware corporation, and Tenaska Energy Holdings, LLC, a Delaware limited liability company, in favor of Class B Member (American Beech), substantially in the form attached hereto as Exhibit D (the “Class A Guaranty”), (v) that certain Sponsor Guaranty by MN8 Energy LLC, a Delaware limited liability company (the “Sponsor”), in favor of the Tax Equity Investor, substantially in the form attached hereto as Exhibit E (the “Sponsor Guaranty”), (vi) that certain Sponsor MIPA Guaranty in favor of the American Beech TE Partnership, substantially in the form attached hereto as Exhibit F (the “Sponsor MIPA Guaranty”), and (vii) that certain Consent and Agreement by and among the Tax Equity Investor, American Beech TE Partnership, Class B Member (American Beech) and the Collateral Agent, substantially in the form attached hereto as Exhibit G (the “Interparty Agreement” and together with the MIPA, the LLCA, the ECCA, the Class A Guaranty, the Sponsor Guaranty and the Sponsor MIPA Guaranty, the “American Beech Tax Equity Documents”).
D. WHEREAS, ▇▇▇▇▇▇▇ has entered into that certain Equity Contribution Agreement with the Administrative Agent and Collateral Agent (the “Equity Contribution Agreement”).
E. WHEREAS, in connection with the execution of the American Beech Tax Equity Documents, the Borrowers wish to amend certain provisions of the Existing Credit Agreement.
F. WHEREAS, pursuant to Section 7.24 and Section 8.18 of the Existing Credit Agreement the consent of all Lenders is required for the applicable Project Group Members to enter into the American Beech Tax Equity Documents.
G. WHEREAS, subject to certain exceptions, Section 12.20 of the Existing Credit Agreement permits any provision of the Credit Documents to be amended or waived if such amendment or waiver is in writing and signed by the Borrower and the Required Lenders.
H. WHEREAS, Section 7.02 of the Existing Security Agreement permits any provision of the Security Agreement to be amended if such amendment is in writing and signed by the Borrower Entities and the Collateral Agent.
I. WHEREAS, the Borrowers request that (i) the Lenders consent to the execution and delivery by the parties thereto of the American Beech Tax Equity Documents on the Amendment Effective Date and (ii) the Lenders, the Issuing Banks, the Administrative Agent and the Collateral Agent agree to amend the Existing Credit Agreement and the Existing Security Agreement as set forth below.
J. WHEREAS, the undersigned ▇▇▇▇▇▇▇ constituting all Lenders have agreed to such consents and amendments to the Existing Credit Agreement and the Existing Security Agreement, subject to the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:
CONSENT AND AMENDMENT
1. Consent and Agreement.
(a) Effective as of the Amendment Effective Date, the undersigned Lenders (constituting all Lenders) consent to the applicable Project Group Members (and their Affiliates) entering into the American Beech Tax Equity Documents, and (ii) approve the updated Base Case Model.
(b) Effective as of the Amendment Effective Date, the Borrowers and the undersigned Lenders (constituting all Lenders) agree that (i) upon the execution of the American Beech Tax Equity Documents, (x) the Tax Equity Effective Date under the Credit Agreement has occurred with respect to the American Beech Project, (y) without limitation of the definition of Tax Equity Documents, the American Beech Tax Equity Documents shall constitute Tax Equity Documents with respect to the American Beech Project and (z) the Maximum Amount (American Beech) (as defined in the Equity Contribution Agreement) has been adjusted to $69,076,758 and (ii) the Updated Base Case Model shall constitute the Base Case Model.
(c) Effective as of the HoldCo Effective Date in connection with the American Beech Project, automatically and without any further action of DevCo Borrower or OpCo Borrowers, the undersigned Lenders (constituting all Lenders) and the Borrower Entities agree that (x) DevCo Borrower shall be deemed to have assigned, and OpCo Borrowers shall be deemed to have assumed, jointly and severally, all Obligations of DevCo Borrower under the Credit Agreement and the other Credit Documents with respect to the American Beech Project, including all Loans or Reimbursement Obligations with respect to the American Beech Project, (y) DevCo Borrower shall no longer be a borrower under the Credit Agreement and the other Credit Documents with respect to the American Beech Project, and (z) the DevCo Borrower’s aggregate liability with respect to the Obligations under the Credit Agreement and the other Credit Documents shall be reduced by an amount equal to the Obligations so assigned to the OpCo Borrowers.
(d) The parties hereto hereby agree that, based on the Updated Base Case Model (as defined below) delivered pursuant to Section 7.24(d) of the Credit Agreement in connection with the American Beech Tax Equity Documents, the adjusted Upsize Bridge Loan Commitment is $170,328,273.14 and the Upsize Bridge Loan Amount (American Beech) is $69,076,758.
2. Amendment. Effective as of the Amendment Effective Date, the Borrower Entities, the Administrative Agent, the Collateral Agent, the Issuing Banks, and the undersigned Lenders constituting all Lenders hereby agree as follows:
(a) Article 8 of the Existing Credit Agreement is amended by adding the following as Section 8.22 immediately after Section 8.21:
“Section 8.22. ITC Transfer Indemnity (American Beech). With respect to the American Beech Project, the Borrower shall not, and shall cause each applicable Project Group Member not to, (a) indemnify any ITC Transferee (as defined in the HoldCo LLCA with respect to the American Beech Project) or (b) other than as provided in the HoldCo LLCA as of the execution date thereof with respect to the American Beech Project, indemnify the Class A Member (as defined in the HoldCo LLCA with respect to the American Beech Project) in connection with any ITC Transfer (as defined in the HoldCo LLCA with respect to the American Beech Project).”
(b) Schedule 6.1(d) (Consents to Collateral Assignment) to the Existing Credit Agreement is hereby amended and restated in its entirety as set forth in Exhibit H hereto.
(c) The Existing Security Agreement is amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Security Agreement attached as Exhibit I hereto (the Existing Security Agreement, as so amended and as may be further amended, amended and restated, modified or supplemented from time to time, the “Security Agreement”).
3. Representations and Warranties. Each Borrower Entity hereby represents and warrants that:
(a) No Default or Event of Default has occurred and is continuing as of the date hereof or would result from the execution, delivery of performance of the Amendment.
(b) Each representation and warranty set forth in Article 5 of the Credit Agreement and in Article III of the Security Agreement is true and correct in all material respects as of the Amendment Effective Date (or, if stated to have been made on or as of an earlier date, were true and correct in all material respects on or as of such earlier date); provided that, to the extent that any such representations and warranties are qualified by materiality, such representations and warranties are true and correct in all respects on and as of the Amendment Effective Date (or, if stated to have been made on or as of an earlier date, were true and correct in all respects on or as of such earlier date).
(c) Each Borrower Entity is duly organized and validly existing, has all requisite corporate, limited liability company or partnership (as applicable) power and authority to execute, deliver and perform this Amendment, the Credit Agreement and the Security Agreement. Each Borrower Entity is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
(d) Each of this Amendment, the Credit Agreement and the Security Agreement (a) has been duly authorized, executed and delivered by each Borrower Entity; and (b) when executed and delivered by each Borrower Entity and each of the other parties thereto will be the legal, valid and binding obligation of such Borrower Entity, enforceable against such Borrower Entity in accordance with its terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(e) The execution, delivery and performance by each Borrower Entity of each of this Amendment, the Credit Agreement and the Security Agreement do not and, to the Knowledge of such Borrower Entity, will not (a) violate any Applicable Law or Governmental Approval in any material respect, (b) violate any provision of the Organizational Documents of such Borrower Entity, (c) violate or result in a material default under any material Project Document or material indenture, agreement or other instrument binding upon such Borrower Entity or such Borrower Entity’s assets, or give rise to a right thereunder to require any material payment to be made by such Borrower Entity or (d) except for the Liens created pursuant to the Credit Documents, result in the creation or imposition of any Lien on any asset of such Borrower Entity.
4. Effectiveness. This Amendment shall be effective on the date (the “Amendment Effective Date”) on which each of the following conditions shall have been satisfied to the satisfaction of the Administrative Agent and all the Lenders:
(a) Receipt by the Administrative Agent of an executed counterpart of this Amendment from each of the Borrower Entities, all Lenders, the Administrative Agent and the Collateral Agent (which may include a copy transmitted by facsimile or PDF or other electronic method).
(b) Delivery to the Administrative Agent of copies of certified true, complete and correct executed copies of the American Beech Tax Equity Documents substantially in the applicable forms attached hereto as Exhibit A, Exhibit B, Exhibit C, Exhibit D, Exhibit E, Exhibit F, and Exhibit G all of which shall be in full force and effect on the Amendment Effective Date, as certified by the Borrowers.
(c) Each of the “Effective Date” under and as defined in the MIPA, the ECCA and the LLCA shall have occurred, as certified by the Borrowers.
(d) The “MC Funding Date” under and as defined in the ECCA shall have occurred or will occur concurrently with the Amendment Effective Date.
(e) Delivery to the Administrative Agent of an officer’s certificate from each of the Borrowers, the American Beech Project Company, the Class B Member (American Beech)
and American Beech TE Partnership, dated as of the Amendment Effective Date, certifying as to (A) each entity’s certificate of good standing in its state of incorporation or formation, dated as of a recent date, (B) each entity’s certificate of formation and operating agreement as then in effect, and (C) a certificate of another responsible officer as to the incumbency and specimen signature of the natural persons authorized to execute and deliver each American Beech Tax Equity Document to which such entity is a party and, with respect to the Borrowers, this Amendment.
(f) Delivery to the Administrative Agent of a certificate of status, good standing or equivalent, as applicable, for the jurisdiction of formation of each Borrower, the American Beech Project Company, the Class B Member (American Beech), American Beech TE Partnership and the Tax Equity Investor as of the Amendment Effective Date.
(g) Delivery to the Administrative Agent of the following opinions, in form and substance reasonably satisfactory to the Lenders: (i) an opinion of Holland & Knight LLP, as special New York counsel to the American Beech TE Partnership, American Beech Project Company and Class B Member (American Beech) addressing customary corporate and enforceability matters with respect to the MIPA, the ECCA, the Sponsor Guaranty, the Sponsor MIPA Guaranty, the Interparty Agreement and this Amendment, (ii) an opinion of Fox Rothschild LLP, as special North Carolina counsel to the American Beech Project Company addressing customary corporate matters, (iii) a legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP, as Delaware counsel to the Class B Member (American Beech) addressing customary matters relating to the LLCA, (iv) an opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, as counsel to the Tax Equity Investor, Tenaska Energy, Inc. and Tenaska Energy Holdings, LLC, addressing customary corporate matters with respect to the ECCA, the LLCA, the Class A Guaranty and the Interparty Agreement, and (v) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, as counsel to the Tax Equity Investor, Tenaska Energy, Inc. and Tenaska Energy Holdings, LLC, addressing customary enforceability matters with respect to the ECCA, the Class A Guaranty and the Interparty Agreement, which, in each case, will include the Administrative Agent as an addressee.
(h) Delivery to the Administrative Agent of the Appraisal and Cost Segregation Report (each as defined in the ECCA) in form and substance reasonably acceptable to the Administrative Agent and all Lenders.
(i) Delivery to the Administrative Agent of the Title Policy and the then-current draft ALTA Survey (each as defined in the ECCA) in form and substance reasonably acceptable to the Administrative Agent and all Lenders.
(j) Delivery to the Administrative Agent of an updated Base Case Model (the “Updated Base Case Model”), in form and substance reasonably acceptable to the Administrative Agent and all Lenders.
(k) Payment of all fees, costs and other expenses (including all reasonably out-of-pocket costs, fees and expenses (including legal expenses)) and all other amounts then due and payable by the Borrowers pursuant to the Credit Agreement.
(l) The representations and warranties set forth in Section 3 are true and correct in all material respects as of the Amendment Effective Date; provided that, to the extent that any such representations and warranties are qualified by materiality, such representations and warranties are true and correct in all respects on and as of the Amendment Effective Date.
(m) No Default or Event of Default has occurred and is continuing as of the date hereof or would result from the execution, deliver and performance of this Amendment.
5. Post-Amendment Effective Date Covenant. No later than thirty (30) days following the Amendment Effective Date, the Borrowers shall cause the Sponsor to deliver a cash diversion guaranty in favor of the Administrative Agent for and on behalf of the Lenders, which shall be in form and substance reasonably satisfactory to all Lenders (the “Cash Diversion Guaranty”). The parties hereto hereby agree that, notwithstanding anything to the contrary in the Credit Agreement, the failure to deliver the Cash Diversion Guaranty to the Administrative Agent within thirty (30) days following the Amendment Effective Date shall be an immediate Event of Default under the Credit Agreement.
6. Reaffirmation of Security. Each Loan Party party hereto hereby (a) acknowledges and agrees that each of the Credit Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its payment obligations, guarantees, pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of such Credit Documents shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment or any of the transactions contemplated hereby and (b) confirms the security interests in the Collateral granted by it pursuant to the applicable Security Documents in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents.
7. Credit Document. This Amendment constitutes a “Credit Document” for purposes of the Credit Agreement. From and after the Amendment Effective Date, all references to the Credit Agreement in the Credit Documents shall be deemed to refer to the Credit Agreement as amended by this Amendment. From and after the Amendment Effective Date, all references to the Security Agreement in the Credit Documents shall be deemed to refer to the Security Agreement as amended by this Amendment.
8. Governing Law. This Amendment, and the rights and duties of the parties hereto, shall be construed and governed in accordance with the laws of the State of New York.
9. Miscellaneous. Sections 12.27 (Governing Law), Sections 12.28 (Severability of Provisions), 12.35 (Limitation on Liability), 12.31 (Submission to Jurisdiction; Waiver of Jury Trial), 12.33 (Confidentiality) and 1.2 (Interpretation) of the Credit Agreement are hereby incorporated herein by reference, mutatis mutandis.
10. Headings. All headings in this Amendment are included only for convenience and ease of reference and shall not be considered in the construction and interpretation of any provision hereof.
11. Binding Nature and Effect. This Amendment shall be binding upon and inure to the benefit of each party hereto and their respective successors and permitted assigns.
12. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original for all purposes, but all of which together shall constitute one and the same instrument.
13. Electronic Execution. This Amendment shall be valid, binding, and enforceable against a party only when executed and delivered by an authorized individual on behalf of the party by means of (i) any electronic signature permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any other relevant electronic signatures law, including relevant provisions of the UCC (collectively, “Signature Law”); (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. For avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings when required under the UCC or other Signature Law due to the character or intended character of the writings.
14. No Modification; No Other Matters. Except as expressly provided for herein, the terms and conditions of the Operative Documents shall continue unchanged and shall remain in full force and effect. The consent and amendment granted herein shall apply solely to the matters set forth herein and to the extent expressly set forth herein and such consent and amendment shall not be deemed or construed as an amendment, waiver or consent of any other matters, nor shall such consent and amendment apply to any other matters. Except as expressly provided herein, nothing herein shall be construed as or deemed to be a waiver or consent by the Administrative Agent or any Lender of any past, present or future breach or non-compliance with any terms or provisions contained in any Credit Document, and nothing herein shall abrogate, prejudice, diminish or otherwise affect any powers, rights, remedies or obligations of any Person arising before the date of this Amendment.
15. Direction to Administrative Agent. Each of the undersigned Lenders hereby directs the Administrative Agent to, on the Amendment Effective Date, execute this Amendment. The Administrative Agent shall have all of the rights, privileges and immunities afforded to it as Administrative Agent under the Credit Agreement.
16. Direction to the Collateral Agent. Each of the undersigned ▇▇▇▇▇▇▇ and the Administrative Agent hereby directs the Collateral Agent to, on the Amendment Effective Date, execute this Amendment and the Interparty Agreement. The Collateral Agent shall have all of the rights, privileges and immunities afforded to it as Collateral Agent under the Credit Agreement.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the undersigned, by their officers thereunto duly authorized, have duly executed this Amendment as of the date first written above.
MN8 DEVCO 3 LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
MN8 FMG CLASS B LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
MN8 BLEEKER 2 LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
AMERICAN BEECH SOLAR LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
AMERICAN BEECH SOLAR HOLDINGS LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
BLUEBIRD SOLAR LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
| Title: Authorized Signatory | ||||||||
BLUEBIRD SOLAR INVESTMENTS LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
PRAIRIE SOLAR HOLDINGS LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
PRAIRIE SOLAR 1 LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
MN8 FMG LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
AMERICAN BEECH CLASS B LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
PRAIRIE CLASS B LLC, | ||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Title: Authorized Signatory | ||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
NATIXIS, NEW YORK BRANCH, as Administrative Agent | |||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇ | ||||||||||
Name: ▇▇▇▇▇ ▇▇▇ | |||||||||||
Title: Director | |||||||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||||||
Title: Director | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
NATIXIS, NEW YORK BRANCH, as Collateral Agent | |||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇ | ||||||||||
Name: ▇▇▇▇▇ ▇▇▇ | |||||||||||
Title: Director | |||||||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||||||
Title: Director | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
NATIXIS, NEW YORK BRANCH, as a Lender | |||||||||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||||
Title: Managing Director | |||||||||||
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ | |||||||||||
Title: Vice President | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
HSBC BANK USA N.A., as a Lender | |||||||||||
| By: | |||||||||||
| Name: | |||||||||||
| Title: | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
SOCIÉTÉ GÉNÉRALE, as a Lender | |||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||||||||
Title: Vice-President | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
ZIONS BANCORPORATION, as a Lender | |||||||||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||||
| Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||||||
| Title: Authorized Signatory | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
TEXAS CAPITAL BANK, as a Lender | |||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇ | ||||||||||
Name: ▇▇▇▇▇ ▇▇▇▇ | |||||||||||
Title: Managing Director | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
BANCO DE SABADELL, S.A. MIAMI BRANCH, as a Lender | |||||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||||||||||
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||||||||||
Title: Head of Corporate Banking | |||||||||||
SIGNATURE PAGE TO MN8 CONSENT AND SECOND OMNIBUS AMENDMENT TO CREDIT AGREEMENT
EXHIBIT A
MIPA
MEMBERSHIP INTEREST PURCHASE AGREEMENT
between
MN8 DEVCO 3 LLC
and
AMERICAN BEECH SOLAR HOLDINGS LLC
August 27, 2025
TABLE OF CONTENTS
| Page | |||||||||||
| ARTICLE ONE DEFINED TERMS AND INTERPRETATION | 1 | ||||||||||
| 1.1 | Definitions | 1 | |||||||||
| 1.2 | Principles of Interpretation | 1 | |||||||||
| ARTICLE TWO PURCHASE AND SALE OF PROJECT COMPANY | 2 | ||||||||||
| 2.1 | Purchase and Sale | 2 | |||||||||
| 2.2 | Purchase Price | 2 | |||||||||
| 2.3 | Purchase Price Allocation and Tax Treatment | 3 | |||||||||
| 2.4 | Withholding | 3 | |||||||||
| ARTICLE THREE REPRESENTATIONS AND WARRANTIES | 3 | ||||||||||
| 3.1 | Representations and Warranties of Seller | 3 | |||||||||
| 3.2 | Representations and Warranties of the Company | 19 | |||||||||
| ARTICLE FOUR CONDITIONS PRECEDENT | 20 | ||||||||||
| 4.1 | Closing Date Deliverables | 20 | |||||||||
| ARTICLE FIVE TAXES | 21 | ||||||||||
| 5.1 | Transfer Taxes | 21 | |||||||||
| 5.2 | Tax Matters | 22 | |||||||||
| ARTICLE SIX INDEMNIFICATION AND REMEDIES | 22 | ||||||||||
| 6.1 | General | 22 | |||||||||
| 6.2 | Limitations on Liability | 22 | |||||||||
| 6.3 | Procedure for Indemnification | 23 | |||||||||
| 6.4 | Tax Treatment of Indemnification Payments | 24 | |||||||||
| 6.5 | RESERVED. | 24 | |||||||||
| 6.6 | No Duplication | 24 | |||||||||
| 6.7 | Sole Remedy | 24 | |||||||||
| ARTICLE SEVEN GENERAL PROVISIONS | 25 | ||||||||||
| 7.1 | Notices | 25 | |||||||||
| 7.2 | Amendment and Waiver | 26 | |||||||||
| 7.3 | Binding Nature; Assignment | 26 | |||||||||
| 7.4 | GOVERNING LAW | 26 | |||||||||
| 7.5 | Submission to Jurisdiction | 26 | |||||||||
| 7.6 | Entire Agreement | 27 | |||||||||
| 7.7 | Counterparts; Electronic Signatures | 27 | |||||||||
| 7.8 | No Third Party Beneficiaries | 27 | |||||||||
TABLE OF CONTENTS
| Page | |||||||||||
| 7.9 | Confidentiality | 27 | |||||||||
| 7.10 | Further Assurances | 27 | |||||||||
| 7.11 | Equitable Remedies | 28 | |||||||||
| 7.12 | Consequential Damages | 28 | |||||||||
LIST OF EXHIBITS AND SCHEDULES TO
MEMBERSHIP INTEREST PURCHASE AGREEMENT
| Exhibit A | Definitions | ||||
| Exhibit B | Form of Assignment Agreement | ||||
| Exhibit C | Warranties | ||||
| Exhibit D | Beginning of Construction Certificate | ||||
| Schedule 1 | Responsible Persons | ||||
| Schedule 2 | Real Property Documents | ||||
| Schedule 3 | Support Obligations | ||||
| Schedule 3.1(g) | Governmental Approvals | ||||
| Schedule 3.1(i) | Project Documents | ||||
| Schedule 3.1(i)(v) | Force Majeure | ||||
| Schedule 3.1(p) | Environmental Matters | ||||
| Schedule 3.1(q) | Insurance | ||||
| Schedule 3.1(z) | Bank Accounts | ||||
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “MIPA”), dated as of August 27, 2025 (the “Effective Date”), is entered into between MN8 DevCo 3 LLC, a Delaware limited liability company (“Seller”), and American Beech Solar Holdings LLC, a Delaware limited liability company (the “Company”).
RECITALS:
1. American Beech Solar LLC, a North Carolina limited liability company (“Project Company”) is developing an approximately 196 MW(dc) photovoltaic power generation project located in Halifax County, North Carolina known as the American Beech Project (the “Project”);
2. Seller directly owns 100% of the outstanding Membership Interests in Project Company and is an Affiliate of American Beech Class B LLC, a Delaware limited liability company (“Class B Member”);
3. Class B Member directly owns 100% of the outstanding Membership Interests in the Company;
4. On the Effective Date and prior to the execution and delivery of this MIPA, the Company, Tenaska American Beech Holdings, LLC, a Delaware limited liability company (“Investor”) and Class B Member have executed and delivered an Equity Capital Contribution Agreement (the “ECCA”) and on the MC Funding Date (as defined in the ECCA), the Investor and Class B Member will execute and deliver an Amended and Restated Limited Liability Company Agreement of the Company (the “LLCA”) to, among other things, admit Investor as a member of the Company and define the respective interests, rights and obligations of Investor and Class B Member in the Company; and
5. Subject to the terms and conditions set forth herein, the Company desires to purchase from Seller, and Seller desires to sell to and irrevocably and unconditionally transfer to Company, 100% of the Membership Interests in Project Company in exchange for the consideration described in Section 2.2.
NOW, THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties set forth herein and intending to be legally bound hereby, Seller and the Company agree as follows:
ARTICLE ONE
DEFINED TERMS AND INTERPRETATION
1.1 Definitions. Capitalized terms not otherwise defined in this MIPA are defined in Exhibit A.
1.2 Principles of Interpretation. All the agreements, contracts or documents defined or referred to in this MIPA will mean such agreements, contracts or documents as the same may
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from time to time be supplemented or amended or their terms waived or modified, except as otherwise provided herein. Defined terms in this MIPA will include, in the singular number, the plural, and in the plural number, the singular. Wherever from the context it appears appropriate, pronouns stated in the masculine, feminine or neuter gender will include the masculine, feminine and neuter genders. All references to Articles, Sections, Schedules and Exhibits will be references to Articles, Sections, Schedules and Exhibits of this MIPA, unless otherwise specified. The words “will” and “shall” have the same meaning. The words “include,” “includes” and “including” are not limiting, and are in all cases to be construed as followed by the words “without limitation” (whether or not expressly so followed); the word “or” is not exclusive; references to Persons include their respective successors and assigns or, in the case of Governmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations will include any amendments of the same and any successor statutes and regulations. The words “herein,” “hereof” and “hereunder” will refer to this MIPA as a whole and not to any particular section or subsection of this MIPA. Documents, files and materials that are posted to the Data Site or otherwise delivered in writing to the Company will be deemed delivered for purposes of this MIPA.
ARTICLE TWO
PURCHASE AND SALE OF PROJECT COMPANY
2.1 Purchase and Sale. On the Closing Date and on the terms and subject to the conditions set forth in this MIPA, Seller shall sell, convey, transfer, assign and deliver to the Company, and the Company shall purchase and accept from Seller, all of Seller’s right, title and interest in and to 100% of the Membership Interests in Project Company, free and clear of all Encumbrances (except for Permitted Equity Encumbrances), as evidenced by the execution and delivery by the Parties of the Assignment Agreement.
2.2 Purchase Price.
(a) In consideration of the purchase and sale of 100% of the Membership Interests in Project Company described in Section 2.1, the Company shall pay to Seller in cash in immediately available funds into an account of Seller a purchase price equal to the Appraised Value (the “Purchase Price”). The Purchase Price shall be paid by a payment in an amount (the “Cash Purchase Price”) equal to (i) the Purchase Price less (ii) the amount of Liabilities of Project Company as of the Closing Date less (iii) the Remaining Costs (Estimated), which amount will be payable on the Closing Date to the account specified in writing by Seller.
(b) The Cash Purchase Price shall be paid in the following installments:
(i) The first installment, consisting of $24,690,228.60 (the “First Installment”), shall be due and payable and shall be paid on the Closing Date by wire transfer of immediately available funds to an account that Seller designates by written notice to the Company.
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(ii) The second installment, consisting of the Cash Purchase Price as updated on the SC Funding Date (as defined in the ECCA) to reflect the final Appraisal delivered pursuant to Section 4.3(e) of the ECCA, reduced by the First Installment (the “Second Installment”), shall be due and payable and shall be paid on the earlier of (A) the SC Funding Date (as defined in the ECCA) and (B) April 30, 2026, by wire transfer of immediately available funds to an account that Seller designates by written notice to the Company.
2.3 Purchase Price Allocation and Tax Treatment. The Parties agree and acknowledge that the transfer of the Membership Interests pursuant to this MIPA will be treated for federal income and other applicable Tax purposes as a sale by Seller and as a purchase by the Company of all of the assets owned by Project Company for a total consideration equal to the Appraised Value (which, for the avoidance of doubt, shall include the assumption by the Company of all of the Liabilities of Project Company as of the Closing Date and the obligation to pay the Remaining Costs (Estimated)). The Parties agree and acknowledge that such consideration shall be allocated among the assets of Project Company consistently with the allocation set forth in the Cost Segregation Report as of the Closing Date. Project Company, the Company and Seller agree to file all federal, state and local Tax Returns in accordance with the provisions of this Section 2.3, and such agreed allocation. Neither Party shall take any position, on any Tax Return or otherwise, that is inconsistent with such allocation unless specifically required pursuant to Applicable Law.
2.4 Withholding. The Company shall be entitled to deduct and withhold from all payments of the Cash Purchase Price, or any other amounts (or any portion thereof) payable pursuant to this MIPA, such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code or any other Applicable Law; provided that the Company will, prior to any deduction or withholding, use commercially reasonable efforts to notify Seller of any anticipated withholding, and reasonably cooperate with Seller to minimize the amount of any applicable withholding to Seller. To the extent that amounts are so withheld, such withheld amounts shall be paid by such withholding party to the relevant Governmental Authority and shall be treated for all purposes of this MIPA as having been paid to the Party to whom such amounts would otherwise have been paid.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. The following representations and warranties are made by Seller to the Company on the Effective Date, unless specifically limited to only certain dates:
(a) Organization, Good Standing, Etc.; Officers. Each of Seller and the Project Company (i) is a limited liability company that is duly organized and existing under the laws of the state of its formation and is in good standing under such laws; (ii) has the requisite power and authority to own, lease and operate its properties and Assets and to carry on its business and (iii) is duly qualified and in good standing in each jurisdiction where such qualification is necessary. The Company has received true and correct copies of the charter documents and operating agreement
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of the Seller and the Project Company currently in effect. The persons listed on Schedule 1 are the individuals who have primary responsibility for all day-to-day operations and management of the Project and the matters to which representations and warranties are made in this MIPA.
(b) Company Membership Interests. On the Effective Date prior to the transactions contemplated in Section 2.1, Seller is the sole member of the Project Company and holds 100% of the ownership interests in the Project Company (subject to no Encumbrances other than those granted pursuant to the Construction Financing Documents and Permitted Encumbrances set forth in clause (e) of the definition thereof), which are validly issued and duly authorized. Other than pursuant to the ECCA, this MIPA, the LLCA or the Construction Financing Documents, there is no agreement or other arrangement to issue, sell, transfer, convert or dispose of any ownership interest in the Project Company.
(c) Sole Purpose. Since the date of acquisition by Seller or one of its Affiliates of the Project Company, the Project Company has been engaged solely in the development, construction and ownership of the Project and has incurred no Liabilities except those incurred under the Project Documents, the Construction Financing Documents and Governmental Approvals and Liabilities incidental to the development, construction and ownership of the Project that are not material. The Project Company is not a party to any agreement or contract having a value over its term in excess of $250,000 other than the Project Documents and the Construction Financing Documents to which it is a party.
(d) Authority; Enforceability. Each of Seller and the Project Company has the requisite power and authority to execute, deliver and enter into the Transaction Documents and Project Documents to which it is a party and to perform its obligations thereunder and consummate the Transaction. The execution and delivery by each of Seller and the Project Company of the Transaction Documents and Project Documents to which it is a party, and the consummation by such persons of the Transaction, have been duly authorized by all necessary entity action. Each Transaction Document and Project Document to which Seller or the Project Company is a party has been duly authorized, validly executed and delivered and constitutes the legal, valid and binding obligations of Seller or the Project Company, as applicable, enforceable against such person in accordance with its terms, except as its enforceability may be limited by Bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and general equitable principles (whether in a proceeding in equity or at law).
(e) No Conflicts. The execution and delivery of the Transaction Documents and the Project Documents to which Seller or the Project Company is a party do not, and the consummation of the transactions contemplated thereby will not, (i) violate or require any filing or notice under any Applicable Law (other than filings or notices that have been made or can reasonably be expected to be made in the ordinary course of business when needed); (ii) conflict with or cause a breach of any provision in such person’s organizational documents; (iii) violate in any material respect, cause a material breach or default, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel (except to the extent that such acceleration, termination, modification or cancellation is not material), or require any authorization or approval (other than those already obtained or made, those to be obtained or made in the
4
ordinary course of business or those that are not required to be obtained or made prior to such date) under, any contract to which Seller or the Project Company is a party or by which it is bound or to which any of its Assets are subject; or (iv) result in the creation of an Encumbrance upon any of the Assets of Seller or the Project Company (other than Permitted Encumbrances), except (in the case of clauses (i), (ii), (iii), and (iv)) for any such event that would not reasonably be expected to have a Material Adverse Effect.
(f) Title; Assets; Indebtedness. (i) The Project Company has good and marketable title to and is the sole owner of the Project and the Assets comprising the Project free and clear of all Encumbrances other than Permitted Encumbrances (other than title to any Assets for which title only transfers from the applicable EPC Contractor to the Project Company at Substantial Completion); and (ii) except for any services that are required to be performed or parts that are required to be provided in accordance with a Project Document in order to achieve Final Completion or are reasonably expected to be available when required on commercially reasonable terms, no additional parts or services from any other Persons are required in order to (A) install the Project and place it in service for U.S. federal income tax purposes in accordance with each of the Project Documents for the Project and all Applicable Law and Governmental Approvals and (B) operate and maintain the Project in accordance in all material respects with Prudent Industry Practice. On and as of the Effective Date, neither the Project Company nor, to the Knowledge of Seller, the AC Subsidiary have Indebtedness other than (1) under the Construction Financing Documents and (2) amounts not yet due under Material Project Documents which may be construed as Indebtedness.
(g) Governmental Approvals.
(i) Neither Seller nor the Project Company is, or will be, required under Applicable Law to give any notice, make any filing, or obtain any consent or approval from any Governmental Authority to execute, deliver or perform any of the Transaction Documents to which it is a party or to consummate the transactions contemplated thereby other than any Governmental Approvals that (A) have been obtained or made as of the Effective Date, each of which is set forth on Part I of Schedule 3.1(g) (or can reasonably be expected to be obtained or made when required, each of which is set forth on Part II or III of Schedule 3.1(g)) or (B) are ministerial in nature, can reasonably be expected to be obtained or made in the ordinary course of business on commercially reasonable terms and conditions when needed and the absence of which could not be reasonably expected to adversely affect the consummation of the transactions contemplated by this MIPA or any of the Transaction Documents or result in a Material Adverse Effect (collectively, “Ministerial Approvals and Filings”).
(ii) True and correct copies of each Governmental Approval that is necessary under Applicable Law for the execution, delivery or, except those Governmental Approvals which relate solely to the construction or operation of the Project that are not required until a later date and are reasonably expected to be obtained in the ordinary course on commercially reasonable terms as and when required, performance of the Transaction Documents to which Seller or the Project Company is a party and the consummation of the
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transactions thereunder that have been directly obtained by or for the benefit of Seller or the Project Company, as applicable, and copies thereof have been delivered to the Company, other than Ministerial Approvals and Filings.
(iii) As of the Effective Date, all Governmental Approvals necessary for the construction, development, ownership and operation of the Project are set forth in Part I of Schedule 3.1(g) and have been obtained and are held by the Project Company, its Affiliates, other contractors hired by or on behalf of the Project Company or any EPC Contractor, as applicable, except Ministerial Approvals and Filings or Governmental Approvals that are not required as of the Effective Date, which are, as of the Effective Date, set forth in Part II and Part III of Schedule 3.1(g). There are no proceedings pending or, to the Knowledge of Seller, threatened (in writing), which would reasonably be expected to result in the material adverse modification, revocation or termination of any such Governmental Approval or the imposition of any material penalty thereunder. None of the Project Company or any of its Affiliates is in violation of a material requirement of any such Governmental Approval that is or could reasonably be expected to have a Material Adverse Effect. To the Knowledge of Seller, no event has occurred and is continuing that, after notice or lapse of time or both would reasonably be expected to constitute, a material violation of any such Governmental Approval, or would reasonably be expected to result in a material adverse modification (including the imposition of any new material adverse conditions, but not including any new compliance conditions that generally apply on an industry-wide basis), revocation or termination of, or any other material adverse change in, any such Governmental Approval. To the Knowledge of Seller, no Governmental Authority intends to cancel, revoke, terminate, suspend, deny or not renew any such Governmental Approval or application for any such Governmental Approval. No Proceeding is pending or, to the Knowledge of Seller, threatened, by or before any Governmental Authority regarding any revocation, withdrawal, suspension, cancellation or termination of any such Governmental Approval or any actual, alleged, possible or potential violation of, or failure to comply with, any such Governmental Approval.
(iv) Notwithstanding anything herein to the contrary, the Seller may, with the written consent of the Company (not to be unreasonably withheld or delayed), update Schedule 3.1(g) between the MC Funding Date and the SC Funding Date as required to reflect the development of the Project during such time period, however no such update to Schedule 3.1(g) shall be deemed to cure any breach of this Section 3.1(g) that has occurred prior to the MC Funding Date.
(h) Absence of Litigation.
(i) There is no pending or, to the Knowledge of Seller, threatened (A) Proceeding involving Seller or to which Seller is a party or that adversely affects the Project, (B) Proceeding involving the Project Company, to which the Project Company is a party or that adversely affects the Project, or (C) Proceeding that could reasonably be expected to adversely affect its ability to complete the Transaction. None of Seller nor the Project Company is subject to any Order adversely affecting the Project, Seller, the Project
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Company or the Transaction. To the Knowledge of Seller, the Seller has delivered to the Company a true, correct and complete copy of each material contract to which the AC Subsidiary is a party.
(ii) To the Knowledge of Seller, no Bankruptcy has occurred with respect to any Material Contract Party.
(i) Transaction Documents and Project Documents.
(i) Schedule 3.1(i) lists each Material Project Document, and Seller has delivered a true, correct, and complete copy of each such Material Project Document and each Construction Financing Document to the Company.
(ii) None of Seller nor the Project Company has materially breached or is in material default under any Transaction Document, Construction Financing Document or Material Project Document, which breach or default remains uncured. To the Knowledge of Seller, no event or circumstance has occurred that would, with the passage of time or notice, reasonably be expected to result in such a material breach or default. To the Knowledge of Seller, no other party to a Transaction Document, Construction Financing Document or Material Project Document (other than the Investor, Tenaska Energy, Inc. or Tenaska Energy Holdings, LLC) has materially breached or is in material default under any Transaction Document, Construction Financing Document or Material Project Document, which breach or default remains uncured, and, to the Knowledge of Seller, no event or circumstance has occurred that would, with the passage of time, be expected to result in such a material breach or material default.
(iii) The materials to be supplied and the interests and other rights granted pursuant to the Material Project Documents comprise all of the interests necessary to secure any right that is material to the acquisition, development, construction, installation, completion, operation, maintenance or replacement or removal of the Project (including the interconnection and transmission of electricity therefrom), in accordance with all Applicable Law, Prudent Industry Practice, the Material Project Documents and in accordance with the schedule for construction and completion of the Project, other than those rights which are reasonably expected to be obtained in due course and on commercially reasonable terms at or before the time when such rights are reasonably necessary to be so obtained.
(iv) No Project Party has, except as set forth on Part I of Schedule 3.1(i)(iv) (A) provided written notice to the Project Company or Seller or any of their respective Affiliates of its intention to amend or terminate a Material Project Document or (B) made any claims against, or sought indemnification from, the Project Company or Seller or any of their respective Affiliates pursuant to a Material Project Document that is not otherwise the subject of a reasonable reserve or otherwise accounted for with reasonable credit support, and none of Seller nor the Project Company or any of their respective directors, managers, members or officers has been advised in writing that any such claims may be asserted or initiated. No Person party to a Construction Financing
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Document has, except as set forth on Part II of Schedule 3.1(i)(iv), (A) provided written notice to the Project Company, or Seller or any of their respective Affiliates of its intention to amend or terminate a Construction Financing Document (other than in connection with Term Conversion (as defined in the Construction Financing Agreement)) or (B) made any claims against, or sought indemnification from, the Project Company, Seller or any of their respective Affiliates pursuant to a Construction Financing Document that is not otherwise the subject of a reasonable reserve or otherwise accounted for with reasonable credit support, and none of Seller, the Project Company or any of their respective directors, managers, members or officers has been advised in writing that any such claims may be asserted or initiated. Notwithstanding anything herein to the contrary, the Seller may, with the written consent of the Company (not to be unreasonably withheld or delayed), update Schedule 3.1(i)(iv) between the MC Funding Date and the SC Funding Date as required to reflect the development of the Project during such time period, however no such update to Schedule 3.1(i)(iv) shall be deemed to cure any breach of this Section 3.1(i)(iv) that occurred prior to the MC Funding Date.
(v) Except as set forth on Schedule 3.1(i)(v), to the Knowledge of Seller, no event, act, circumstance or condition exists that constitutes or could reasonably be expected to constitute a force majeure event under any Material Project Document.
(vi) All representations, warranties and other material factual statements made by the Project Company in each of the Material Project Documents to which it is a party are true and correct in all material respects as of the date made (except for representations and warranties or other factual statements that refer only to an earlier date).
(vii) Other than the Transaction Documents, the Assignment Agreement, the Construction Financing Documents, the O&M Agreement, and the Asset Management Agreement, there are no Affiliate Contracts.
(viii) Other than as disclosed in Schedule 3, there are no Support Obligations with respect to the Project.
(ix) All utility services (including electricity and telecommunications) reasonably necessary and sufficient, in quality and quantity, for the construction, development, ownership, operation and maintenance of the Project for its intended purposes are currently available at the Site or can reasonably be expected to be commercially available as and when required upon commercially reasonable terms and consistent with the schedule for the Project.
(x) To the Knowledge of Seller and solely with respect to the Project and the Project Company, no event or condition exists that would either immediately or with the passage of any applicable grace period or giving of notice, or otherwise, enable either Seller or PSA Seller to terminate or suspend its applicable obligations under the PSA or entitle PSA Seller to any claim, counterclaim, offset or defense against Seller in respect of the PSA (provided, for purposes of clarity, there are non-Project and non-Project Company assets and operations that were sold under the PSA and nothing in this Section
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3.1(i) shall take any such non-Project or non-Project Company assets or operations into account).
(xi) As of the Effective Date and solely with respect to the Project and the Project Company, all amounts then due and payable by each of Seller and PSA Seller under the PSA have been paid (subject to any offset payments and bona fide disputes and claims made thereunder), and the Project Company does not has any obligations or liabilities (including contingent obligations) to Seller, PSA Seller or any of their respective Affiliates in connection with the purchase of a direct or indirect ownership interest in the Project Company or any of its Affiliates, and PSA Seller does not own any direct or indirect ownership interest in the Project Company.
(xii) Neither Seller nor PSA Seller under the PSA, have or have granted to any other person, any outstanding option, lien, warrant, put, call, buy-back, repurchase right, right of first refusal, right of first offer or other agreement to acquire any equity interest in Project Company or ownership of any assets of the Project.
(xiii) PSA Seller has no right under the PSA which, if exercised, would be reasonably likely to result in (x) the reduction, loss disallowance or recapture of the ITC claimed or projected to be claimed with respect to the Project or any component thereof within the meaning of Section 50(a) of the Internal Revenue Code of 1986, as amended or (y) the Investor failing to satisfy any of the Target Parameters shown in the Base Case Model.
(xiv) As of the Effective Date, all amounts then due and payable by each of “Buyer” and “Seller”, in each case, under and as defined in the PSA, have been paid.
(j) Consents and Approvals. No filings, consents, waivers, authorizations or approvals are required for the Project Company or Seller to execute, deliver and perform its obligations under the Transaction Documents or the Project Documents to which it is a party, or for the consummation of the Transaction, other than those already obtained or made, those to be obtained or made in the ordinary course of business, those that are not required to be obtained or made prior to such date.
(k) Taxes.
(i) (A) All Tax Returns required to be filed with any Tax authority by, or with respect to, the Project Company have been duly and timely filed, and all such Tax Returns were prepared in compliance with all Applicable Laws and are true, correct and complete in all material respects, (B) all Taxes due and payable by, or with respect to, the Project Company and its assets or activities (whether or not shown as due on any Tax Return) have been timely paid to the applicable Governmental Authority, (C) all unpaid taxes that have accrued, but are not yet due and payable, by the Project Company on or before the Effective Date are reflected in the Base Case Model, (D) no written claim, and no other claim to the Knowledge of Seller, has been made by a Tax authority in a jurisdiction where the Project Company does not file a Tax Return that the Project
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Company is or may be subject to taxation by that jurisdiction, (E) there are no liens for Taxes upon any of the Assets of the Project Company, other than Permitted Encumbrances, (F) there are no agreements or consents currently in effect for the extension or waiver of the time for the filing of any Tax Return or the assessment or collection of any Taxes relating to the Project Company or the Project, and no Person has been asked to enter into any such agreement or consent, (G) the Project Company is not a party to any Tax sharing or allocation agreement, Tax indemnity agreement or similar agreement or arrangement regarding Taxes, other than agreements entered into in the ordinary course of business that do not have as their principal purpose the allocation of liabilities for Taxes and under which any liability of Project Company for Taxes is pursuant only to customary tax gross-up, tax indemnity or tax allocation provisions contained therein, (H) there are no audits, examinations, claims, assessments, levies, administrative proceedings or lawsuits with respect to Taxes or Tax Returns in progress, pending or threatened in writing against the Project Company or the Assets of the Project Company, (I) none of the Project Company or any of its Affiliates has had a pre-submission conference with the IRS or applied to the IRS for a private letter ruling, pre-filing agreement or determination letter with respect to the Project, including any application for a private letter ruling that has been withdrawn, (J) the Project Company has no liability for the Taxes of any other Person as a result of having been a member of an affiliated, consolidated, combined, unitary or similar group, succeeding to such liability as a result of a merger, conversion or asset transfer, or otherwise as a transferee or successor (by contract or otherwise), (K) all material amounts required to be withheld or collected by the Project Company have been duly withheld, collected and paid to the appropriate Tax authorities within the time and in the manner required under Applicable Law and (L) no power of attorney currently in force has been granted by the Project Company in respect of Taxes;
(ii) The Project Company and the AC Subsidiary has been treated as either a “partnership” for U.S. federal income tax purposes under Treasury Regulations § 301.7701-3(b)(1)(i) (and for applicable state, and local income tax purposes) or a “disregarded entity” for U.S. federal income tax purposes under Treasury Regulations § 301.7701-3(b)(1)(ii) and for applicable state, and local income tax purposes at all times since its formation. No election has been filed with the IRS or any state or other jurisdiction to treat the Project Company or the AC Subsidiary as an association taxable as a corporation.
(iii) Seller is and has since its formation been treated as a disregarded entity for U.S. federal income tax purposes and as a separate taxpayer from the Class B Member for federal income tax purposes. Seller does not own, directly or indirectly, any interest in the Class B Member or the Company for U.S. federal income tax purposes.
(iv) Each contract, agreement, or other arrangement entered into between the Company or the Project Company, on the one hand, and the Class B Member (or its affiliates) on the other hand, if any, is on arm’s length terms and conditions.
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(v) The aggregate tax basis of the ITC Eligible Property included in the Project will be equal to the eligible basis shown in the Appraisal, Cost Segregation Report and Base Case Model, each as of the SC Funding Date, and the aggregate tax basis of the Assets included in the Project will be allocated for depreciation purposes among the Project assets as specified in the Appraisal, Cost Segregation Report and Base Case Model, each as of the SC Funding Date (as reduced, for depreciation purposes, by one-half of the ITC).
(vi) All equipment comprising the Project will be considered new equipment for which the Company will be considered the original user. None of the equipment is imported property covered by an executive order described in section 168(g)(6) of the Code. No preliminary application was filed with the U.S. Department of the Treasury for a section 1603 payment, and no such payment will be claimed on the Project. No Person has claimed on any Tax Return any depreciation or amortization deductions, ITCs, renewable energy production tax credits pursuant to Section 45 of the Code or any other tax credits or deductions that are available with respect to ownership or operation of the Project or any property that is part of the Project. No portion of the assets comprising the Project has benefited from the proceeds of any grant or rebate program that would cause a reduction in the amount of the ITC for the Project, and no application with respect to any such grant or rebate has been filed or submitted. No Person has made the election under Section 6417 or 6418 of the Code (or entered into an agreement to make such an election) with respect to the Project.
(vii) All state and local sales, use and property taxes with respect to the Transaction and the Project, including such taxes for which the Project Company is responsible under the EPC Contracts, are reflected properly in the Base Case Model.
(viii) The Project will not be used to generate electricity for the purpose of heating a swimming pool within the meaning of section 48(a)(3)(A)(i) of the Code.
(ix) As of the Effective Date, no Block nor the Project has been Placed In Service and none of the factors in clauses (B), (C), (D) or (E) in the definition of “Placed in Service Factors” have occurred for any such Blocks or the Project.
(x) Seller (or, if it is a disregarded entity for U.S. federal income tax purposes, the Person treated for U.S. federal income tax purposes as the owner of the assets of Seller) is not a Disqualified Entity or a Related Person.
(xi) None of the property included in the Project is leased to a “tax-exempt entity” within the meaning of Section 168(h)(2)(A) of the Code, is “tax-exempt bond financed property” within the meaning of Section 168 of the Code, imported property of the kind described in Section 168(g)(6) of the Code, or “public utility property” within the meaning of Section 168(f)(2) of the Code or Treasury Regulations Section 1.46-3(g). No election has been made to cause the “alternative depreciation system” described in Section 168(g) of the Code to apply to any of the property included in the Project. The Project is located in its entirety in the United States.
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(xii) Either (x)(a) for purposes of Section 48(a)(9)(B)(ii) of the Code, construction of the Project began before January 29, 2023, (b) the Project is exempt from the prevailing wage and apprenticeship requirements of Section 48(b)(9)-(10), and (c) all property included in the Project has been or will be Placed In Service by December 31, 2025 or (y)(a) for purposes of Section 48(a) of the Code, construction of the Project began before December 31, 2024 by complying with the Five Percent Safe Harbor (as defined in IRS Notice 2018-59) as of such date, and (b) the Project has complied or is in the process of complying with the PWA Requirements (and such compliance may be achieved by making payments (including for any penalty and interest owed to the IRS and any backpay wages owed to any applicable wage earner) to cure any failure to have satisfied such requirements).
(xiii) The Project (i) will be owned by a single legal entity, (ii) will have been constructed and installed on contiguous pieces of land, (iii) will be described in common power purchase agreements, (iv) will have a common intertie, (v) has a common substation, (vi) will be described in one or more common environmental or other regulatory permits, (vii) will have been constructed pursuant to a single master construction contract, and (viii) will have been financed pursuant to a single loan agreement.
(xiv) As of the Closing Date, the Beginning of Construction Certificate is true, correct, and complete.
(xv) Seller is not aware of any reason that the Project would fail to satisfy the “Prevailing Wage Requirements” and the “Apprenticeship Requirements” set forth in Code Sections 48(a)(10) and 48(a)(11), respectively, prior to being Placed In Service.
(xvi) The interconnection property identified as ITC eligible property in the Appraisal constitutes “qualified interconnection property” under Section 48(a)(8) of the Code. All such interconnection property: (i) is part of an addition, modification, or upgrade to a transmission or distribution system that is required at or beyond the point at which the Project interconnects to such transmission or distribution system in order to accommodate such interconnection, (ii) was either (A) constructed, reconstructed, or erected by the Company (as defined in Treas. Reg. §1.48-9(b)(1)), or (B) the cost with respect to the construction, reconstruction, or erection of such property was paid or incurred by the Company, (iii) is properly chargeable to the capital account of the Company, and (iv) the original use (as defined in Treas. Reg. §1.48-9(b)(3)), of which, pursuant to the Interconnection Agreement, commences with a utility (as defined in Treas. Reg. §1.48-14(h)(5)). The Seller does not reasonably anticipate any reimbursement of the cost of such interconnection property by the applicable utility or any other Person.
(l) Compliance with Applicable Law.
(i) (A) The Project Company is and, since the Acquisition Date always has been, in material compliance with all Applicable Law and Governmental Approvals, (B) each of the Seller and, to the Knowledge of Seller, the AC Subsidiary is and always has been in material compliance with all Applicable Law and Governmental Approvals
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and (C) none of Seller, its Affiliates, the Project Company, or to the Knowledge of Seller, the AC Subsidiary has received any written notice from any Governmental Authority of an actual or potential material violation of any Applicable Law with respect to the Project, Seller, the AC Subsidiary, the Project Company or the Transaction which violation has not been remedied or cured.
(ii) None of Seller, the Project Company or any Covered Entity relating to Seller or the Project Company is a Sanctioned Person, has any of its Assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person or does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority. The proceeds of any Transaction Document will not be used to fund any operations in, finance any investments or activities in or make any payments to a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority. The funds used for the Project are not derived from any unlawful activity. Each of the Project Company and Seller and each Covered Entity relating to Seller and the Project Company is in compliance with and does not engage in any dealings or transactions prohibited by any Anti-Terrorism Laws.
(m) Personal Property. To the Knowledge of Seller, all goods, equipment, parts, materials and facilities furnished in connection with the Project are or will be in good repair and operating condition and suitable for the purposes for which they are employed, including, without limitation, for the construction, development, ownership, operation and maintenance of the Project for its intended purposes, and to the Knowledge of Seller, there is no material defect or dangerous condition of such equipment or facilities.
(n) Information Provided. The information delivered by or for Seller or its Affiliates to the Company consultants or advisors engaged by the Company in connection with the Transactions (including any information pertaining to the price paid to the PSA Seller under the PSA) is true and complete in all material respects, and contains no and does not omit to state a material fact that was necessary in order to make the statements therein, in light of the circumstances under and at the time which they were made, not misleading. The Base Case Model has been prepared in good faith based upon assumptions that are consistent with the Project Documents and Construction Financing Documents, and are believed by Seller to be reasonable at the time made and at the time so furnished. Notwithstanding anything to the contrary, no representation or warranty is made with respect to (i) any projected financial information or other forward-looking statement (except that such projections and the Base Case Model were made and prepared in good faith) or (ii) conclusions contained in any third-party reports, except as specifically provided herein. The Company acknowledges and agrees that any assumptions that are projections are subject to uncertainties and contingencies, many of which are beyond the control of Seller and the Company, and that no assurance can be given that any such projections will be realized and actual results may differ and the differences may be material.
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(o) Financial Statements. Seller has provided to the Company complete copies of the most recent unaudited, non-consolidated balance sheet of the Project Company (the “Current Balance Sheet”). The Current Balance Sheet has been prepared in accordance with GAAP and presents fairly in all material respects the financial position of the Project Company as of the date or for the period set forth therein, subject to normal year-end audit adjustments and the absence of footnotes. Since December 31, 2024, no event, change, fact, condition or circumstance has occurred and is continuing, that has had, or could reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.
(p) Environmental Matters. Except as set forth on Schedule 3.1(p):
(i) Each of Seller and the Project Company is, and its businesses and operations are, in compliance in all material respects with all applicable Environmental Laws. To the Knowledge of Seller, no Hazardous Substances have been Released on the Site in violation of Environmental Laws. Neither Seller nor the Project Company has received written notice from any Governmental Authority of an actual or potential violation of or liability under any Environmental Laws. To the Knowledge of Seller, there are no material Liabilities arising from Environmental Laws with respect to the Project.
(ii) Seller has delivered to the Company complete copies of any and all material reports, site assessments, audits, and studies concerning environmental conditions or media sampling results prepared by or on behalf of, or otherwise in the possession or control of Seller or the Project Company concerning the Project.
(iii) The Project Company has not nor, to the Knowledge of Seller, has any third party used, Released, generated, manufactured, produced, or stored in, on, under, or about the Site, or transported thereto or therefrom, or has caused or is otherwise responsible for any human exposure to, any Hazardous Substances that could reasonably be expected to subject the Project Company to any Environmental Claim.
(iv) To the Knowledge of Seller, no Environmental Claim is pending or threatened (in writing) against the Project Company. To the Knowledge of Seller, there is no condition, circumstance, occurrence, action, activity or event at the Site that could reasonably be expected to form the basis of an Environmental Claim. Neither Seller nor the Project Company is conducting, paying for or performing, in whole or in part, any clean-up, removal, remediation, excavation, or other corrective action pursuant to any Environmental Law at the Site; nor is the Project Company subject or a party to any order, judgment, or decree, or a contract or agreement with a Governmental Authority that imposes any obligation or liability under any Environmental Law.
(q) Insurance. The insurance policies listed in Schedule 3.1(q) are the policies held by the Project Company and constitute all of the insurance coverage required under each Project Document. All such policies are in full force and effect, and there are no unpaid claims or premiums for any such insurance.
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(r) Regulatory Matters.
(i) Seller is a “holding company” within the meaning of Section 1262(8) of PUHCA solely with respect to its ownership of Exempt Wholesale Generators and is entitled to the waivers and exemptions set forth in 18 C.F.R. § 366.3(a). The Project Company is (i) not a “holding company” within the meaning of Section 1262(8) of PUHCA, and (ii) an Exempt Wholesale Generator and exempt from regulation under PUHCA pursuant to 18 C.F.R. § 366.7(e).
(ii) Seller is not a “public utility” within the meaning of Section 201(e) of the FPA.
(iii) The Project Company is a “public utility” within the meaning of Section 201(e) of the FPA, with MBR Authority. The Project Company has not provided transmission service to any party or made any sales of electric energy at wholesale. From and after the time when any energy generated by the Project (including test power) is first delivered or sold, the Project Company will (A) have MBR Authority, (B) be an “electric utility company,” and a “public-utility company,” as such terms are defined in PUHCA, and (C) be an Exempt Wholesale Generator.
(iv) Neither the Seller nor the Project Company has received any notice, claim, complaint, protest, or assertion either from, or directed to, any Governmental Authority stating or finding that any of them is in violation of or has failed to comply with any requirement under the FPA or PUHCA.
(v) The Project Company is not subject to regulation as a “public utility” as defined in N.C. Gen. Stat. § 62-3(23), or the NCUC’s administrative rules or other laws or regulations of the State of North Carolina respecting the rates charged by, or the financial or organizational regulation of “public utilities” or “electric utilities”. The Project Company is not subject to regulation as an “alternative retail electric supplier” or an “electric supplier” under the NCUC’s administrative rules or other laws or regulations of the State of North Carolina respecting the rates charged by, or the financial or organizational regulation of “public utilities” or “electric utilities”.
(vi) The Project Company is in compliance in all material respects with all applicable Laws, judgments, decrees, consents, requirements, orders and rules and regulations of PJM, FERC, NERC and NCUC, applicable to the Project Company.
(s) Site.
(i) There are no Encumbrances affecting the use or occupancy of the Project or the Site, other than Permitted Encumbrances. To the Knowledge of Seller, there are no soil, structural, subsurface or other natural or artificial conditions affecting the applicable Site that could reasonably be expected to materially and adversely affect the Project Company’s ability to conduct its operations on such real property materially in accordance with the Project Documents and the Base Case Model or otherwise have a
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Material Adverse Effect, and the Site is otherwise sufficient for the construction, development, operation and maintenance of the Project. The portions of the Site on which the buildings, improvements and fixtures comprising the Project (the “Facilities”) are being built are not located in an area that has been identified by the Director of the Federal Emergency Management Agency as a special flood hazard area in which flood insurance has been delivered under the National Flood Insurance Act of 1968, as amended. The Project Company has good and valid fee simple, leasehold and easement or other real property interests in the Site and all such valid, irrevocable and permanent easements, rights of way and other property rights as are reasonably necessary for the construction, development, ownership, operation and maintenance of the Project for its intended purposes. The Real Property Documents listed on Schedule 2 are all of the agreements to which the Project Company is a party pertaining to Project or the Site and grant all rights sufficient in all material respects to enable (A) the Project to be located, constructed, operated, maintained, removed and replaced on the Site and (B) the Project Company to construct, operate, maintain, remove and replace the Project in accordance with all Governmental Approvals and Transaction Documents, including, without limitation, providing sufficient ingress and egress in connection with the construction, operation, maintenance, removal and replacement of the Project. Other than pursuant to the Real Property Documents listed on Schedule 2, the Project Company does not have any interest in real property, whether owned, leased or otherwise occupied or used, and the Project Company is not a party to any agreement to acquire or sell any interest in real property. The Real Property Documents are in full force and effect and are valid, binding and enforceable against the Project Company and the other parties thereto. The Project Company has not assigned any interest in the Real Property Documents, subleased or granted a sub-easement, in whole or in part, or otherwise granted any third party the right to use or occupy, to any portion of the Site or the appurtenances thereto, and there are no parties in possession of the Site that are not entitled to such possession, unless otherwise shown in any of the Project Contracts. All rents and monetary obligations due and payable by the Project Company under the Real Property Documents have been paid in full and the Project Company is not in breach or default beyond any applicable notice or cure periods of its obligations under the Real Property Documents. The Project Company is not in breach or default beyond any applicable notice or cure periods of its obligations, if any, under those documents and/or instruments listed in the Title Policy and not otherwise listed as a Real Property Document. Except as may be described in the Title Policy or shown on the ALTA Survey, to the Knowledge of Seller, there are no unrecorded interests in any portion of the Site, including oil, gas or other mineral rights leases, easements, options, rights to purchase, tenancies, licenses, occupancies, rights of possession claims, encroachments or prescriptive easements. All roads necessary for the construction, development, operation and maintenance of the Project have either been completed or the Project Company possesses all necessary real property rights for the construction and completion thereof. The Site is not subject to any conservation reserve program or other agricultural preserve program.
(ii) The Site is either (a) freely accessible directly from public streets, or (b) uses adjoining private land to access the same in accordance with valid, permanent,
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irrevocable and appurtenant easements benefiting such land. To the Knowledge of Class B Member, there is no condition that would result in the termination or impairment of such access, and such access is sufficient for the operation of the Project.
(iii) With regard to the Real Property Documents and the Site: (i) the Project Company’s possession and quiet enjoyment of the Site has not been disturbed, Seller has not received written notice of any disputes with respect to any Real Property Documents, and, to the Knowledge of Seller, there are no facts or circumstances that would give rise to any disputes with respect to any Real Property Documents; (ii) no security deposit or portion thereof, if any, has been applied in respect of a breach or default under any Real Property Document that has not been redeposited in full; (iii) the other party to each Real Property Document is not in any way affiliated with Class B Member; and (iv) the Project Company has not collaterally assigned or granted any security interest in any of the Real Property Documents or any interest therein.
(t) Intellectual Property. The Project Company owns, has a valid license to or other contractual right to use all material intellectual property that is reasonably necessary to install, operate and maintain the Project. There are no pending Proceedings concerning any such intellectual property to which ▇▇▇▇▇▇ is a party, and to the Knowledge of Seller, no such Proceeding is threatened. To the Knowledge of Seller, there is not now and has never been any infringement or misappropriation by Seller of any patent, trademark, trade name, domain name, service mark, copyright or trade secret that is owned by any third party.
(u) Warranties. When the Project reaches Substantial Completion, the Warranties and the warranty of the EPC Contractors under the EPC Contracts, the warranty of the Module Supplier under the Module Supply Agreements and the warranty of the Operator under the O&M Agreement will in each case be in full force and effect, have been assigned to or are directly for the benefit of the Project Company, are enforceable by the Project Company in all material respects, and will satisfy the standards in Exhibit C.
(v) Payment of All Costs. As of the Effective Date, all costs and expenses then due and payable by the Project Company and, to the Knowledge of Seller, the AC Subsidiary, including all payments then due and payable under the relevant Material Project Documents, AC Subsidiary LLCA, Transaction Documents and Construction Financing Documents, have been paid.
(w) Mechanical Completion. The Project has achieved Mechanical Completion as of the Closing Date.
(x) Condemnation; Unrepaired Casualty. No condemnation is pending or, to the Knowledge of Seller, threatened with respect to all or part of the Project or the Site, and no unrepaired Substantial Casualty exists with respect to all or part of the Project or the Site.
(y) Brokers. None of Seller, the Project Company or their Affiliates has incurred any liability for any broker, agent or finder with respect to the Transaction Documents, Transaction or Project Documents.
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(z) Banks and Accounts. Schedule 3.1(z) contains a true and correct list of the names of all banks and other financial institutions with which the Project Company currently has an account, deposit or safe deposit box, along with the account numbers and the names of the persons holding check signing or withdrawal power.
(aa) Books and Records. True, correct and complete copies of all records of the Project Company have been delivered to the Company on the Effective Date. Such records have been maintained in accordance with good business practices.
(bb) Employees. The Project Company does not have and has not, since the Effective Date, had any employees, any “employee benefit plan” as defined in section 3(3) of ERISA or any liabilities or obligations in connection with such a plan.
(cc) Powers of Attorney. Except as set forth in the Construction Financing Documents, there are no outstanding powers of attorney executed by or with respect to the Project Company or the Project.
(dd) Prior Owner Obligations. Since the Acquisition Date, the Project has not been owned by a Person other than the Project Company.
(ee) Real Property. Seller has delivered true, complete and accurate copies of all of the Real Property Documents to the Company. Schedule 2 sets forth a true and complete list of (i) a description of all Real Property Documents, (ii) the street address and tax parcel number of such real property pertaining to each Real Property Document; (iii) the counterparties to each Real Property Document; and (iv) the use of the real property pertaining to each Real Property Document. Except as set forth on Schedule 2, (i) all available options to acquire additional real property interests contained in the Real Property Documents necessary to enable the Project to be owned, located, constructed, developed, operated, maintained, removed and replaced at the Site have been exercised, and (ii) the Real Property Documents provide all of the real property interests sufficient to (A) enable the Project to be owned, located, constructed, developed, operated, maintained, removed and replaced for a period of the Term (as such term is defined in the PPA) and (B) provide sufficient ingress to and egress from the Project for the construction, development, ownership, operation, maintenance, removal or replacement of the Project, all without any further consent or approval from any third party. Except as otherwise expressly provided herein, the Project Company neither owns nor leases any real property other than each of the Sites that are described in the Real Property Documents.
(ff) No Subsidiaries. Other than its minority interests in AC Subsidiary, the Project Company does not own any capital stock, security, partnership interest or other equity interest of any kind in any corporation, partnership, limited liability company, joint venture, association or other entity.
(gg) No Other Representations or Warranties. Seller is not relying on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations or warranties expressly set out in this MIPA and the other Transaction Documents to which it is a party.
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3.2 Representations and Warranties of the Company. The following representations and warranties are made by the Company to Seller on the Effective Date, unless specifically limited to only certain dates:
(a) Organization, Good Standing, Authority, Etc. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to own, lease and operate its properties and to carry on its business as being conducted.
(b) No Conflicts. The execution and delivery by the Company of the Transaction Documents to which it is a party do not, and the performance of its obligations under such agreements, will not (i) violate any laws, statutes, rules, regulations, ordinances, judgments, settlements, orders, decrees, injunctions, and writs of any Governmental Authority having jurisdiction over the Company, (ii) conflict with or cause a breach of any provision in the charter, bylaws or other organizational document of the Company, or (iii) cause a breach of, constitute a default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which the Company is a party or under which it is bound or to which any of its Assets are subject (or result in the imposition of an Encumbrance upon any such Assets) except (in the case of clause (i), (ii) and (iii)) for any such event that would not reasonably be expected to have a Material Adverse Effect or adversely affect the ability of the Company to timely execute, deliver and perform any of its material obligations under this MIPA.
(c) Absence of Litigation. There is no action, suit, claim, investigation or proceeding of any kind pending or, to the knowledge of the Company, threatened, before any court, arbitration panel or Governmental Authority having jurisdiction against the Investor that could reasonably be expected to adversely affect the Company’s ability to execute, deliver and perform its obligations under this MIPA and each Transaction Document to which it is a party and consummate the Transaction.
(d) Authority; Enforceability. The Company has the requisite power and authority to execute, deliver and enter into the Transaction Documents to which it is a party and to perform its obligations thereunder and consummate the Transaction. The execution and delivery by the Company of the Transaction Documents to which it is a party and the consummation of the Transaction have been duly authorized by all necessary entity action. Each Transaction Document to which the Company is a party has been duly authorized, validly executed and delivered and constitutes the legal, valid and binding obligations of the Company, enforceable against such person in accordance with its terms, except as its enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and general equitable principles (whether in a proceeding in equity or at law).
(e) Consents and Approvals. No filings, consents, waivers, authorizations or approvals are required for the Company to execute, deliver and perform its obligations under the Transaction Documents to which it is a party, or for the consummation of the Transaction, other
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than those already obtained or made, those to be obtained or made in the ordinary course of business or those that are not required to be obtained or made prior to such date.
(f) Brokers. None of the Company or its Affiliates has retained or incurred any liability for any other broker, agent or finder with respect to the Transaction Documents or the Transaction.
(g) No Other Representations or Warranties. The Company is not relying on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations or warranties expressly set out in this MIPA and the other Transaction Documents to which it is a party.
(h) Compliance with Applicable Law.
(i) (A) The Company is and always has been in material compliance with all Applicable Law and Governmental Approvals and (B) the Company has not received any written notice from any Governmental Authority of an actual or potential material violation of any Applicable Law with respect to the Company, or the Transaction, which violation has not been remedied or cured.
(ii) None of the Company or any Covered Entity relating to the Company is a Sanctioned Person, has any of its Assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person or does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority. The proceeds of any Transaction Document will not be used to fund any operations in, finance any investments or activities in or make any payments to a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority. The funds used for the Project are not derived from any unlawful activity. The Company and each Covered Entity relating to the Company is in compliance with and does not engage in any dealings or transactions prohibited by any Anti-Terrorism Laws.
ARTICLE FOUR
CONDITIONS PRECEDENT
4.1 Closing Date Deliverables.
(a) On or prior to the Closing Date, Seller shall deliver, or cause to be delivered, to the Company:
(i) Officer’s Certificate. A certificate duly executed by an authorized officer of Seller dated as of the Closing Date certifying (i) that attached thereto is a true, correct and complete copy of the certificate of formation of Seller, as amended; (ii) as to the authority and incumbency of the officers of Seller executing this MIPA and the
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Assignment Agreement; (iii) that attached thereto is a certificate of good standing of Seller from its jurisdiction of formation; and (iv) that attached thereto are true, correct and complete copies of the limited liability company agreement and certificate of formation of Project Company.
(ii) FIRPTA Certificate. An affidavit of non-foreign status that complies with Section 1445 of the Code and the Treasury Regulations promulgated thereunder duly executed by Seller (or, if Seller is disregarded as separate from its owner for federal income tax purposes, the Person that is treated as the owner of Seller’s assets for federal income tax purposes); provided that a valid executed IRS Form W-9 shall be acceptable for satisfying the requirements of this Section 4.1(a)(ii).
(iii) Books and Records. All original books and records of Project Company.
(iv) Beginning of Construction Certificate. The Beginning of Construction Certificate, executed by the Seller.
(b) On or prior to the Closing Date, the Company shall deliver, or cause to be delivered, to Seller:
(i) Officer’s Certificate. A certificate duly executed by an authorized officer of the Company dated as of the Closing Date certifying (i) that attached thereto is a true, correct and complete copy of the certificate of formation of the Company, as amended; (ii) as to the authority and incumbency of the officers of the Company executing this MIPA and the Assignment Agreement; and (iii) that attached thereto is a certificate of good standing of the Company from its jurisdiction of formation.
(ii) FIRPTA Certificate. An affidavit of non-foreign status that complies with Section 1445 of the Code and the Treasury Regulations promulgated thereunder duly executed by the Company (or, if the Company is disregarded as separate from its owner for federal income tax purposes, the Person that is treated as the owner of the Company’s assets for federal income tax purposes); provided that a valid executed IRS Form W-9 shall be acceptable for satisfying the requirements of this Section 4.1(b)(ii).
(iii) Approvals. Copies of all consents and approvals (if any) required to be obtained, made or delivered by the Company in connection with the transactions contemplated by this MIPA.
ARTICLE FIVE
TAXES
5.1 Transfer Taxes. The responsibility for paying any Transfer Taxes imposed by Applicable Law by reason of the transfer of the Membership Interests in Project Company to the Company as provided herein shall be borne by Seller. The Parties shall cooperate in obtaining all
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applicable exemptions from Transfer Taxes that are allowable under Applicable Law. Seller shall file all necessary documentation and Tax Returns with respect to such Transfer Taxes and the Company shall provide such cooperation in connection with the preparation and filing of such documentation and Tax Returns as may be reasonably requested by Seller.
5.2 Tax Matters. Seller shall have responsibility for, and shall pay or cause to be paid when due, any and all Taxes imposed on the assets of Project Company or on Project Company with respect to any Tax period (or portion thereof) ending on or before the Closing Date. In the case of any Taxes that are imposed on a periodic basis and relate to Tax periods that begin before and end after the Closing Date (each a “Straddle Taxable Period”) with respect to the Project Assets or Project Company, the portion of such Tax which related to the portion of such taxable period ending on the Closing Date shall (a) in the case of any Taxes other than the Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period, and (b) in the case of any Tax based upon or related to income or receipts, be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date. Seller shall have responsibility for, and shall pay or cause to be paid when due, any and all Taxes with respect to a Straddle Taxable Period (“Straddle Period Taxes”) relating to the Project Assets or Project Company that, in each case, are attributable to the portion of the Straddle Taxable Period beginning before and ending on the Closing Date, and the Company shall have responsibility for, and shall pay or cause to be paid when due, any and all such Straddle Period Taxes for the portions of any Straddle Taxable Periods beginning after the Closing Date. Neither Seller nor any Affiliate of Seller (other than the Class B Member following the MC Funding Date) will claim on any Tax Return any depreciation or amortization deductions or the ITC with respect to ownership or operation of the Project or any property that is part of the Project, including the Project Assets, other than as a result of the ownership of the Class B Units (as defined in the LLCA) by Class B Member (or its regarded owner for U.S. federal income tax purposes).
ARTICLE SIX
INDEMNIFICATION AND REMEDIES
6.1 General. From and after the Closing Date, Seller shall defend, indemnify and hold harmless the Company Indemnified Parties from and against, and without duplication, any and all Damages imposed upon, suffered or incurred by any Company Indemnified Party by reason of, arising out of or resulting from: (a) any inaccuracy, breach or failure of any representation or warranty by Seller set forth in this MIPA; (b) any breach of any covenant or obligation of Seller set forth in this MIPA; (c) Transfer Taxes for which Seller is liable; or (d) any Taxes of Seller for any taxable period.
6.2 Limitations on Liability.
(a) Overall Limitations. Notwithstanding any other provision of this MIPA, Seller’s aggregate liability under this Article Six shall not exceed one-hundred percent (100%) of the Cash Purchase Price paid to Seller, plus all out of pocket costs, expenses or fees (including
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reasonable and documented attorneys’ fees and costs) incurred in connection with collection of amounts under Section 6.1 and enforcement of this MIPA, except that there shall be no limitation on the liability of Seller for claims for Damages resulting from a breach of a Fundamental Representation, fraud, gross negligence or willful misconduct of Seller or any Affiliate of Seller, any Third Party claim, environmental claims, any Recapture Event, any tax gross-up, or any costs of collection and enforcement by any Company Indemnified Party.
(b) Survival. No indemnification claim may be made under Section 6.1(a) based on the inaccuracy, breach or failure of any representation or warranty after a period of fifteen (15) months following the Effective Date; provided that an indemnification claim may be brought with respect to (i) any Fundamental Representation and any Tax Loss or Tax Representation, within sixty (60) days after the expiration of the applicable statute of limitations (giving effect to any waivers or extensions thereof) and (ii) any Environmental Representation, within a period of five (5) years following the Effective Date; and provided, further, that if written notice of an indemnification claim has been given by a Company Indemnified Party on or prior to the last day of the respective foregoing period, then the obligation of Seller to indemnify such Company Indemnified Party pursuant to this Article Six shall survive with respect to such claim until such claim is finally resolved.
6.3 Procedure for Indemnification.
(a) Notice of Claim. After (i) receipt by a Company Indemnified Party of any claim or demand asserted, or any notice of the commencement of any Proceeding, by any Third Party or (ii) the occurrence of any other Damages, in either case as to which indemnification may be sought by any Company Indemnified Party under this Article Six, such Company Indemnified Party shall give prompt written notice thereof to Seller, specifying the nature of such claim, demand or Proceeding and the amount or estimated amount of Damages to the extent determinable, which estimate shall not be binding on the Company Indemnified Party; provided that a failure of a Company Indemnified Party to give timely notice shall not affect its rights to indemnification under this Article Six, except to the extent that Seller has been actually prejudiced by such failure.
(b) Conduct of Claim. Seller shall have the right, at its option and at its own expense, to be represented by counsel of its choice and to participate in, or take control of, the defense, negotiation and/or settlement of such claim, demand or Proceeding that relates to any amounts indemnifiable or potentially indemnifiable under this Article Six; provided that the Company Indemnified Party may participate in any such Proceeding with counsel of its choice (which shall be at its own expense) if (i) Seller chooses counsel not reasonably acceptable to such Company Indemnified Party, or (ii) in the reasonable opinion of such Company Indemnified Party and its counsel, such Proceeding involves the potential imposition of criminal liability upon such Company Indemnified Party or a conflict of interest between such Company Indemnified Party and Seller. The Company Indemnified Party shall have a right to notice of any settlement, and Seller shall not execute or otherwise agree to any settlement that (A) provides for other than solely monetary payment without the Company Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed or (B) does not include as an unconditional term thereof the giving of a release from all liability with respect to such claim by
23
each claimant or plaintiff to each Company Indemnified Party that is or may be subject to the Third Party claim, without the Company Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. If Seller elects not to defend or settle such claim, demand or Proceeding and the Company Indemnified Party defends, settles or otherwise deals with any such Proceeding, the Company Indemnified Party shall provide fifteen (15) days’ written notice of any settlement to Seller and shall act reasonably and in accordance with the Company Indemnified Party’s good faith business judgment. Notwithstanding the foregoing, the Company Indemnified Party shall have the right to pay or settle any such claim; provided that in such event the Company Indemnified Party shall waive any right to indemnity therefor by Seller. Seller and the Company Indemnified Party shall cooperate fully with each other in connection with the defense, negotiation or settlement of any such claim, demand or Proceeding.
(c) Payment of Third Party Claims. After final judgment or award shall have been rendered by a Governmental Authority of competent jurisdiction and the expiration of the time in which to file an appeal therefrom, or a settlement shall have been consummated, or the Company Indemnified Party and Seller shall have arrived at a mutually binding agreement with respect to each separate matter indemnified by Seller, the Company Indemnified Party shall forward to Seller notice of any sums due and owing by Seller with respect to such matter, and Seller shall pay such sums within fifteen (15) days after the date of receipt of such notice.
(d) Access to Information. If any claim is made by a Third Party against a Company Indemnified Party, the Company Indemnified Party shall use commercially reasonable efforts to make available to Seller those partners, members, officers and employees whose assistance, testimony or presence is necessary to assist Seller in evaluating and defending such claims; provided that any such access shall be conducted in a manner as not to interfere unreasonably with the operations of the business of the Company Indemnified Party.
6.4 Tax Treatment of Indemnification Payments. Except as otherwise required by Applicable Law, the Parties shall treat indemnification payments pursuant to Section 6.1 as adjustments to the Purchase Price for Tax purposes.
6.5 RESERVED.
6.6 No Duplication. The Company, for itself, and the Company Indemnified Parties agree that, notwithstanding anything to the contrary herein or in any other agreement, any liability for indemnification under Section 6.1 shall be determined without duplication of recovery by the Company and the Company Indemnified Parties under this MIPA, the ECCA, the LLCA or any other Transaction Document. Without limiting the generality of the prior sentence, if a statement of facts, condition or event constitutes a breach of more than one cause, representation, warranty, covenant or agreement which is subject to an indemnification obligation in Section 6.1, only one recovery thereof shall be allowed.
6.7 Sole Remedy. Each Company Indemnified Party will not bring any action or proceeding, or take any other action, in respect of indemnification claims to the extent recoverable and addressed by the payment of money except as provided by this Article Six and each Company Indemnified Party hereby agrees that the only relief and remedy available to each Company
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Indemnified Party in respect of indemnification claims to the extent recoverable and addressed by the payment of money shall be as set forth in this Article Six; provided, that (a) the foregoing limitation shall not apply to a cause of action relating to fraud or willful misconduct, in relation to any breach, default, or nonperformance by any party or any of its Affiliates of its or their respective representations and warranties, covenants or obligations, made in whatever capacity pursuant to, and under the terms of, this MIPA, or any certificate, instrument, or document delivered pursuant hereto and (b) no Company Indemnified Party has waived any rights to pursue non monetary or equitable remedies under this MIPA or the other Transaction Documents, or to pursue any other remedy expressly provided herein.
ARTICLE SEVEN
GENERAL PROVISIONS
7.1 Notices. All notices and communications will be in writing and deemed given if delivered by email (subject to confirmation of receipt), delivered personally, by a nationally recognized overnight courier, or mailed by registered or certified mail (return receipt requested) (or if any such delivery is refused) to the Parties at the following addresses:
| If to Seller, to: | ||||||||
| MN8 DevCo 3 LLC | ||||||||
| c/o MN8 Energy LLC | ||||||||
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||||||||
| New York, NY 10036 | ||||||||
| Attn: Legal | ||||||||
| Email: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇ | ||||||||
| With a copy to: | ||||||||
| Holland & Knight LLP | ||||||||
| ▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇ | ||||||||
| Houston, TX 77002 | ||||||||
| Attn: ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||
| Email: ▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ | ||||||||
| If to the Company, to: | ||||||||
| American Beech Solar LLC | ||||||||
| c/o MN8 Energy LLC | ||||||||
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||||||||
| New York, NY 10036 | ||||||||
| Attn: Legal | ||||||||
| Email: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇ | ||||||||
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Each Party may change the place to which notices are sent or delivered or to specify one additional address to which copies of notices may be sent, in either case by similar notice sent or delivered in like manner to the other Party.
7.2 Amendment and Waiver. Neither this MIPA nor any term hereof may be changed, amended or terminated orally, but only by written act of the Parties (or, in respect of a waiver, the waiving Party). No failure or delay on the part of a Party hereto in the exercise of any right hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right preclude any other or further exercise thereof or of any other right.
7.3 Binding Nature; Assignment. This MIPA will bind and inure to the benefit of the Parties hereto and their respective successors and legal representatives and permitted assigns. No Party will assign its rights, interests or obligations under this MIPA (except by operation of law), without the prior written consent of the other Parties hereto, and any such assignment contrary to the terms hereof will be null and void and of no force and effect; provided, this MIPA may be collaterally assigned to the Collateral Agent pursuant to the Construction Financing Documents (as used herein, as such terms are defined in the ECCA) and assigned to the Collateral Agent and any Subsequent Transferee (as used herein, as such term is defined in the Tax Equity Consent) that has succeeded to Class B Member’s rights under the LLCA, the ECCA and this MIPA in connection with a Transfer (as used herein, as such term is defined in the LLCA) upon foreclosure and an initial Transfer after such foreclosure (or in lieu of such foreclosure) under an Encumbrance (as such term is defined in the LLCA) held by the Collateral Agent pursuant to the Construction Financing Documents, so long as in each case the Collateral Agent, any Subsequent Transferee and any Transfer upon foreclosure and any such initial Transfer after foreclosure of any such Encumbrance (or Transfer in lieu of such foreclosure) complies with the express terms and conditions of the Tax Equity Consent with respect to any Transfer upon foreclosure and any such initial Transfer after foreclosure of the Encumbrance (or Transfer in lieu of such foreclosure) held by the Collateral Agent in the LLCA, the ECCA and the MIPA.
7.4 GOVERNING LAW. THIS MIPA WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE OF LAW RULES (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
7.5 Submission to Jurisdiction. Each of the Parties irrevocably consents to the non-exclusive jurisdiction of the courts of the State of New York, Borough of Manhattan and of any federal court located in the Southern District of New York in connection with any suit, action or other proceeding arising out of or relating to this MIPA or the transactions contemplated hereby, agrees to waive any objection to venue in the State and County of New York, and agrees that, to the extent permitted by law, service of process in connection with any such proceeding may be effected by mailing in the same manner provided in Section 7.1. Each Party hereto hereby waives, to the fullest extent permitted by Applicable Law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this MIPA.
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7.6 Entire Agreement. This MIPA constitutes the entire understanding of the Parties with respect to the subject matter hereof, and supersedes all prior statements or agreements, whether oral or written, among the Parties with respect to such subject matter.
7.7 Counterparts; Electronic Signatures. This MIPA may be executed in counterparts (which may be delivered by use of a facsimile machine or an e-mail which attaches a portable document format (.pdf) document), each of which will be an original, but each of which, when taken together, will constitute one and the same instrument. The words “execution”, “execute”, “signed”, “signature”, and words of like import in or related to any document signed or to be signed in connection with this MIPA and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Parties, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
7.8 No Third Party Beneficiaries. This MIPA is solely for the benefit of the Parties and their respective successors and permitted assigns, and except as expressly provided in Article Six, this MIPA shall not otherwise be deemed to confer upon or give to any other third party any right, claim, cause of action or other interest herein.
7.9 Confidentiality. The confidentiality provisions of Section 7.7 of the LLCA apply to this MIPA, mutatis mutandis, as though they were set out in full in this MIPA, except that (i) references to the LLCA therein shall be construed as references to this MIPA, (ii) references to the Parties, any Party, such Party, each Party, a Party and no Party therein shall each be construed as references to the Parties as defined in this MIPA and (iii) references to other Party, other Parties and another Party therein shall each be construed as references to the Parties, collectively, as defined in both this MIPA and the LLCA.
7.10 Further Assurances. Each Party agrees to furnish or cause to be furnished to the other Party, upon request, as promptly as practicable, but subject to any confidentiality restrictions and attorney-client privilege, such information and assistance (including access to books and records and any additional documents) relating to the Project or Project Company as is reasonably necessary for: (i) the preparation of any Tax Return or the prosecution or defense against any action with respect to Taxes; or (ii) the initiation or defense of any action to which the requesting Party is a party or is subject, provided that no such obligation shall exist with respect to any action in which the Parties (or their Affiliates) are adverse to one another. If after the Closing Date, there are any documents necessary in connection with any action relating to Taxes, any litigation or investigation or any other matter requiring any such books and records (other than as provided in the prior sentence), each Party will make available to the other Party, during normal business hours after reasonable advance notice, all books and records retained and remaining in existence. In addition, if after the Closing Date any further action is reasonably necessary to carry out the purposes of this MIPA and the transactions contemplated hereby, each of the Parties will take such
27
further reasonable actions (including the execution and delivery of such further instruments and documents) as the other Party may reasonably request in writing; provided that the requesting Party shall be required to pay any out of pocket, third-party expenses incurred by the other Party in complying with such request; and provided further that no Party will be required to take any action that, in the opinion of counsel, would constitute a violation of any Applicable Law.
7.11 Equitable Remedies. Each Party acknowledges that the other would suffer irreparable damage and would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements set forth in this MIPA were not performed by such other Party in accordance with its terms, and therefore each Party agrees that the other Party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to specific performance, injunctive and other equitable relief, without the necessity of posting of a bond or other security.
7.12 Consequential Damages. NO PARTY SHALL BE LIABLE (WHETHER IN CONTRACT, TORT, STRICT LIABILITY, EQUITY OR OTHERWISE) FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT FORESEEABLE, INCLUDING LOST PROFITS OR REVENUES AND ANY OTHER DAMAGES WHICH CANNOT BE READILY ASCERTAINED AND QUANTIFIED, FOR ANY BREACH OF A REPRESENTATION OR WARRANTY UNDER THIS MIPA, OTHER THAN SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES AWARDED TO ANY THIRD PARTY WHOSE CLAIM IS SUBJECT TO INDEMNIFICATION IN ACCORDANCE WITH ARTICLE SIX. THE OBLIGATIONS OF THE PARTIES UNDER THIS MIPA ARE OBLIGATIONS OF THE PARTIES ONLY AND NO RECOURSE SHALL BE AVAILABLE UNDER THIS MIPA AGAINST ANY OFFICER, DIRECTOR, MANAGER, MEMBER, PARTNER OR AFFILIATE OF ANY PARTY.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this MIPA to be duly executed as of the day and year first above written.
| MN8 DEVCO 3 LLC | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| AMERICAN BEECH SOLAR HOLDINGS LLC | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
[Signature Page to American Beech Membership Interest Purchase Agreement]
EXHIBIT A
DEFINITIONS
“AC Subsidiary” means AC1 ASOA LLC, a Delaware limited liability company.
“AC Subsidiary LLCA” means that certain Second Amended and Restated Limited Liability Company Agreement of AC1 ASOA LLC, dated as of January 10, 2023, by and among the Project Company and the other parties from time to time thereto.
“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or under common Control with such first Person; provided, that, with respect to the Company and the Project Company, “Affiliate” shall not include the Investor or any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or under common Control with the Investor.
“Affiliate Contract” means any Contract between or among the Project Company, on the one hand, and any Affiliate of Seller, on the other hand.
“ALTA Survey” means, an ALTA/NSPS land title survey of the real property interests comprising the Site, including all easements, related rights of way and other appurtenances thereto, whether owned, licensed or leased, certified to the Title Company, the Company, the Project Company and the Investor, and as revised, updated, or reissued pursuant to the terms of the ECCA.
“Anti-Terrorism Laws” means any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery, all as amended, supplemented or replaced from time to time.
“Applicable Law” means any federal, state or local treaty, constitution, law, statute, ordinance, rule, injunction, writ, order, decree, regulation or other directive that is legally binding and has been enacted, issued or promulgated in final form by any Governmental Authority, including all protocols and other binding rules of any relevant independent system operator.
“Appraised Value” means the fair market value of the Project as set forth in the Appraisal (as defined in the ECCA) delivered in connection with the MC Funding Date (as defined in the ECCA) pursuant to the ECCA; provided, however, that any development premium shall not exceed 20% of the fair market value of the Project (exclusive of the development premium), taking into consideration any other developer fees or payments under any construction service agreements.
“Appraiser” means ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Incorporated.
“Acquisition Date” means October 29, 2024.
“Asset Management Agreement” means that certain Management Services Agreement, dated as of August 27, 2025, by and between the Project Company and the Asset Manager.
“Asset Manager” means GSRP Services LLC.
Exhibit A-1
“Assets” means all right, title and interest of a Person in land, properties, buildings, improvements, fixtures, foundations, assets and rights of any kind, whether tangible or intangible, real, personal or mixed, including contracts, leases, easements, equipment, systems, books, data, reports, studies and records, proprietary rights, intellectual property, Governmental Approvals, rights under or pursuant to all warranties, representations and guarantees, cash, accounts receivable, deposits and prepaid expenses.
“Assignment Agreement” means an assignment agreement substantially in the form attached as Exhibit B.
“Backleverage Financing Documents” is defined in the LLCA.
“Bankruptcy” means, with respect to any Person: (a) that such Person (i) files in any court pursuant to any statute of the United States or of any state a voluntary petition in bankruptcy or insolvency, (ii) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law or the appointment of a receiver or a trustee of all or substantially all of such Person’s Assets, (iii) makes a general assignment for the benefit of creditors, (iv) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a), (vi) admits in writing its inability to pay its debts (other than debts subject to a bona fide dispute) as they fall due or (vii) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for all or substantially all of its Assets; or (b) a petition in bankruptcy or insolvency, or a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any law has been commenced against such Person, and (i) 60 days have expired since the service of such petition on the Person without dismissal thereof or (ii) with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or substantially all of such Person’s properties has been appointed and (x) 60 days have expired without the appointment’s having been vacated or stayed, or (y) 60 days have expired after the date of expiration of a stay, if the appointment has not previously been vacated; or (c) if a Member (as defined in the ECCA), the whole or any material portion of such Person’s Membership Interest is levied or attached, and such levy or attachment is not released or discharged within 60 days.
“Base Case Model” means the financial model attached as Exhibit B to the ECCA as updated in accordance with the express terms of the ECCA and the LLCA.
“Beginning of Construction Certificate” has the meaning given to the term Beginning of Construction Certificate (MC Funding) in the ECCA except that such certificate shall be given by the Seller (and not the Class B Member).
“Block” has the meaning given to the term “Circuit” in the PV EPC Contract.
“Cash Purchase Price” has the meaning set forth in Section 2.2(a).
Exhibit A-2
“Class B Member” has the meaning set forth in the MIPA recitals.
“Closing Date” means the MC Funding Date pursuant to (and as defined in) the ECCA.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral Agent” means Natixis, New York Branch or any other Person serving in the role of collateral agent under the Construction Financing Documents and the Backleverage Financing Documents.
“Company” has the meaning set forth in the MIPA preamble.
“Company Indemnified Parties” means, collectively, the Company and its Affiliates and their respective members, managers, partners, shareholders, officers, directors, employees, consultants, agents advisors, successors and assigns.
“Compliance Authority” means the (a) U.S. Department of the Treasury /Office of Foreign Assets Control, (b) U.S. Department of the Treasury /Financial Crimes Enforcement Network, (c) U.S. Department of State /Directorate of Defense Trade Controls, (d) U.S. Department of Commerce /Bureau of Industry and Security, (e) U.S. Internal Revenue Service, (f) U.S. Department of Justice and (g) U.S. Securities and Exchange Commission.
“Construction Financing Agreement” means that certain Credit Agreement, dated as of December 31, 2024, by and among MN8 DevCo 3 LLC and MN8 Bleeker LLC, as borrowers, Natixis, New York Branch, as administrative agent and collateral agent, and the financial institutions party thereto as lenders and LC issuers, as amended, amended and restated, supplemented, or otherwise modified from time to time.
“Construction Financing Documents” is defined in the LLCA.
“Construction Management Agreement” means that certain Construction Management and Administrative Services Agreement, dated October 29, 2024, between the Project Company and the Construction Manager.
“Construction Manager” means BayWa r.e. Solar Projects LLC.
“Contract” means any written agreement, contract, lease, sublease, promise, evidence of indebtedness (including any promissory note), mortgage, indenture, security agreement, bond, guaranty, deed of trust, purchase order, letter of credit, license, sublicense, instrument, obligation, commitment, or undertaking of any nature, but not including any Governmental Approvals.
“Control” means the possession, directly or indirectly, of either of the following: (a) (i) in the case of a corporation, more than 50% of the outstanding voting securities, (ii) in the case of a limited liability company, partnership, limited partnership or joint venture, the right to more than 50% of the distributions (including liquidating distributions) or more than 50% of the economic or outstanding voting securities, (iii) in the case of a trust or estate, including a business trust, more than 50% of the beneficial interest and (iv) in the case of any other entity, more than 50% of the
Exhibit A-3
economic or beneficial interest, or (b) in the case of any entity, the power or authority, through ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity. “Controlled” and “Controlling” each have a correlative meaning.
“Cost Segregation Report” means the cost segregation report prepared by the Appraiser, and included as part of the Appraisal, allocating the Company’s basis in the Project among the assets of the Project (including the portion that is eligible for the ITC).
“Covered Entity” means any Person and its Affiliates.
“Damages” means any and all judgments, awards, claims, actions, demands, liabilities, causes of action, lawsuits, suits, proceedings, damages (including liquidated damages), losses (including amounts paid in settlement of claims), Taxes, Tax Losses, costs and expenses (including litigation costs and documented attorneys’ and experts’ fees and expenses), assessments, fines, penalties, settlements, administrative orders or injunctions (including any loss of profits or consequential, punitive, incidental or special damages recovered by any Third Party, but excluding loss of future profits or consequential, punitive, incidental or special damages asserted by any Party or an Affiliate; provided, that lost ITCs and other lost tax benefits contemplated by the Base Case Model shall not constitute lost future profits or consequential, punitive, incidental or special damages), including interest, penalties, disbursements and costs of investigations, deficiencies, levies, duties and imposts.
“Data Site” means that certain data room named “American Beech” located on ▇▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇.
“Disqualified Entity” is defined in the LLCA.
“ECCA” has the meaning set forth in the MIPA recitals.
“Effective Date” has the meaning set forth in the MIPA preamble.
“Encumbrance” means any lien (statutory or otherwise), mortgage, deed of trust, security deed, deed to secure debt, claim, option, lease, occupancy or use agreement, grant, right of way, charge, easement, charge, pledge, security interest, hypothecation, assignment, restriction (whether on voting, sale, transfer or disposition), purchase right or option, right of first refusal, encroachment, deficiency, defect, adverse claim or other encumbrance of any kind or nature, whether voluntary or involuntary, or imposed by law (including any agreement to give any of the foregoing or any conditional sale or other title retention agreement), understanding or otherwise, and whether or not of record, impairing or adversely affecting the title to real or personal property (including membership interests).
“Energy Management Services Agreement” has the meaning given in the LLCA.
“Environmental Claim” means any suit, action, notice of violation or non-compliance, investigation, notice of liability or potential liability, consent order, consent decree, consent agreement, or proceeding before any Governmental Authority or arbitral body, or otherwise
Exhibit A-4
brought or made by a Governmental Authority relating to the Project or the Project Company: (a) arising pursuant to any Environmental Law; (b) in connection with any actual or alleged violation of, or liability pursuant to, any Environmental Law; (c) in connection with the presence or Release of, or exposure to, any Hazardous Substance, including claims to report, clean up, remove, remediate, contain, confine, excavate, treat, monitor, assess, evaluate, investigate, delineate, study, test, analyze or in any other way address Hazardous Substances in the environment, including the Project Site; or (d) in connection with any actual or alleged damage, injury, threat or harm to: (i) health or safety regulated under any Environmental Law; (ii) natural resources; (iii) endangered, threatened, listed or protected species or habitat; or (iv) the environment.
“Environmental Law” means any Applicable Law (both statutory and common law) pertaining to, regulating, relating to or imposing liability, standards or obligations of conduct concerning pollution or protection of health, safety (including the health and safety of workers under the U.S. Occupational Safety and Health Act of 1970 (29 U.S.C. §§ 651 et seq.)), the environment, wildlife, wildlife habitat or natural resources, including without limitation (a) any Applicable Law relating to any actual or threatened emission, discharge, Release, manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any hazardous waste (as defined by 42 U.S.C. § 6903(5)), hazardous substance (as defined by 42 U.S.C. § 9601(14)), hazardous material (as defined by 49 U.S.C. § 5102(2)), toxic pollutant (as listed pursuant to 33 U.S.C. § 1317), pollutant or contaminant (as pollutant or contaminant is defined in 42 U.S.C. § 9601(33)), or oil (as defined by 33 U.S.C. § 2701(23)) and (b) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), and the Endangered Species Act of 1973 (16 U.S.C. §§ 1531 et seq.), with any amendments or reauthorization thereto or thereof, and any and all regulations promulgated thereunder, and all analogous state and local counterparts or equivalents.
“Environmental Representations” means the representations set forth in Section 3.1(p).
“EPC Contractor” means, individually or collectively as the context may require, the HV EPC Contractor and the PV EPC Contractor.
“EPC Contracts” means the HV EPC Contract and the PV EPC Contract.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exempt Wholesale Generator” means an “exempt wholesale generator” under PUHCA and the implementing regulations of FERC at 18 C.F.R. Part 366.
“FERC” means the Federal Energy Regulatory Commission or any successor agency.
“Final Completion” has the meaning given in the applicable EPC Contract.
“First Installment” has the meaning set forth in Section 2.2(b)(i).
Exhibit A-5
“FPA” means the Federal Power Act, as amended, and FERC’s rules and regulations thereunder.
“Fundamental Representation” means each of the representations and warranties made by the Seller pursuant to Sections 3.1(a), 3.1(b), 3.1(d) and 3.1(f)(i).
“GAAP” means United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis.
“Governmental Approvals” means filings and registrations with, and licenses, permits, notices, approvals, grants, easements, exemptions, variances and authorizations from, any Governmental Authority, other than those licenses, permits, notices, approvals, grants, easements, exemptions, variances and authorizations that are ministerial in nature and can be obtained in the ordinary course of business.
“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental or quasi-governmental authority, court, commission, board, bureau, agency or instrumentality, or any regulatory, administrative or other department, agency, or any political or other subdivision, department or branch of any of the foregoing, and any taxing authority and any electric reliability organization, regional transmission organization or independent system operator, including FERC, NERC, PJM, and NCUC or any successor thereto, in each case, with legal jurisdiction over the matter or Person in question.
“Hazardous Substances” means all substances, materials, or chemicals (whether solid, liquid or gaseous) that (a) require removal, remediation or reporting under any Environmental Law or (b) are defined, listed, classified, or regulated as a “pollutant,” “contaminant,” “hazardous material,” “hazardous substance,” “hazardous waste,” “toxic substance,” or any word, term, or phrase of similar meaning or regulatory effect under any Environmental Law. Hazardous Substances include asbestos or asbestos containing materials, radioactive materials, lead, polychlorinated biphenyls, any petroleum or petroleum product, mold, mycotoxins, urea formaldehyde foam insulation and radon gas.
“HV EPC Contract” means that certain HV Balance of Plant Agreement, dated as of September 27, 2024, by and between the Project Company and the HV EPC Contractor, as supplemented by Third Amended and Restated Limited Notice to Proceed, dated August 30, 2024.
“HV EPC Contractor” means RES America Construction Inc.
“Indebtedness” means (a) any indebtedness for borrowed money; (b) any indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security; (c) amounts owing as the deferred purchase price for the purchase of property or services other than accounts payable incurred in the ordinary course of business which are less than thirty (30) days past due; (d) liabilities under any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement or other similar agreement designed to protect the Project Company against fluctuations in interest rates or other currency fluctuations and all net ordinary course settlement or other obligations under any other hedging
Exhibit A-6
arrangement; (e) all contingent reimbursement obligations with respect to letters of credit; (f) any obligations under leases which are or should be, in accordance with GAAP, recorded as capital leases, conditional sales contracts and other similar title retention instruments whether short term or long term; (g) all obligations to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities (or property); (h) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property (even though the rights and remedies of the seller or lender under such agreement are limited to repossession or sale of such property); (i) any obligations of the types referred to in clauses (a) – (h) secured by a lien on any property or Assets of the Project Company and/or any off-balance sheet financings, whether or not such indebtedness is assumed by such Person or is non-recourse to such Person; and (j) all guarantees (or obligations that are substantially the economic equivalent of a guarantee) of obligations of a type referred to in clauses (a) – (i).
“Interconnecting Utility” means Virginia Electric and Power Company.
“Interconnection Agreement” means that certain Interconnection Service Agreement, dated as of March 25, 2022, by and among PJM Interconnection, L.L.C., the Project Company and the Interconnecting Utility, as amended by that certain Agreement to Amend, dated as of May 4, 2023, by and among PJM Interconnection, L.L.C., the Project Company and the Interconnecting Utility.
“Interconnection Construction Services Agreement” means that certain Interconnection Construction Service Agreement, dated as of May 2, 2022, by and among PJM Interconnection, L.L.C., the Project Company, and the Interconnecting Utility, as amended by that certain Agreement to Amend, dated as of May 4, 2023, by and among PJM Interconnection, L.L.C., the Project Company, and the Interconnecting Utility.
“Inverter Supply Agreement” means that certain Purchase Order No. P-0284-6245 for PCS Skids and Commissioning, dated as of July 17, 2024, by and between the Project Company and Sungrow USA Corporation.
“Investor” has the meaning set forth in the MIPA recitals.
“IRS” means the Internal Revenue Service or any successor agency.
“ITC” means the investment tax credit allowed pursuant to Section 48 of the Code.
“Knowledge” means actual knowledge after due inquiry of the persons listed on Schedule 1.
“Liability” means the outstanding amount of principal and accrued interest outstanding under the Construction Financing Documents (as defined in the ECCA) as of the Effective Date and any other liability, indebtedness, adverse claim or other obligation of Project Company as of the Effective Date; provided, that “Liability” shall not include any Remaining Costs (Estimated).
“LLCA” has the meaning set forth in the MIPA recitals.
Exhibit A-7
“Material Adverse Effect” means any change, circumstance, event or effect that has a material adverse effect on (a) the Project, (b) the business, earnings, Assets, liabilities, results of operations or financial condition of the Project Company, (c) the ability of the Project Company or any Material Contract Party (other than any counterparty to a Real Property Document) to timely perform any of its material respective obligations under any Transaction Document, Material Project Document or any Construction Financing Document to which it is a party, or (d) has a materially adverse impact on the validity or enforceability of any Transaction Document, any Material Project Document, or any Construction Financing Document.
“Material Contract Party” means a counterparty to a Material Project Document other than the Company or the Project Company.
“Material Project Documents” means the PPA, the Interconnection Agreement, the Interconnection Construction Services Agreement, the EPC Contracts, the Module Supply Agreements, the Energy Management Services Agreement, the Asset Management Agreement, the O&M Agreement, the O&M Guaranty, the Warranties, the Real Property Documents, the Construction Management Agreement, the Inverter Supply Agreement, the Tracker Supply Agreement, the Transformer Supply Agreement, each Additional Material Project Document, the Support Obligations, in connection with any Material Project Document, and each other agreement replacing or entered into in connection with any Material Project Document; provided, however, that any Material Project Document shall cease to be a Material Project Document when all material obligations thereunder have been performed and paid in full, other than contingent indemnity and reimbursement obligations that survive the expiration of the applicable Material Project Document.
“MBR Authority” means an order issued by FERC, without any restriction or condition that could reasonably be expected to result in a Material Adverse Effect, authorizing the sale at wholesale of electric energy, capacity and specified ancillary services at market-based rates pursuant to Section 205 of the FPA, accepting a tariff for filing providing for such sales, and granting such regulatory waivers and blanket authorizations as FERC customarily grants to persons authorized to sell electric energy and capacity at market-based rates, including blanket authorization to issue securities and assume liabilities under Section 204 of the FPA and FERC’s applicable regulations at 18 C.F.R. Part 34.
“Mechanical Completion” has the same meaning, collectively, given to the terms “Circuit Mechanical Completion” as defined in the PV EPC Contract and “Mechanical Completion” as defined in the HV EPC Contract, as the context may require.
“Membership Interest” means, for a limited liability company, the membership interest of a member in such company including, without limitation, its right to a share of the profits, losses, deductions and credits of the company and its right to a distributive share of the Assets of the company in accordance with the provisions of the applicable limited liability company agreement.
“MIPA” has the meaning set forth in the MIPA preamble.
“Module Supplier” means Jinko Solar (U.S.) Industries Inc.
Exhibit A-8
“Module Supply Agreements” means, collectively, (a) that certain Project Module Supply Agreement, dated as of May 16, 2024, by and between the Project Company and the Module Supplier, as amended by that certain First Amendment to Project Module Supply Agreement, dated as of September 24, 2024 and (b) that certain Project Module Supply Agreement, dated as of September 27, 2024, by and between the Project Company the Module Supplier.
“NCUC” means the North Carolina Utilities Commission or any successor entity.
“NERC” means the North American Electric Reliability Corporation or any successor thereto and any applicable regional entity thereof.
“O&M Agreement” means that certain Operation and Maintenance Agreement, dated August 27, between Project Company and MN8 Solutions LLC.
“O&M Guaranty” means that certain Operator Parent Guaranty, dated August 27, 2025, by MN8 Energy Operating Company LLC for the benefit of the Project Company, in connection with the O&M Agreement.
“Operator” means MN8 Solutions LLC, a Delaware limited liability company.
“Order” means any order, injunction (whether temporary, preliminary or permanent), ruling, decree (including any consent decree), writ, judgment, or award entered, issued, made or rendered by any court or other Governmental Authority or by any arbitrator.
“Party” means one of the parties to this MIPA.
“Permitted Encumbrances” means (a) Encumbrances imposed by any Governmental Authority for taxes (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings diligently conducted so long as (x) such proceeding will not involve any material risk of the sale, forfeiture or loss of any part of the Project or any Asset of the Company or the Project Company and (y) the payment thereof is (A) reserved for in accordance with GAAP, (B) fully covered by bonds or (C) fully covered by other security that in the case of this clause (C) is reasonably acceptable to the Investor, (b) carrier’s, warehouse’s, mechanics’, materialmen’s, landlord’s, repairmen’s, contractor’s, operator’s, vendor’s and other similar liens arising in the ordinary course of business or incident to the construction, improvement or restoration of the Project in respect of obligations (i) that are not past due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceedings will not involve any material risk of forfeiture, sale or loss of any part of the Project or any Asset of the Company and (y) the payment thereof is (A) reserved for in accordance with GAAP, (B) fully covered by bonds or (C) fully covered by other security that in the case of this clause (C) is reasonably acceptable to the Investor, (c) Encumbrances created by any Project Document and any Transaction Document, (d) obligations or duties to any Governmental Authority or utility arising in the ordinary course of business (including under Governmental Approvals), (e) restrictions on transfer imposed by applicable securities laws, applicable energy regulatory laws or as set forth in the organizational documents of the Company and Project Company, (f) prior to the SC Funding Date (as defined in the ECCA), liens created pursuant to, and securing any Indebtedness under the Construction
Exhibit A-9
Financing Documents, (g) Encumbrances on the Site that are (i) exceptions listed on the Title Policy, or (ii) defects in title, easements, rights-of-way, restrictions, including land use and zoning restrictions, covenants, licenses, encroachments, protrusions and other similar charges or encumbrances on or with respect to real property that do not, individually or in the aggregate, (i) impair the value thereof, (ii) materially and adversely affect the use by the Project Company of the real property for the Project or (iii) materially and adversely interfere with the construction, development, operation or maintenance of the Project for its intended use, (h) pledges or deposits to secure the performance of bids, tenders, trade contracts and leases (other than for the repayment of borrowed money) incurred in the ordinary course of business, (i) pledges or deposits to secure regulatory or statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business securing the payment of amounts not yet due and payable or amounts being contested in good faith and by appropriate proceedings, including (without limitation) in connection with workers’ compensation, unemployment or other social security, (j) Encumbrances securing Indebtedness of the type described in clause (c) of the definition thereof, (k) Encumbrances and any right of setoff in favor of a bank or other financial institution arising by operation of Applicable Laws or in the ordinary course of business encumbering deposits held by such bank or financial institution and (l) judgment Encumbrances that do not involve any immediate risk of forfeiture of the Project and are being contested in good faith and by appropriate proceedings, and adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP or the Encumbrance is covered by insurance, bonds or other reasonable security.
“Permitted Equity Encumbrances” means, with respect to any equity interests, (a) those restrictions on transfer or ownership imposed by applicable securities laws and restrictions or imposed on transfer or ownership set forth in the applicable governing documents in respect of such equity interests and (b) prior to the SC Funding Date (as defined in the ECCA), liens created pursuant to, and securing any Indebtedness under the Construction Financing Documents.
“Person” means an individual, corporation, limited liability company, partnership, association, joint venture, Governmental Authority, trust or any other entity or organization.
“Placed In Service” means, with respect to a Block (or the Project, as applicable), that such Block (or the Project, as applicable) is placed in service for tax purposes within the meaning of Section 48(a)(1) of the Code.
“Placed in Service Factors” means, with respect to a Block (or the Project, as applicable), (A) all licenses and permits necessary for operation thereof and the generation and sale of electricity therefrom have been obtained; (B) all critical tests necessary for the proper operation thereof have been performed; (C) such Block and/or the Project are capable of operating in a reliable and continuous manner for their intended purpose and/or have commenced daily and regular operations; (D) care, custody and control of, risk of loss and legal title thereto have transferred to the Project Company; and (E) such Block and/or the Project have been synchronized to the grid.
“Power Purchaser” means Microsoft Corporation.
Exhibit A-10
“PPA” means that certain Renewable Energy Purchase Agreement, dated as of February 1, 2024, between the Project Company and the Power Purchaser, as amended, restated, or supplemented from time to time.
“Proceeding” means any action, claim, complaint, charge, arbitration, audit, hearing, investigation, inquiry, suit, litigation or other proceeding (whether civil, criminal, administrative or investigative) commenced, brought, conducted or heard by or before any Governmental Authority or arbitrator.
“Project” has the meaning set forth in the MIPA recitals.
“Project Company” has the meaning set forth in the MIPA recitals.
“Project Documents” means, without duplication, the Material Project Documents and any other Contract relating to the development, construction or operation of the Project to which the Project Company is a party (other than any Transaction Document) under which the Project Company could reasonably be expected to have obligations, liabilities or revenues equal to or in excess of five hundred thousand dollars ($500,000) in any year or seven hundred fifty thousand dollars ($750,000) in the aggregate; provided, however, that any Project Document shall cease to be a Project Document when all material obligations thereunder have been performed and paid in full, other than contingent indemnity and reimbursement obligations that survive the expiration of the applicable Project Document.
“Project Party” means a counterparty to a Project Document other than the Company or the Project Company.
“Prudent Industry Practices” means, with respect to the Project, the practices, standards, designs, methods, means, techniques, equipment and acts, as they may change from time to time, that (a) are generally used to own, operate and maintain utility scale solar photovoltaic power generation projects, safely, reliably and efficiently and in compliance with Applicable Law (including Environmental Laws), manufacturers’ warranties, manufacturers’ recommendations and the Material Project Documents and (b) are consistent with the exercise of the reasonable judgment, skill, diligence and care expected of an operator of utility scale solar photovoltaic power generation projects of a type and size similar to the Project in order to efficiently accomplish the desired result consistent with applicable standards of safety, output, dependability, efficiency and economy, including recommended practice, of a good, safe, prudent and ▇▇▇▇▇▇▇-like character, in each case, taking into account the location of the Project, including climatic, environmental and general conditions. Prudent Industry Practices are not intended to be limited to the optimum or minimum practice or method to the exclusion of all others, but rather to be a spectrum of reasonable and prudent practices and methods as commonly practiced in the solar photovoltaic industry in the same region of the Project during the relevant time.
“PSA” means that certain Membership Interest Purchase Agreement, dated as of October 20, 2024, by and between Seller and PSA Seller.
Exhibit A-11
“PSA Seller” means, collectively, BayWa r.e. Development Portfolio I LLC and BayWa r.e. USA LLC.
“PUHCA” means the Public Utility Holding Company Act of 2005, as amended, and FERC’s rules and implementing regulations thereunder.
“Purchase Price” has the meaning set forth in Section 2.2(a).
“PV EPC Contract” means that certain PV Engineering, Procurement and Construction Agreement, dated as of September 24, 2024, by and between the Project Company and the PV EPC Contractor, as amended by that certain Change Order No. 2, dated January 9, 2025, that certain Change Order No. 3, dated April 22, 2025 and that certain Change Order No. 4, dated February 10, 2025, as supplemented by Limited Notice to Proceed, dated January 24, 2024, Limited Notice to Proceed No. 2, dated May 31, 2024, Limited Notice to Proceed No. 3, dated June 24, 2024, Limited Notice to Proceed No. 4, dated August 8, 2024, Limited Notice to Proceed No. 5, dated August 14, 2024 and Limited Notice to Proceed No. 6, dated October 10, 2024.
“PV EPC Contractor” means Pure Power Contractors, LLC.
“PWA Requirements” means the prevailing wage and apprenticeship requirements described in Sections 48(a)(10)-(11) of the Code, including any Treasury Regulations, IRS Notices, or other issued guidance with respect thereto
“Real Property Documents” means those certain leases, subleases, licenses, sublicenses, easements, deeds, occupancy or use agreements, crossing agreements, letters of no objection, subordination agreements and other documents (together with all amendments, modifications, supplements, guaranties, extensions, renewals and other agreements with respect thereto) listed on Schedule 2.
“Recapture Event” means any recapture, reduction, loss or disallowance of all or any portion of the ITCs.
“Related Person” means a Person that has a relationship with a purchaser of electricity from the Project that results in the purchaser being a “related person” to such Person or to the Company for purposes of application of the loss disallowance rules of Section 267(a) or Section 707(b)(1) of the Code.
“Release” means any release, spill, leak, emission, deposit, pumping, pouring, emptying, discharging, injecting, escaping, leaching, disposing, dumping, dispersion or migration of Hazardous Substances into the environment. “Released” has a correlative meaning.
“Remaining Costs (Estimated)” means the aggregate amount of remaining costs estimated to be incurred by the Company and Project Company on and after the Closing Date in connection with the development, engineering, construction, procurement, installation and commissioning of the Project through Final Completion (as such term is defined in the EPC Contracts) determined as of the Closing Date.
Exhibit A-12
“Sanctioned Country” means a country subject to a sanctions program maintained by any Compliance Authority.
“Sanctioned Person” means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.
“Second Installment” has the meaning set forth in Section 2.2(b)(ii).
“Seller” has the meaning set forth in the MIPA preamble.
“Site” means the real property on which the Project is located.
“Straddle Period Taxes” has the meaning set forth in Section 5.2.
“Straddle Taxable Period” has the meaning set forth in Section 5.2.
“Substantial Casualty” means, with regard to the Project Company, any sudden, unexpected, or accidental event that results in significant physical damage or loss to property, assets, or infrastructure, with losses and/or damages valued at no less than $5,000,000 as mutually determined and agreed to by the Parties, where the extent of the damage is sufficient to trigger coverage under applicable insurance policies. This includes, but is not limited to, damage caused by fire, flood, storm, vandalism, or other insured perils, and typically requires repair, replacement, or restoration.
“Substantial Completion” has the meaning given to the term in the applicable EPC Contract.
“Support Obligations” means all letters of credit, guarantees, deposits, payment or performance bonds or other credit support from the Project Company or other Person relating to the ownership or operation of the Project or use of the Site, in each case as set forth on Schedule 3.
“Tax” or “Taxes” means all taxes, including all charges, fees, duties, imposts, levies or other assessments in the nature of taxes, now or hereafter imposed by any Governmental Authority, including income, gross receipts, excise, property, sales, gain, use, license, custom duty, unemployment, inheritance, corporation, capital stock, transfer, franchise, payroll, withholding, social security, minimum estimated, profit, gift, severance, value added, escheat, disability, premium, recapture, credit, occupation, service, leasing, employment, stamp, goods and services, ad valorem, utility, utility users and other taxes, and shall include interest, penalties or additions attributable thereto or attributable to any failure to comply with any requirement regarding Tax Returns.
Exhibit A-13
“Tax Equity Consent” means that certain Consent and Agreement, dated as of the date hereof, by and among Investor, Company, Collateral Agent and Class B Member.
“Tax Loss” means the loss, reduction, unavailability, delay or recapture of ITCs assumed in the Base Case Model or loss, reduction, unavailability, or delay of tax depreciation benefits as measured against those assumed in the Base Case Model.
“Tax Representations” means the representations contained in Section 3.1(k).
“Tax Return” means any report, return, declaration, claim for refund, or other information supplied or required to be supplied to a Tax authority in connection with Taxes, including any schedule or attachment thereto, including estimated returns and reports of every kind, and including any amendment thereof.
“Third Party” has the meaning set forth in the LLCA.
“Title Company” means Chicago Title Insurance Company.
“Title Policy” is defined in the LLCA.
“Tracker Supply Agreement” means that certain Tracker Supply Agreement, dated as of September 6, 2024, by and between the Project Company and Nextracker, LLC, as amended by that certain Change Order No 1, dated December 11, 2024.
“Transaction” means the transactions contemplated by the Transaction Documents.
“Transaction Documents” means this MIPA and the Assignment Agreement.
“Transfer Taxes” means any and all sales, use, transfer, real property transfer, recording, documentary, stamp, registration, stock transfer and other similar Taxes (including any penalties and interest or additions thereto) incurred in connection with the transactions contemplated by this MIPA (including recording and escrow fees and any real property or leasehold interest transfer or gains or any similar Tax).
“Transformer Supply Agreement” means that certain Purchase Order No. P-0234-911, dated as of August 16, 2019, by and between Virginia Transformer Corporation and the Project Company (as assignee of the Construction Manager pursuant to the Assignment and Assumption Agreement, dated as of October 20, 2024), as amended by that certain Change Order No. 1, dated February 28, 2020, that certain Change Order No. 2, dated April 20, 2023, and that certain Change Order No. 3, dated January 7, 2025.
“Treasury Regulations” means regulations issued by the IRS to implement the Code.
“Warranties” means the warranties with respect to inverters, modules, trackers, and transformers for the Project.
Exhibit A-14
EXHIBIT B
FORM OF ASSIGNMENT AGREEMENT
This Assignment Agreement (this “Assignment”) is made and entered as of [ò], 2025 between MN8 DevCo 3 LLC, a Delaware limited liability company (“Assignor”) and [ò], a Delaware limited liability company (“Assignee”). Capitalized terms used but not defined herein shall have the meanings ascribed thereto in that certain Membership Interest Purchase Agreement, dated August 27, 2025, between Assignor and Assignee (as amended, restated, supplemented or otherwise modified from time to time, the “MIPA”).
WITNESSETH
WHEREAS, Assignor directly owns one hundred percent (100%) of the membership interests (collectively, the “Interests”) in American Beech Solar LLC, a North Carolina limited liability company (the “Acquired Entity”); and
WHEREAS, pursuant to and in accordance with the MIPA, on the date hereof Assignor desires to transfer and assign all of its right, title and interest in and to the Interests, free and clear of all Encumbrances (except for Permitted Encumbrances), to Assignee, and Assignee desires to accept such assignment and transfer.
NOW, THEREFORE, for good and value consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1.Assignment. Assignor hereby sells, assigns, conveys, transfers and delivers all of Assignor’s right, title and interest in and to the Interests, free and clear of all Encumbrances (except for Permitted Encumbrances), to Assignee, and Assignee hereby accepts this assignment and purchases and assumes the Interests from Assignor.
2.Effect of Transfer. As of the date hereof, (a) Assignor will cease to be a member of the Acquired Entity and (b) Assignee will be admitted as, and become, the sole member of the Acquired Entity, and such termination and admission will be deemed to occur simultaneously.
3.Further Assurances. Each of Assignor and Assignee agrees to execute and deliver such additional instruments and other documents, and to take such other actions, as may be reasonably requested by the other party to further effectuate and confirm the transfer and assignment of the Interests as herein provided.
4.The MIPA. This Assignment is being delivered pursuant to the MIPA and will be construed consistently therewith. This Assignment is not intended to, and does not, in any manner enhance, diminish or otherwise modify the rights and obligations of the parties under the MIPA. To the extent that any provision of this Assignment conflicts or is inconsistent with the terms of the MIPA, the terms of the MIPA will govern.
Exhibit B-1
5.Governing Law. THIS ASSIGNMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE OF LAW RULES (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
6.Successors and Assigns. This Assignment will bind and inure to the benefit of the parties hereto and their respective successors and legal representatives and permitted assigns.
7.Counterparts. This Assignment may be executed in counterparts (which may be delivered by use of a facsimile machine or an e-mail which attaches a portable document format (.pdf) document), each of which will be an original, but each of which, when taken together, will constitute one and the same instrument.
[Signature Page Follows]
Exhibit B-2
IN WITNESS WHEREOF, the parties have executed this Assignment on the date first written above.
ASSIGNOR: | |||||||||||
| MN8 DEVCO 3 LLC | |||||||||||
| By: | |||||||||||
| Name: | |||||||||||
| Title: | |||||||||||
| ASSIGNEE: | |||||||||||
[ò] | |||||||||||
| By: | |||||||||||
| Name: | |||||||||||
| Title: | |||||||||||
[Signature Page to Assignment Agreement]
EXHIBIT C
WARRANTY STANDARDS
The Project must have the following Warranties and such Warranties must meet the following standards:
1.All modules must be warranted against defects in workmanship for a period of not less than 12 years and against defects in performance for a period of not less than 30 years from the Warranty Start Date, as such term is defined in the corresponding Module Supply Agreement.
2.All inverters must be warranted against defects in workmanship and against defects in performance for a period of not less than 10 years from the earlier of (i) the first-time commissioning date, or (ii) 6 months after the delivery date.
3.All trackers must be warranted against defects in workmanship and against defects in performance for a period of (i) not less than 10 years for their structural components and (ii) not less than 5 years for the motor, gear and controller, starting on the earlier of (a) completion of commissioning, or (b) 120 days from final delivery.
4.Initial 5 year availability guaranty under the O&M Agreement backed by the O&M Guaranty.
5.The transformer must be warranted in that they satisfy all applicable law, be new, unused and undamaged at the time of delivery, suitable for intended use, free from defects in design, engineering, materials, construction and workmanship, for a period of 18 months after operational startup or 24 months from delivery, whichever happens first. All equipment provided by Virginia Transformer Corp. shall have a warranty as described in the Standard Terms and Conditions of Sale dated August 2020, and extend to 12 months from the date of equipment installation or 18 months from date of shipment, whichever occurs first, provided that coils and cores shall be warranted for failure in the normal operation of the transformer for 60 months.
6.All work performed under the HV BoP Agreement must be warranted as provided in Section 13.1 thereof, for a period of 2 years after the Substantial Completion Date, provided that the warranty shall be extended for any corrected defect as provided thereunder.
7.All work performed under the PV EPC Agreement must be warranted as provided in Section 13.1 thereof, for a period of 2 years after the Substantial Completion Date, provided that the warranty shall be extended for any corrected defect as provided thereunder.
EXHIBIT D
BEGINNING OF CONSTRUCTION CERTIFICATE
[See attached.]
EXHIBIT B
LLCA
AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT
OF AMERICAN BEECH SOLAR HOLDINGS LLC
Dated as of August 27, 2025
between
TENASKA AMERICAN BEECH HOLDINGS, LLC
(as Class A Member)
and
AMERICAN BEECH CLASS B LLC
(as Initial Class B Member)
CONTENTS
| Page | |||||||||||
ARTICLE I DEFINITIONS | 1 | ||||||||||
| 1.1 | Certain Definitions | 1 | |||||||||
| 1.2 | Other Definitional Provisions | 1 | |||||||||
| ARTICLE II THE COMPANY | 2 | ||||||||||
| 2.1 | Continuation of Limited Liability Company | 2 | |||||||||
| 2.2 | Name | 2 | |||||||||
| 2.3 | Principal Office | 2 | |||||||||
| 2.4 | Registered Office; Registered Agent | 2 | |||||||||
| 2.5 | Purposes | 2 | |||||||||
| 2.6 | Term | 3 | |||||||||
| 2.7 | Title to Property | 3 | |||||||||
| 2.8 | No State Law Partnership | 3 | |||||||||
| 2.9 | Membership Interests | 3 | |||||||||
| ARTICLE III CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; LOANS | 3 | ||||||||||
| 3.1 | Capital Contributions | 3 | |||||||||
| 3.2 | Capital Accounts | 4 | |||||||||
| 3.3 | Delay Damages; Additional Working Capital; Working Capital Loans. | 4 | |||||||||
| 3.4 | Credit Support Loans | 7 | |||||||||
| 3.5 | O&M Loans | 8 | |||||||||
| 3.6 | Remedial Loans | 8 | |||||||||
| ARTICLE IV ALLOCATIONS | 9 | ||||||||||
| 4.1 | Allocations | 9 | |||||||||
| 4.2 | Special Allocations | 10 | |||||||||
| 4.3 | Loss Limitations | 12 | |||||||||
| 4.4 | Certain Reallocations | 12 | |||||||||
| 4.5 | Allocation of ITC | 13 | |||||||||
| 4.6 | Tax Allocations | 13 | |||||||||
| 4.7 | Transfer or Change in Company Interest | 13 | |||||||||
| ARTICLE V DISTRIBUTIONS | 14 | ||||||||||
| 5.1 | Distributions of Available Cash Flow | 14 | |||||||||
i
| 5.2 | Satisfaction of Certain Obligations of the Class B Members to the Class A Member | 17 | |||||||||
| 5.3 | Withholding | 18 | |||||||||
| ARTICLE VI MANAGEMENT | 18 | ||||||||||
| 6.1 | Managing Member; Operations Manager | 18 | |||||||||
| 6.2 | Standard of Care; Delegation; Required Consents | 20 | |||||||||
| 6.3 | Removal of Managing Member | 26 | |||||||||
| 6.4 | Indemnification and Exculpation | 29 | |||||||||
| 6.5 | Company Reimbursement | 29 | |||||||||
| 6.6 | Approved Budgets | 29 | |||||||||
| 6.7 | Insurance | 30 | |||||||||
| 6.8 | Officers | 31 | |||||||||
| 6.9 | Rebuild | 31 | |||||||||
| 6.10 | FERC 203 Approval | 32 | |||||||||
| 6.11 | Interim Period Prior to FERC 203 Approval | 33 | |||||||||
| ARTICLE VII RIGHTS AND RESPONSIBILITIES OF MEMBERS | 33 | ||||||||||
| 7.1 | General | 33 | |||||||||
| 7.2 | Member Voting Rights | 33 | |||||||||
| 7.3 | Member Liability | 34 | |||||||||
| 7.4 | Withdrawal | 35 | |||||||||
| 7.5 | Member Compensation | 35 | |||||||||
| 7.6 | Other Ventures | 35 | |||||||||
| 7.7 | Confidential Information | 35 | |||||||||
| 7.8 | Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member | 37 | |||||||||
| ARTICLE VIII ADMINISTRATIVE AND TAX MATTERS | 37 | ||||||||||
| 8.1 | Intention for Income Tax Purposes | 37 | |||||||||
| 8.2 | Books and Records; Bank Accounts; Company Procedures | 37 | |||||||||
| 8.3 | Information and Access Rights | 38 | |||||||||
| 8.4 | Reports | 38 | |||||||||
| 8.5 | Permitted Investments | 41 | |||||||||
| 8.6 | Tax Elections | 42 | |||||||||
| 8.7 | Partnership Representative and Tax Audits | 43 | |||||||||
| 8.8 | Preparation of Tax Returns | 45 | |||||||||
| 8.9 | Representations, Warranties and Covenants of the Members | 47 | |||||||||
| 8.10 | Additional Representations and Warranties of the Managing Member | 49 | |||||||||
| 8.11 | Tax Credit Transfers. | 50 | |||||||||
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| 8.12 | Survival | 51 | |||||||||
| ARTICLE IX TRANSFERS OF INTERESTS; PURCHASE OPTION | 51 | ||||||||||
| 9.1 | Transfer Restrictions | 51 | |||||||||
| 9.2 | Permitted Transfers | 52 | |||||||||
| 9.3 | Conditions to Transfers | 53 | |||||||||
| 9.4 | Regulatory Compliance | 55 | |||||||||
| 9.5 | Encumbrances of Membership Interest | 56 | |||||||||
| 9.6 | Admission of Transferee as a Member | 57 | |||||||||
| 9.7 | Buyout Events | 57 | |||||||||
| 9.8 | Purchase Option and ROFO | 58 | |||||||||
| 9.9 | Terminated Member | 60 | |||||||||
| ARTICLE X TRACKING MODEL AND FLIP DATE | 61 | ||||||||||
| 10.1 | Calculation of Internal Rate of Return | 61 | |||||||||
| 10.2 | Flip Date Dispute Resolution | 65 | |||||||||
| ARTICLE XI INDEMNIFICATION | 65 | ||||||||||
| 11.1 | Indemnification | 65 | |||||||||
| 11.2 | Limitation on Liability | 67 | |||||||||
| 11.3 | Procedure for Indemnification | 69 | |||||||||
| 11.4 | No Right of Contribution | 69 | |||||||||
| 11.5 | No Duplication | 69 | |||||||||
| 11.6 | Sole Remedy | 70 | |||||||||
| ARTICLE XII DISSOLUTION, LIQUIDATION AND TERMINATION | 70 | ||||||||||
| 12.1 | Dissolution | 70 | |||||||||
| 12.2 | Liquidation and Termination | 70 | |||||||||
| 12.3 | Deficit Capital Accounts | 71 | |||||||||
| 12.4 | Termination | 72 | |||||||||
| ARTICLE XIII GENERAL PROVISIONS | 72 | ||||||||||
| 13.1 | Notices | 72 | |||||||||
| 13.2 | Governing Law and Severability | 72 | |||||||||
| 13.3 | Jurisdiction | 72 | |||||||||
| 13.4 | Amendment or Modification | 73 | |||||||||
| 13.5 | Counterparts; Electronic Signatures | 73 | |||||||||
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| 13.6 | Amendment and Restatement | 73 | |||||||||
| 13.7 | Expenses | 73 | |||||||||
| Exhibit A | Definitions | ||||
| Exhibit B | Initial Capital Account Balances | ||||
| Exhibit C | Initial Annual Operating Budget | ||||
| Exhibit D | [Reserved] | ||||
| Exhibit E | Form of Transfer Agreement | ||||
| Exhibit F | Form of Monthly Report | ||||
| Exhibit G | Form of Quarterly Report | ||||
| Exhibit H | Form of Annual Report | ||||
| Exhibit I | Form of Certificate of Interest | ||||
| Schedule 1 | Operations Manager Responsibilities | ||||
| Schedule 2 | Insurance | ||||
| Schedule 3 | Permitted Debt Service | ||||
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF AMERICAN BEECH SOLAR HOLDINGS LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF AMERICAN BEECH SOLAR HOLDINGS LLC (this “LLCA”), dated as of August 27, 2025 (the “Effective Date”), is made and entered into by and between Tenaska American Beech Holdings, LLC, a Delaware limited liability company, as the Class A Member (the “Class A Member”) and American Beech Class B LLC, a Delaware limited liability company, as the Initial Class B Member (the “Initial Class B Member”).
RECITALS
A. American Beech Solar Holdings LLC, a Delaware limited liability company (the “Company”) was formed pursuant to the Act on June 30, 2025. Before the Effective Date, the Initial Class B Member owned 100% of the membership interests in the Company and was party to the Limited Liability Company Agreement of the Company, dated as of June 30, 2025 (the “Original LLCA”).
B. The Class A Member will make a Capital Contribution to the Company on the Effective Date in exchange for the Class A Membership Interests, and the membership interests in the Company held by the Initial Class B Member immediately prior to the Effective Date will automatically convert into Class B Membership Interests on the Effective Date.
C. In connection with the foregoing, the parties wish to amend and restate the Original LLCA to reflect the admission of the Class A Member as a Member of the Company, the issuance of the Class A Membership Interests to the Class A Member and the conversion of the existing membership interests held by the Initial Class B Member into the Class B Membership Interests.
NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and promises in this LLCA, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. Capitalized terms used but not otherwise defined herein are defined in Exhibit A.
1.2 Other Definitional Provisions. All the agreements, contracts or documents defined or referred to in this LLCA will mean such agreements, contracts or documents as the same may from time to time be supplemented or amended or their terms waived or modified to the extent permitted by, and in accordance with, or not prohibited by, the terms of the agreement and this LLCA, and will disregard any supplement, amendment or waiver made in breach of this LLCA. Defined terms in this LLCA will include in the singular number the plural and in the plural number the singular. Wherever from the context it appears appropriate, pronouns stated in the masculine,
feminine or neuter gender will include the masculine, feminine and neuter genders. All references to Articles, Sections, Schedules and Exhibits will be references to Articles, Sections, Schedules and Exhibits of this LLCA, unless otherwise specified. The words “will” and “should” have the same meaning. The words “include,” “includes” and “including” are not limiting, and are in all cases to be construed as followed by the words “without limitation” (whether or not expressly so followed); the word “or” is not exclusive; references to Persons include their respective successors and assigns or, in the case of Governmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations will include any amendments of the same and any successor statutes and regulations. The words “herein,” “hereof” and “hereunder” will refer to this LLCA as a whole and not to any particular section or subsection of this LLCA.
ARTICLE II
THE COMPANY
2.1 Continuation of Limited Liability Company. The Managing Member will execute or cause to be executed all certificates, instruments and other documents, and cause to be done all filings and other actions, as necessary or appropriate to operate, continue or terminate the Company as a limited liability company under the laws of Delaware and to qualify the Company to do business in all jurisdictions other than Delaware in which the Company conducts or proposes to conduct business.
2.2 Name. The name of the Company is “American Beech Solar Holdings LLC.” The Managing Member will take any action required to comply with the Act or similar statute in effect in each jurisdiction in which the Company conducts or proposes to conduct business, and the Members agree to execute any documents reasonably requested by the Managing Member in connection with any such action.
2.3 Principal Office. The Company will maintain a principal office at c/o MN8 Energy LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Managing Member may change the principal office upon prior written notice to the Members and will maintain all records of the Company at its principal office or a location designated by the Managing Member in a notice to the Members.
2.4 Registered Office; Registered Agent. The address of the registered office of the Company in the State of Delaware is c/o Corporation Service Company, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is Corporation Service Company, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Managing Member may change the registered agent and registered office upon prior written notice to the Members.
2.5 Purposes. The purposes of the Company are (a) to own and operate the Project Company, which owns the Project and the proceeds thereof, (b) to, and to cause the Project Company to, (i) develop, own, finance, operate, maintain, and repair the Project, including for the purpose of producing electricity, (ii) sell electricity, renewable energy credits, tax credits and other
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attributes produced by or associated with the Project and (iii) enter into, comply with and perform its obligations and enforce its rights under the Transaction Documents and the Project Documents to which it is a party, and (c) to engage in and perform any activities necessary, incidental, related or appropriate to the foregoing. The Company will not engage in any activity or own any Assets that are unrelated to this purpose.
2.6 Term. The Company was formed on June 30, 2025 and will continue in existence until dissolved and terminated in accordance with this LLCA or the Act.
2.7 Title to Property. Title to the Company’s Assets will be held in the name of the Company, and no Member will have any direct interest in such property.
2.8 No State Law Partnership. The Members intend that the Company not be a partnership or joint venture and no Member be a partner or joint venturer of any other Member, for any purpose other than tax purposes.
2.9 Membership Interests. There shall be two classes of Membership Interests: the Class A Membership Interests and the Class B Membership Interests. Membership Interests shall be represented by Units, divided into Class A Units (in the case of Class A Membership Interests), and Class B Units (in the case of Class B Membership Interests). The Membership Interests represented by Class A Units and Class B Units shall have the respective rights, powers and preferences ascribed to Class A Units and Class B Units in this LLCA. The class of Membership Interest and number of Units of a Member shall be as provided in Exhibit B. The Members hereby specify, acknowledge and agree that all Units (and the Membership Interests represented thereby) are securities governed by Article 8 and all other provisions of the Uniform Commercial Code, and pursuant to the terms of Section 8-103(c) of the Uniform Commercial Code, such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the Uniform Commercial Code. All Units (and the Membership Interests represented thereby) shall be represented by certificates substantially in the form attached hereto as Exhibit I, shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this LLCA, as the Managing Member may from time to time determine. The Company shall maintain books for the purpose of registering the transfer of limited liability company interests. A transfer of limited liability company interests in the Company shall be effected by the Company’s registering the transfer upon delivery of an endorsed certificate representing the limited liability company interests being transferred.
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; LOANS
3.1 Capital Contributions. The Members will make Capital Contributions to the Company at the times and in the amounts required by, and the Managing Member will cause Company to apply such amounts in accordance with, Article 2 of the ECCA. No other Capital Contributions will be required of Members except as provided in Section 3.3, Section 6.9, Section 6.12 or Section 12.3. The initial Capital Account balances of the Members as of the MC Funding Date are shown in Exhibit B.
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3.2 Capital Accounts. The Company will establish and maintain a separate Capital Account for each Member in accordance with the following provisions:
(a) Each Member’s Capital Account shall be increased by (i) the amount of money and the Gross Asset Value of any property contributed by such Member pursuant to any provision of this LLCA, (ii) the income and gain (or items thereof) the Member is allocated by the Company, including any income and gain that are exempted from tax and income and gain described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) and any tax-exempt income allocated as a result of a transfer pursuant to Code Section 6418, but excluding income and gain described in Treasury Regulations Section 1.704-1(b)(4)(i), (iii) the amount of any Company liabilities assumed by such Member or that are secured by any property distributed to such Member, and (iv) an amount equal to an allocation of upward basis adjustment to such Member as described in Treasury Regulation Section 1.704-1(b)(2)(iv)(j).
(b) Each Member’s Capital Account shall be decreased by (i) the amount of money and the Gross Asset Value of any property distributed to such Member pursuant to any provision of this LLCA, (ii) any expenditures of the Company described in Section 705(a)(2)(B) of the Code that are allocated to the Member, (iii) losses and deductions (or items thereof) that are allocated to the Member but excluding loss or deduction described in Treasury Regulation Section 1.704-1(b)(4)(i), (iv) the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company, and (v) an amount equal to an allocation of downward basis adjustment to such Member as described in Treasury Regulation Section 1.704-1(b)(2)(iv)(j).
(c) The Gross Asset Values of all Company property shall be adjusted to equal their respective gross fair market values (taking Section 7701(g) into account), as agreed by the Consent of the Members, as required by and in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f). If a Member transfers all or part of its Membership Interest, then the Transferee will succeed to the Capital Account of the Transferring Member in the transferred interest.
(d) This Section 3.2 and the other provisions of this LLCA relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulation.
3.3 Delay Damages; Additional Working Capital; Working Capital Loans.
(a) To the extent (i) the Commercial Operation Date (as defined in the PPA) has not occurred on or prior to the Guaranteed Commercial Operation Date (as defined in the PPA) and (ii) the Company is liable for any Delay Damages (as defined in the PPA), the Initial Class B Member shall make a Capital Contribution to the Company (or make payment with Available Cash Flow otherwise available for distribution to the Initial Class B Member in lieu of such a Capital Contribution) on or prior to the SC Funding Date in an amount sufficient to cover all Delay Damages (as defined in the PPA) asserted against, resulting to, imposed upon, incurred by, or payable by the Project Company as a result of the delay in achieving the Commercial Operation Date (as defined in the PPA) on or prior to the Guaranteed Commercial Operation Date (as defined
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in the PPA); provided, that the amount of any Delay Liquidated Damages (as defined in each EPC Contract) or any delay liquidated damages under any other Project Document actually received by the Project Company or any proceeds actually received by the Project Company or the Company under any insurance policy or pursuant to any claim, recovery, settlement or payment by or against any other Person in connection with a delay in achieving the Commercial Operation Date (as defined in the PPA), net of any actual costs, expenses or premiums incurred in connection with securing or obtaining such proceeds, shall be deducted from such amount payable by the Class B Member. In the event that the Initial Class B Member pays any such costs and expenses directly on behalf of the Project Company, such payment shall be treated as a Capital Contribution by the Initial Class B Member to the Company.
(b) The Managing Member shall use commercially reasonable efforts to cause the Project to achieve Final Completion. During the period from the Effective Date until the date of Final Completion, if the Managing Member, in its sole discretion, determines that additional funds (in excess of any amounts available for drawing under the Construction Financing Agreement or in the Final Completion Account) are required to enable the Company to cause its assets or any of the Project Company’s assets to be properly constructed, operated or maintained or to pay and perform its respective costs, expenses, obligations and liabilities, the Managing Member shall make additional Capital Contributions to the Company.
(c) After Final Completion, if the Company needs additional working capital to contribute to the Project Company to operate and maintain the Project, to pay costs or liabilities and has inadequate reserves and there is no availability under the Backleverage Financing Agreement for Managing Member to make an O&M Loan, then the Managing Member will notify the Members in writing, and each Class B Member will have the right (but not the obligation) to provide all or part of its Pro Rata Share of the needed funds as a Capital Contribution. Each Class B Member will notify the Managing Member in writing, within ten (10) Business Days after the notice from the Managing Member, whether it will provide all or part of the needed funds. If a Class B Member chooses to contribute its Pro Rata Share of such funds, then it will do so within five Business Days after responding to the notice from the Managing Member.
(d) If any Class B Member fails to deliver a notice or notifies the Managing Member that it plans to contribute less than all of its share of the needed funds pursuant to Section 3.3(c), then the Class A Member may make a working capital loan up to the amount of the needed funds that such Class B Member has not committed to fund, but Class A Member will be under no obligation to do so. The Class A Member will notify the Managing Member in writing of its intention to fund a working capital loan within ten (10) Business Days after expiration of the period for each Class B Member to notify the Managing Member of its intention. Any such loan by the Class A Member will be made within five Business Days after the Class A Member notifies the Managing Member that it plans to make such a loan. Working capital loans made pursuant to this Section 3.3(d) will be unsecured and bear a floating rate of interest, with annual compounding, at the lesser of the Reference Rate plus four percent (4%) or the highest interest rate that may be charged under Applicable Law. Interest will be payable quarterly in arrears. The loan will be evidenced by a promissory note satisfactory to Class A Member and will contain arm’s-length terms and conditions. Working capital loans shall be repaid out of Available Cash Flow of the
5
Company before any distributions to any Member and after payment of other Company expenses, O&M Loans, Credit Support Loans and remedial loans. Working capital loans shall not be considered a part of a Member’s Capital Contribution and shall not increase such Member’s Capital Account. Unless repaid earlier, the working capital loans will be due and payable at the dissolution of the Company, but after repayment of any other Company expenses, O&M Loans, Credit Support Loans and remedial loans made under this Article III and before any liquidating distributions to the Members. In no event may the aggregate principal amount of all outstanding working capital loans exceed two million dollars ($2,000,000).
(e) Notwithstanding anything to the contrary in this Agreement, on or prior to the first day that the Project Company could be required to pay PJM Penalties for the then-applicable PJM Capacity Auction Period, the Managing Member shall cause the Company to fund an amount equal to the then-applicable PJM Penalty Reserve Amount into the PJM Penalty Reserve Account utilizing capacity sales revenue of the Project Company, in each case if and only if such revenue is greater than or equal to $1,000,000 for the then-applicable PJM Capacity Auction Period. In the event that any PJM Penalties become due and payable by the Project Company at a time when the Project Company does not have available cash to pay such amounts, the Managing Member shall cause funds on deposit in the PJM Penalty Reserve Account (if any) to be transferred by the Project Company and the Managing Member shall cause the Project Company to use such proceeds to pay such amounts. Upon the first Distribution Date to occur after the expiration of an applicable PJM Capacity Auction Period, all remaining amounts on deposit in the PJM Penalty Reserve Account after any required payments by the Project Company shall be distributed to the Members in accordance with the percentages set out in Section 5.1(a). To the extent the funds on deposit in the PJM Penalty Reserve Account are insufficient to pay PJM Penalties due and payable as of any applicable date of determination, then (i) the Class B Member shall make a working capital loan to the Company in an amount sufficient to pay any and all such amounts due, and (ii) the Managing Member shall cause the Project Company to use any such working capital loan proceeds to pay such due amounts. Working capital loans made pursuant to this Section 3.3(e) will be unsecured and bear a floating rate of interest, with annual compounding, at the lesser of the Reference Rate plus two percent (2%) or the highest interest rate that may be charged under Applicable Law, and shall otherwise be consistent with and upon the same terms and conditions set forth in Section 3.3(d).
(f) Notwithstanding anything to the contrary in this Agreement, (i) on or prior to the SC Funding Date, the Class B Member shall fund the PJM DAT Account in an amount equal to $500,000, and (ii) prior to the date falling 12 months after the SC Funding Date, the Managing Member shall cause the Company to fund and maintain an amount equal to the then-applicable PJM DAT Required Amount into the PJM DAT Account utilizing Available Cash Flow. In the event that any PJM DAT Costs become due and payable by the Project Company at a time when the Project Company does not have available cash to pay such amounts, the Managing Member shall cause funds on deposit in the PJM DAT Account to be transferred by the Project Company and the Managing Member shall cause the Project Company to use such proceeds to pay such amounts. Following any use of funds in the PJM DAT Account to pay PJM DAT Costs, the Managing Member shall cause the PJM DAT Account to be funded with Available Cash Flow in an amount necessary to cause the amount on deposit therein to be equal to the PJM DAT Required
6
Amount on or prior to the next Distribution Date. Upon the first Distribution Date to occur after the Flip Date, all remaining amounts on deposit in the PJM DAT Account after any required payments by the Project Company shall be distributed to the Members in the following percentages: (A) to the Class A Member, 5%, and (B) to the Class B Member, 95%. To the extent the funds on deposit in the PJM DAT Account are insufficient to pay PJM DAT Costs due and payable as of any applicable date of determination, then the provisions of Section 3.3(g) shall apply.
(g) To the extent (i) the funds on deposit in the PJM DAT Account are insufficient to pay PJM DAT Costs due and payable as of any applicable date of determination, (ii) the PJM DAT Account has not been funded to an amount equal to the PJM DAT Required Amount on or prior to the date falling 12 months after the SC Funding Date, or (iii) following payment of PJM DAT Costs with funds in the PJM DAT Account, the Managing Member has failed to cause the PJM Account to be replenished to an amount equal to the PJM DAT Required Amount, then (A) the Class B Member shall make a working capital loan to the Company in an amount sufficient to pay any and all such amounts due, and (B) the Managing Member shall cause the Project Company to use any such working capital loan proceeds to pay such due amounts. Working capital loans made pursuant to this Section 3.3(g) will be unsecured and bear a floating rate of interest, with annual compounding, at the lesser of the Reference Rate plus two percent (2%) or the highest interest rate that may be charged under Applicable Law, and shall otherwise be consistent with and upon the same terms and conditions set forth in Section 3.3(d).
3.4 Credit Support Loans. The Managing Member shall be obligated to obtain and maintain, or cause its Affiliates to obtain and maintain, the Support Obligations and all other letters of credit, guaranties or other security for the Project Company’s and Company’s obligations under any Project Document to which it is party or by which it is bound, in each case in accordance with the terms of such Project Document and the Managing Member shall be obligated to obtain, or cause to be obtained, on behalf of the Project Company and the Company, any replacement security in accordance with any Project Document. The Company shall reimburse the Managing Member or its Affiliates for actual fees, costs and expenses payable in respect of any such security, including fees, costs and expenses payable to third-parties; provided, however, that such fees, costs and expenses payable to the Managing Member or its Affiliates (as the case may be) shall be in accordance with the then-effective Approved Budget. Any such security posted by the Managing Member or its Affiliates in the form of cash (whether such cash is posted directly or indirectly by means of a draw under a letter of credit provided by the Managing Member or its Affiliates) and any reimbursement obligations arising from draws on any letters of credit, which shall include, for the avoidance of doubt, any obligation of the Managing Member to repay any principal, interest, costs, fees and expenses in respect of any such draws drawn in respect of any letter of credit, or replacements thereof, posted by Managing Member or its Affiliate as security for the Project Company’s obligations under any Project Document shall be deemed to be a loan by the Managing Member to the Company (any such loan, a “Credit Support Loan”). At the Managing Member’s request, any Credit Support Loan shall be evidenced by a non-negotiable promissory note. All of the reimbursements described in this Section 3.4 and Credit Support Loans shall be repaid out of Available Cash Flow of the Company before any distributions to any Member, before payment of remedial loans and working capital loans and after payment of other Company expenses and O&M
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Loans. Credit Support Loans shall be unsecured loans and shall bear interest solely with respect to the portion thereof constituting principal at a rate per annum equal to the rate of interest payable on the applicable letter of credit loan therefor pursuant to the Backleverage Financing Agreement then in effect. Credit Support Loans shall not be considered a part of a Member’s Capital Contribution and shall not increase such Member’s Capital Account. Unless repaid earlier, Credit Support Loans will be due and payable at the dissolution of the Company before the repayment of any remedial loans and working capital loans, and after payment of O&M Loans, and before liquidating distributions to the Members.
3.5 O&M Loans. From and after the SC Funding Date, the Managing Member may (but shall not be obligated to) obtain and maintain, or cause its Affiliates to obtain and maintain, a revolving credit facility or letter of credit facility with a commitment amount not to exceed the maximum amount of the Project Company’s and Company’s O&M Expenses over any six-month period as set forth in the Base Case Model; for the avoidance of doubt, in no event shall the Class A Member, the Company or the Project Company be obligors under such facility or provide any guarantee, security or other collateral in connection therewith. The Company shall reimburse the Managing Member or its Affiliates for actual fees, costs and expenses payable in respect of any such facility, including fees, costs and expenses payable to third-parties; provided, however, that such fees, costs and expenses payable to the Managing Member or its Affiliates (as the case may be) shall be in accordance with the then-effective Approved Budget. From and after the SC Funding Date, any obligation of the Managing Member to repay any principal, interest, costs, fees and expenses in respect of any such facility to the extent that loans are borrowed or draws are made thereunder and contributed to the Company or the Project Company solely for the purpose of paying any O&M Expense shall be deemed to be a loan by the Managing Member to the Company (any such loan, an “O&M Loan”). At the Managing Member’s request, any O&M Loan shall be evidenced by a non-negotiable promissory note. The O&M Loans shall be repaid out of Available Cash Flow of the Company before any distributions to any Member, before the repayment of any other loan made pursuant to this Article III, and after payment of other Company expenses. O&M Loans shall be unsecured loans and shall bear interest solely with respect to the portion thereof constituting principal at a rate per annum equal to the rate of interest payable on the applicable loan therefor pursuant to the Backleverage Financing Agreement then in effect. O&M Loans shall not be considered a part of a Member’s Capital Contribution and shall not increase such Member’s Capital Account. Unless repaid earlier, O&M Loans will be due and payable at the dissolution of the Company before the repayment of any remedial loans, working capital loans and Credit Support Loans, and before liquidating distributions to the Members.
3.6 Remedial Loans.
(a) Notwithstanding anything to the contrary in this Article III, if there is an event of default by the Company or the Project Company under a Project Document that would permit the contract counterparty to pursue remedies under such Project Document, and such event of default has occurred as a result of an act or omission of the Managing Member, then the Managing Member will give prompt written notice to the Members. If Capital Contributions and working capital loans under Section 3.3(d) or O&M Loans under Section 3.5 are insufficient to cure the default, then the Class B Members shall have the right to cure such event of default within sixty
8
(60) days of the aforementioned notice from the Managing Member. In the event that the Class B Members fail to cure such event of default during such cure period, then the Class A Member will have the right (but not the obligation) to make a remedial loan to the Company to cure the default.
(b) Remedial loans will be unsecured and bear a floating rate of interest at the greater of (i) the Reference Rate plus five percent (5%) and (ii) ten percent (10%), or, if less, the highest rate of interest that may be charged under Applicable Law. Interest will be payable quarterly in arrears. The loan will be evidenced by a promissory note satisfactory to Class A Member and will contain arm’s-length terms and conditions. Remedial loans shall be repaid out of Available Cash Flow before any distributions to any Member, before the repayment of any working capital loans made pursuant to Section 3.3, and after payment of other Company expenses, O&M Loans, and Credit Support Loans. Unless repaid earlier, remedial loans will be due and payable at the dissolution of the Company before the repayment of any working capital loans made pursuant to Section 3.3, and after payment of O&M Loans and Credit Support Loans, and before liquidating distributions to the Members.
(c) In no event may the aggregate principal amount of all outstanding remedial loans exceed three million dollars ($3,000,000).
ARTICLE IV
ALLOCATIONS
4.1 Allocations. For purposes of maintaining Capital Accounts, after giving effect to Section 4.2 and subject to Sections 4.3, 4.4 and 12.2, all items of Company income, gain, loss, deduction and credit (including the ITC) will be allocated to the Members as follows:
(a) Subject to Section 4.1(b), in the following order and priority:
(i) from the Effective Date through the later of (x) the last day of the first Fiscal Year in which the last Block is Placed In Service and (y) the last day of the second calendar quarter that immediately follows the calendar quarter in which the last Block is Placed In Service, 99% to the Class A Member and 1% to the Class B Members in accordance with their Pro Rata Shares;
(ii) thereafter through the last day of the Recapture Period, 67% to the Class A Member and 33% to the Class B Members in accordance with their Pro Rata Shares;
(iii) from and after the first day after the Recapture Period through the Flip Date, 99% to the Class A Member and 1% to the Class B Members in accordance with their Pro Rata Shares; and
(iv) thereafter, 5.00% to the Class A Member and 95.00% to the Class B Members in accordance with their Pro Rata Shares.
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(b) Notwithstanding the other provisions of Section 4.1(a):
(i) In the first Fiscal Year in which the Company generates positive taxable income, all items of Company income, gain, loss, deduction and credit will be allocated 99% to the Class A Member and 1% to the Class B Members in accordance with their Pro Rata Shares; and
(ii) If the Class A Member has a deficit Capital Account balance on or after the Flip Date, 99% of the amount of items of income and gain shall be allocated to the Class A Member and 1% to the Class B Members in accordance with their Pro Rata Shares and items of loss, deductions and credits shall be allocated 5% to the Class A Member and 95% to the Class B Members in accordance with their Pro Rata Shares until the Class A Member’s Capital Account balance is $0. The allocations under this Section 4.1(b)(ii) for an Allocation Period to the Class A Member shall be made prior to determining for that Allocation Period whether any Member has a taxable distribution under Section 731(a) of the Code (and any corresponding adjustments pursuant to Section 4.2(g)), so as to minimize to the extent possible any such taxable distribution to the Class A Member; and
(iii) Any amount received as consideration for the sale of ITCs pursuant to an ITC Transfer will be treated as tax exempt income to the Company and will be allocated to the Class A Member in accordance with Section 6418(c)(1)(B) of the Code and any Treasury Regulations issued with respect thereto, including Section 1.6418-3(b)(2)(iii) of the Treasury Regulations, and any items of deduction attributable to ITC Transfer Costs shall be allocated to the Class A Member.
4.2 Special Allocations. The following special allocations shall be made in the following order:
(a) In any Allocation Period in which there is a net decrease in Company Minimum Gain, income and gain in the amount of the net decrease will be allocated to Members in the manner and ratio required by Treasury Regulation section 1.704-2(f)(6), (g)(2) and (j)(2)(i) or any successor provision. This Section 4.2(a) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(b) In any Allocation Period in which there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to Member Nonrecourse Debt, then income and gain in the amount of the net decrease will be allocated to each Member who was considered to have had a share of the Member Nonrecourse Debt Minimum Gain at the beginning of the Allocation Period in the manner and ratio required by Treasury Regulations sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii) or any successor provisions. This Section 4.2(b) is intended to comply with the partner nonrecourse debt minimum gain chargeback requirements in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
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Company income and gain will be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Member’s Adjusted Capital Account Deficit as quickly as possible; provided, however, that an allocation will be made under this Section 4.2(c) only if and to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in Sections 4.1 and 4.2 have been tentatively made as if this Section 4.2(c) were not in this LLCA. This Section 4.2(c) is intended to qualify as a “qualified income offset” within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) In the event any Member has a deficit Capital Account at the end of any Allocation Period that is in excess of the sum of (A) the amount such Member is obligated to restore pursuant to Section 12.3 and (B) the amount such Member is deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, except that an allocation pursuant to this Section 4.2(d) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in Sections 4.1 and 4.2 have been made as if Section 4.2(c) and this Section 4.2(d) were not in this LLCA.
(e) Nonrecourse Deductions for any Allocation Period will be allocated to the Members in the same ratio as other income and loss under Section 4.1 or 12.2, as applicable.
(f) Any Member Nonrecourse Deductions for any Allocation Period will be allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which the Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i)(1).
(g) If the Company distributes property to a Member in liquidation of the Membership Interest of the Member and there is an adjustment in the adjusted tax basis of Company property under Section 734(b) of the Code, then there will be a corresponding adjustment to the Capital Account of the Member receiving the distribution. If the Company distributes cash to a Member in excess of its outside basis in its Membership Interest, leading to an adjustment in the inside basis of the Company property under Section 734(b) of the Code, solely for purposes of adjusting Capital Accounts of the Members, the adjustment in the inside basis will be treated as gain or loss and be allocated among the Members in the same ratio as other gain or loss for the Allocation Period in which the adjustment occurs. This Section 4.2(g) is intended to comply with Treasury Regulation Sections 1.704-1(b)(2)(iv)(m)(2) and (4) and shall be interpreted and applied consistently therewith.
(h) The allocations in this Section 4.2 (the “Regulatory Allocations”) are required to comply with the Treasury Regulations. To the extent the Company can do so consistently with the Treasury Regulations and Section 4.4, the net amount of the allocations under this Article IV and Section 12.2 to each Member will be the net amount that would have been allocated to each Member if this LLCA did not contain the Regulatory Allocations. Therefore, notwithstanding any other provision of this Section 4.2, to the extent the Company can do so consistently with the Treasury Regulations and Section 4.4, the Company shall make offsetting special allocations of
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Company items of income, gain, loss or deduction such that, to the extent possible, the net amount of allocations under this Article IV and Section 12.2 will be the net amount that would have been allocated to each Member if the LLCA did not contain the Regulatory Allocations.
(i) Upon a transfer of a Company asset that constitutes “capital gain property” within the meaning of Treasury Regulations Section 1.755-1(a)(1), then notwithstanding any other provision of Section 4.1 or 4.2, any item of gain (not including any gain for which Sections 1245(a)(1) or 1250(a) would apply) resulting from such transfer shall be allocated first 99% to any Class A Member that has a deficit Capital Account balance in excess of the amount such Member is deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and 1% to the Class B Members, in accordance with their Pro Rata Shares, to the extent of any such excess, and thereafter 5% in the aggregate to the Class A Members, in accordance with their Pro Rata Shares, and 95% to the Class B Members, in proportion to their Pro Rata Shares.
4.3 Loss Limitations. Notwithstanding Sections 4.1, 4.2 and 12.2, items of loss or deduction allocated pursuant to each Member (i) shall not exceed the maximum amount of items of loss or deduction that can be allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Allocation Period and (ii) shall not be made to the Class A Member to the extent that such allocation would result in the increase or recurrence of a deficit Capital Account balance of such Class A Member following such time as such Class A Member’s deficit Capital Account balance has occurred and then has been reduced or eliminated. In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of items of loss or deduction, the limitation set forth in this Section 4.3 shall be applied on a Member by Member basis and items of loss or deduction not allocable to any Member as a result of such limitation shall be allocated to the other Members in accordance with the positive balances in such Members’ Capital Accounts so as to allocate the maximum permissible items of losses or deduction to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
4.4 Certain Reallocations. Notwithstanding Section 4.1, after giving effect to the special allocations set forth in Section 4.2, if the allocations set forth in Section 4.1 or Section 12.2(c) otherwise (x) would result in less than sixty-seven percent (67%) of the general profits of the Company as determined for purposes of Section 702(a)(8) of the Code for any Allocation Period during the Recapture Period being allocated to the Class A Member, then all Company items of income, gain, loss or deduction shall be reallocated for such Allocation Period so that not less than 67% of the general profits of the Company as determined for purposes of Section 702(a)(8) of the Code are allocated to the Class A Member, (y) would result in less than 5.00% of any item of income or gain for any Allocation Period being allocated to the Class A Member, then such item of income or gain shall be reallocated for such Allocation Period so that not less than 5.00% of each such item of income and gain is allocated to the Class A Member, or (z) would result in less than 1% of any item of income, gain, loss or deduction for any Allocation Period being allocated to the Class B Members in accordance with their Pro Rata Shares, then to the extent possible after giving effect to clauses (x) and (y), such item of income, gain, loss or deduction shall be reallocated for such Allocation Period so that not less than 1% of each such item is allocated to the Class B Members in accordance with their Pro Rata Shares.
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4.5 Allocation of ITC. It is the intention of the Members that the allocations of income and gain provided in Section 4.1 constitute, for purposes of Treasury Regulation Section 1.46-3(f)(2)(i), the ratio in which the Members divide the general profits of the Company (that is, the taxable income of the partnership as described in Section 702(a)(8) of the Code) regardless of whether the Company has a profit or a loss for a relevant taxable year. Further, it is the intention of the Members that, for purposes of Treasury Regulation Section 1.47-6(a)(2)(i)(b), the allocations provided in Section 4.1 for Allocation Periods beginning after the Flip Date shall not constitute a reduction in the Class A Member’s interest in the general profits of the Company (that is, the taxable income of the Company as described in Section 702(a)(8) of the Code) below two-thirds of the Class A Member’s interest in the general profits of the Company for the Allocation Period in which the applicable ITC Eligible property was placed in service by the Company for U.S. federal income tax purposes before the close of the “estimated useful life” of such ITC Eligible Property (treating the “estimated useful life” of the ITC Eligible Property as ending not earlier than the end of the fifth anniversary of its placed in service date for purposes of Section 168 of the Code).
4.6 Tax Allocations.
(a) All allocations of tax items of Company income, gain, deductions and losses for each Allocation Period will be allocated in the same proportions as the allocations of book items of Company income, gain, deductions and losses were made pursuant to Sections 4.1 and 4.2.
(b) Notwithstanding Section 4.6(a), if, as a result of contributions of property by a Member to the Company or an adjustment to the value of Company property under Section 3.2, there is a difference between the adjusted basis of an item of Company property for U.S. federal income tax purposes and as determined under the definition of Gross Asset Value, then allocations of income, gain, loss and deduction will be allocated among the Members to take into account any variation between the adjusted basis of the property for U.S. federal income tax purposes and its initial Gross Asset Value using the remedial method.
(c) Allocations pursuant to this Section 4.3 are solely for purposes of U.S. federal, state and local income taxes and will not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of items of income, gain, deductions or losses or distributions pursuant to any other provision of this LLCA.
(d) To the extent an adjustment to the adjusted tax basis of any Company asset is made under Section 743(b) of the Code, any adjustment to the depreciation, amortization, gain or loss resulting from the adjustment will affect the Transferee only and not the Capital Account of the Transferring Member or Transferee. The Transferee will be required to provide to the Company information about the allocation of any step-up or step-down in basis to the Company’s assets and the depreciation or amortization method for any step-up in basis to the Company’s assets.
4.7 Transfer or Change in Company Interest. If the Membership Interests or allocation ratios described in this Article IV of the existing Members change or a Membership Interest is Transferred in compliance with this LLCA, then, for the Allocation Period in which the change or Transfer occurs, all items of income, gains, losses, deductions, credits and other tax incidents
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resulting from the operations of the Company will be allocated between the Members for the Allocation Period in which the change occurs or between the Transferring Member and Transferee by taking into account the varying interests using the closing of the books method permitted by Treasury Regulation section 1.706-1(c)(2)(ii), unless the Members agree otherwise in writing.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow.
(a) Subject to Sections 3.3, 3.4, 3.5, 3.6, 5.1(b), 5.2, 10.1 and 12.2 of this LLCA, Available Cash Flow will be distributed to the Members as follows:
(i) on Distribution Dates prior to the Flip Date, 20.00% to the Class A Member and 80.00% to the Class B Members in accordance with their Pro Rata Shares; provided, that if the Flip Date has not occurred on or prior to that date that is the seven (7) year anniversary of the SC Funding Date (the “Target Flip Date”), then on Distribution Dates from the Target Flip Date until the Flip Date, 50.00% to the Class A Member and 50.00% to the Class B Members in accordance with their Pro Rata Shares; and
(ii) on Distribution Dates on or after the Flip Date, 5.00% to the Class A Member and 95.00% to the Class B Members in accordance with their Pro Rata Shares.
(b) Notwithstanding Section 5.1(a):
(i) Subject to the terms of the Construction Financing Documents with respect to proceeds received prior to the SC Funding Date:
(A) in the event the Company or the Project Company receives proceeds relating to (i) a casualty (other than a Subject Casualty) or condemnation to the Project that will not be used to repair the Project, (ii) an early termination under the PPA, (iii) any guaranty, warranty or indemnity claims under any contract or warranty for the Project that will not be used to repair the Project or (iv) title insurance or any other insurance claim relating to the Project, then the Managing Member shall determine the characterization of such net proceeds (i.e., as a payment for disallowance or recapture of the ITC or a payment for lost revenues or other obligations under the applicable agreement or insurance policy or with respect to any payments made under any title policy in respect of the Project that are not used to repair or restore the Project) and shall distribute such payment to the Members as appropriate, it being understood and agreed by the Members that a payment characterized as a payment for disallowance or recapture of the ITC (including any gross-up amounts related thereto) shall be distributed to the Members in accordance with the ratios set forth in Section 4.1(a) and all items of income associated therewith shall be allocated to the Members in accordance with Section 4.1(a), and a payment characterized as a payment for lost revenues under an applicable agreement or insurance policy shall be distributed in a manner to
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restore, to the greatest extent possible, each of the Members to the position that they would have been in had the event or circumstance giving rise to such proceeds not occurred, in each case, based upon the Tracking Model results on the date immediately preceding the occurrence of such event or circumstance; provided¸ that in the event that such net proceeds exceed $250,000, the Managing Member shall notify the Members in writing of the proposed characterization and provide an updated Base Case Model demonstrating the impact of such event and proceeds on the Flip Date; and if the Flip Date will be delayed beyond one (1) calendar quarter, any such characterization and proposed distribution shall be approved by the Consent of the Members; and if no agreement has been reached by the Members within thirty (30) Days following receipt by the Project Company or the Company of an amount described in this Section 5.1(b)(i)(A), then the actual determination shall be finally referred to independent public accounting firm appointed jointly by the Members; and
(B) in the event the Company or the Project Company receives proceeds (including Loss Proceeds) relating to a Subject Casualty that will not be used to repair the Project in accordance with Section 6.9, such proceeds shall be distributed one hundred percent (100%) to the Class A Member until (x) in the case of total casualty, the Class A Member reaches the Target IRR or (y) in the case of a partial casualty, the Tracking Model demonstrates that the Flip Date is anticipated to occur on or before the Flip Date estimated by the Tracking Model prior to the Subject Casualty, and in each case thereafter, any remaining amounts shall be distributed in accordance with Section 5.1(a)(ii);
(ii) any amounts received as a return of Support Obligations provided by a Class B Member that are replaced with Support Obligations provided by a Class B Member shall be distributed entirely to the applicable Class B Member providing such replacement Support Obligations;
(iii) any amounts received in respect of any network or interconnection upgrade refunds pursuant to the Interconnection Agreement shall be distributed entirely to the Class B Members;
(iv) any amounts received as delay liquidated damages under any Project Document net of the portion thereof necessary to pay Delay Damages (as defined in the PPA) in accordance with Section 3.3(a) shall be distributed entirely to the Class B Members;
(v) any amounts received in respect of any test revenues under the PPA shall be distributed entirely to the Class B Members;
(vi) any funds remaining in the Final Completion Account after the Project reaches Final Completion will be distributed to the Initial Class B Member and will be treated, to the extent eligible, as a reimbursement of pre-formation expenditures to the extent permitted by Treasury Regulations section 1.707-4(d);
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(vii) with respect to any Allocation Period that begins after the Flip Date, as determined under the procedures set forth in Section 10.1, on each Distribution Date, Available Cash Flow that would otherwise have been distributed to the Class B Members in accordance with their Pro Rata Shares shall instead be distributed to the Class A Member to the extent necessary such that, after giving effect to the amounts distributed to the Class A Member pursuant to this Section 5.1(b)(vii) and otherwise distributable to the Class A Members pursuant to Section 5.1(a), the Class A Member receives an amount at least equal to the product of (i) the Corporate Tax Rate and (ii) the net federal taxable income recognized by the Class A Member in excess of the taxable income allocated to the Class A Member pursuant to Section 4.1(a)(iv) with respect to such Allocation Period as a consequence of its ownership of an interest in the Company (after taking into account any amount of Tax Benefit that was previously suspended under Code Sections 704(d) and 163(j) with respect to such Class A Member and is now available to offset any such additional net taxable income);
(viii) notwithstanding anything in this Agreement to the contrary, if a Recapture Event occurs as a result of a Subject Casualty, then (A) to the extent not otherwise reflected in the Tracking Model in accordance with the provisions of Article X or the other provisions of this Agreement, the Tracking Model shall be modified to reflect the amount of ITCs subject to such recapture, reduction, loss or disallowance resulting from such Subject Casualty (including the forecast of future Available Cash Flow after any planned rebuild or repair), and the ITCs and other Tax Benefits to be allocated to the Class A Members upon any planned rebuild or repair of the Project in accordance with Section 6.9 (all determined in a manner consistent with the Base Case Model), and (B) the amount of Available Cash Flow otherwise distributable to the Class A Members pursuant to Section 5.1(a) shall be modified to the extent necessary to cause the Flip Date to occur as closely as possible to the Flip Date estimated by the Tracking Model prior to revision to reflect such Subject Casualty, and the consequences thereof, but not to exceed 50% of the Available Cash Flow that would otherwise have been distributed to the Class B Members under this Section 5.1, taking into account any amounts already distributed pursuant to Section 5.1(b);
(ix) notwithstanding the foregoing provisions of this Section 5.1, in the event that, after the SC Funding Date and prior to the Adjustment Outside Date, there is a Change in Tax Law which results in an ITC Loss, the percentages set forth in Section 5.1(a) with respect to the Class A Member shall be adjusted to the extent necessary to preserve the Target Parameters and the Target Flip Date (the “IRA Post Funding Adjustment”); provided, that in no event shall the IRA Post Funding Adjustment allow the Class A Member to be entitled to more than fifty percent (50%) of Available Cash Flow; provided, further, that if the IRA Post Funding Adjustment is insufficient to preserve the Target Parameters, the Managing Member shall have the obligation to make an additional Capital Contribution to the Company, which shall be distributed to the Class A Member in order to preserve the Target Parameters and Target Flip Date. The Class B Member shall reimburse the Class A Member for all reasonable and documented legal costs and expenses
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of the Class A Member incurred in connection with implementing this Section 5.1(b)(ix); and
(x) notwithstanding the foregoing provisions of this Section 5.1, in the event (i) a Proposed Change in Tax Law that was incorporated in the SC Funding Date Base Case Model and by the Adjustment Outside Date, (X) such Proposed Change in Tax Law (or any bill that has the same impact as such Proposed Change in Tax Law) has not been enacted into law or (Y) such Proposed Change in Tax Law is enacted into law with modifications or amendments, then, in the case of clause (X) above, by the date that is ten (10) days (excluding Sundays) after the Adjustment Outside Date, or in the case of clause (Y) above, 30 days from the enactment of such Proposed Change in Tax Law:
(A) the Base Case Model as of the SC Funding Date shall be rerun without regard to the Proposed Change in Tax Law taken into account in such Base Case Model, but otherwise in accordance with, and without any changes to, the assumptions reflected therein, and if clause (Y) above applies, taking into account the Proposed Change in Tax Law as modified or amended and enacted (such rerun Base Case Model, the “True-Up Base Case Model”); and
(B) in the event that the True-Up Base Case Model demonstrates that the Flip Date would be accelerated under the P50 production case in the Base Case Model delivered pursuant to Section 4.3(b) of the ECCA, at the Class A Member’s option, either (x) the percentages set forth in Section 5.1(a) shall be adjusted to the extent necessary to preserve the Target Parameters; or (y) the Class A Member shall make a Capital Contribution to the Company in an amount equal to the difference between the amount that was contributed by the Class A Member on the applicable Funding Date and the amount that the Class A Member would have been required to contribute without regard to the applicable Proposed Change in Tax Law, as determined by the True-Up Base Case Model, and 100% of such amount shall be distributed by the Company to the Class B Member as a special distribution. In no event will the Investor be required to make a Capital Contribution that will result in its total contributions exceeding the cap described in the definition of Commitment (as defined in the ECCA).
The Class B Member shall reimburse the Class A Member for all reasonable and documented costs and expenses (including attorney’s fees) of the Class A Member incurred in connection with implementing this Section 5.1(b)(ix).
5.2 Satisfaction of Certain Obligations of the Class B Members to the Class A Member. During any period when there is an unpaid Indemnification Claim under Section 11.1 that is not being disputed by the Class B Member or the Class B Member Guarantor and that remains unpaid by or on behalf of any Indemnifying Party after the date when payment is due in accordance with Section 11.3(b), and the applicable Indemnified Party has submitted a demand of payment to the Class B Member Guarantor in accordance with the Guaranty, commencing with the next Distribution Date occurring after the 30-day period following such demand, the greater of (a) 50% of the Available Cash Flow that would otherwise have been distributed to the Class B Members
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under Section 5.1 and (b) 100% the Available Cash Flow that would otherwise have been distributed to the Class B Members under Section 5.1 less the amount needed to pay Permitted Debt Service, will be paid instead to the Indemnified Parties to the extent necessary to pay the undisputed portion of such Indemnification Claim, provided, for purposes of clarity, that any portion of such Indemnification Claim that is in dispute shall instead be paid into a segregated account used solely for such purpose, maintained at a commercial bank that is a member of the Federal Reserve System and has a combined capital and surplus of at least $1,000,000,000, up to the amount of such disputed claim, and shall be payable to the applicable Indemnified Party upon final resolution of the relevant disputed claim. Amounts paid to the Indemnified Parties pursuant to this Section 5.2 will be treated as if distributed to the Class B Members and then immediately paid by the Indemnifying Party to the Indemnified Party.
5.3 Withholding. Notwithstanding any other provision of this LLCA, the Company shall comply with any withholding requirements under any Applicable Law and shall remit amounts withheld to, and file required forms with, applicable taxing authorities. To the extent that the Company is required to withhold and pay over any amounts to any taxing authority with respect to distributions or allocations to any Member, the amount withheld shall be treated as a distribution of cash to such Member in the amount of such withholding. It shall be the duty of the Managing Member to cause the Company to comply with such requirements and to take such actions. If an amount required to be withheld was not withheld from an actual distribution, the Company may reduce subsequent distributions by the amount of such required withholding and any penalties or interest thereon. Each Member agrees to furnish to the Company such forms or other documentation as is necessary to assist the Company in determining the extent of, and in fulfilling, its withholding obligations.
ARTICLE VI
MANAGEMENT
6.1 Managing Member; Operations Manager.
(a) The Initial Class B Member is appointed by the Members as the initial Managing Member of the Company. Except as provided in Section 6.2, or as otherwise expressly provided in this LLCA, the Managing Member will exercise day-to-day control over the activities of the Company and the Project Company (through its management of the Company as the sole member of the Project Company), will have full power and authority on behalf of the Company to manage and administer the business and affairs of the Company and the Project Company (through its management of the Company as the sole member of the Project Company), to sign for on behalf of the Company and the Project Company, and to bind the Company and the Project Company, and to do or cause to be done any and all acts necessary or appropriate to conduct the business of the Company and the Project Company.
(b) Without limiting the foregoing, the Managing Member will, in accordance with the Prudent Operator Standard and the standard of care set forth in Section 6.2: (i) cause the Company or the Project Company to perform and pursue the Company’s and the Project Company’s obligations and rights under the Transaction Documents and the Project Documents to which it is a party and, prior to the SC Funding Date, the Construction Financing Documents to which it is a
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party; (ii) ensure material compliance by the Company and the Project Company with any Applicable Law, including Environmental Laws, Anti-Terrorism Laws and laws of a Compliance Authority or relating to Sanctioned Persons and Sanctioned Countries; and (iii) not cause the Company or the Project Company to take or omit to take any action that would result in a material breach or an event of default, or that would permit or result in the acceleration of any obligation or termination of any right, under any Transaction Document or Project Document to which it is a party and, prior to the SC Funding Date, the Construction Financing Documents to which it is a party; provided, that, for the avoidance of doubt, Managing Member will be entitled to all applicable protections of Section 6.4 and the waiver set forth in Section 6.4 in so discharging such obligations.
(c) The Managing Member will enforce any Affiliate Contract in material compliance with its terms. Upon a default under an Affiliate Contract, the Managing Member will exercise remedies under the Affiliate Contract in consultation with the Class A Member. The Managing Member shall neither exercise its remedies under the Affiliate Contract, nor fail to exercise such remedies, absent the express, prior consent of the Class A Member, which shall not be unreasonably withheld, conditioned or delayed.
(d) The Project Company has entered into the Asset Management Agreement pursuant to which the Asset Manager shall be responsible for the administration of certain Project Documents and the day-to-day operations of the Company and the Project Company, and the Members acknowledge and agree that the Managing Member may, to the fullest extent permitted by Applicable Law, delegate to the Asset Manager all or any part of its power and authority as the Managing Member hereunder (subject to consent rights set forth in Section 6.2(b), and other matters requiring a vote by the Members pursuant to this LLCA) pursuant to the Asset Management Agreement.
(e) The Class A Member is appointed by the Members as the initial Operations Manager of the Company subject to the Project Company obtaining all necessary approvals from any Governmental Authority, including without limitation the FERC 203 Approval, and the duties and obligations of the Operations Manager shall be limited to such duties and obligations that are set forth in Schedule 1 and as otherwise expressly set forth in this LLCA; provided, however, that, for the avoidance of doubt, the Class A Member shall not be obligated to, and shall not, act as or perform the duties and obligations of the Operations Manager for the Project Company or the Company (1) until after the Placed In Service Date, and (2) unless and until the FERC 203 Approval has been obtained. In carrying out the duties and obligations set forth in Schedule 1 and as otherwise expressly set forth in this LLCA, the Operations Manager will have full power and authority on behalf of the Company and the Project Company (through its management of the Company as the sole member of the Project Company) to sign for on behalf of the Company and the Project Company (with the prior written consent of the Managing Member), to bind the Company and the Project Company (with the prior written consent of the Managing Member), and to do or cause to be done any and all acts necessary or appropriate to fully discharge such duties and obligations. The Operations Manager shall have no authority to take any action for or on behalf of the Company or the Project Company, except as expressly set forth in this Section, and shall not be entitled to any compensation for performing the services contemplated hereby.
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6.2 Standard of Care; Delegation; Required Consents.
(a) The Managing Member and the Operations Manager will be required to perform their respective duties and obligations under this LLCA in accordance with Applicable Law, in good faith and in a manner reasonably believed to be in the best interest of the Company, the Project Company and the Project and, with respect to operation and management of the Project, in accordance with the Prudent Operator Standard; provided, that to the fullest extent permitted by Applicable Law, that it shall not be a breach of the Managing Member’s or the Operations Manager’s standard of care and neither the Managing Member nor the Operations Manager shall be responsible hereunder for the negligence, gross negligence or willful misconduct of, or breach of contract by, any sufficiently qualified Person engaged by the Managing Member or the Operations Manager, as applicable, pursuant to a contract that requires such Person to perform its duties in accordance with the Prudent Operator Standard (or substantially similar standard of care) if such Person is sufficiently qualified to perform such duties and the Managing Member or the Operations Manager, as applicable, is diligent in its oversight of such Person in accordance with the Prudent Operator Standard; provided, further, that (i) the foregoing proviso shall not be applicable to any agreement with an Affiliate of the Managing Member or the Operations Manager, as applicable, and (ii) the Managing Member shall be obligated to administer and enforce the agreements to which each of the Company and the Project Company is a party in a commercially reasonable manner in accordance with their respective terms; provided, further, that (A) it shall not be a breach of the Managing Member’s standard of care and the Managing Member shall not be responsible hereunder for the negligence, gross negligence or willful misconduct of, or breach of this LLCA by, the Operations Manager and (B) it shall not be a breach of the Operations Manager’s standard of care and the Operations Manager shall not be responsible hereunder for the negligence, gross negligence or willful misconduct of, or breach of this LLCA by, the Managing Member.
(b) Notwithstanding any other provision of this LLCA to the contrary, except to the extent any such action is reasonably necessary, as determined by the Managing Member, in response to an unexpected event or circumstance occurring at the Project that (1) unless remedied or addressed immediately, poses actual or imminent risk of (a) personal injury, (b) material property damage to, or impairment of value of, the Project or (c) an imminent violation of Applicable Law not precipitated by any breach of the Managing Member’s obligations hereunder, and (2) requires, in the good faith and reasonable determination of the Managing Member, immediate preventative or remedial action, the Managing Member and the Operations Manager may not cause the AC Subsidiary, the Company or the Project Company, as applicable, to take any of the following actions without the prior written Consent of the Members, such Consent of the Members not to be unreasonably withheld, conditioned or delayed:
(i) do any act, or omit to take any act, in material breach of its obligations under any Transaction Document or the organizational documents of the AC Subsidiary, the Company or the Project Company;
(ii) (A) during the Recapture Period, sell, lease, transfer, assign, distribute or dispose of the Project or its Assets or any ownership interest in the Project Company or the
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AC Subsidiary or its assets, or (B) following the Recapture Period, sell, lease, transfer, assign, distribute or dispose of the Project, the Company, any ownership interest in the Project Company, any ownership interest in the AC Subsidiary owned by the Project Company or any of their Assets with a fair market value prior to the later of (x) the Flip Date and (y) the date upon which any negative Capital Account balance of the Class A Member has been reduced to zero (the “DRO Zero Date”) (the later of clauses (x) and (y), the “Consent Date”), in excess of $500,000 in any year or $2,000,000 in the aggregate, and on and after the Consent Date, in excess of $350,000 in one or a series of transactions, in each case, other than a disposition of Assets that are obsolete, beyond repair, surplus or no longer required for such Project and sales or transfers of electricity, RECs, other renewable energy credits and other power attributes; provided, however, that any funds received by the AC Subsidiary pursuant to the Duke ASOA Agreement shall not be subject to this Section 6.2(b)(ii) and shall be distributed in accordance with that agreement.;
(iii) cause the Company or the Project Company to engage in any business or activity that is not within the purpose of the Company described in Section 2.5 or the purpose set forth in the AC Subsidiary’s or the Project Company’s organizational documents, or to change such purpose;
(iv) cause the Company or the AC Subsidiary to elect to be treated other than as a partnership, or the Project Company to be treated other than as a disregarded entity, for U.S. federal income tax purposes;
(v) permit on behalf of the AC Subsidiary, the Company or the Project Company, or cause the Company or the Project Company to enter into or permit: (A) any amendment or modification, any waiver or termination of any provision of, or assignment of, any Governmental Approval, any Material Project Document, any Construction Financing Document (prior to the SC Funding Date) or any Transaction Document, other than any such amendments, waivers or modifications (I) to correct ministerial or clerical errors or (II) that relate solely to increased costs and such amendment, waiver or modification would not reasonably be expected to result in additional cost to the Project Company or the Company in excess of (x) $250,000 (or, after the Consent Date, $750,000) in any consecutive twelve (12)-month period, (B) (I) on or prior to the Consent Date, a substitution or replacement of any Material Project Document, except for substitution or replacement contracts that contain terms no less favorable to the Company and the Project Company than those in the Material Project Document being substituted or replaced and, on and after the Consent Date, that would not reasonably be expected to cause a Material Adverse Effect, or (II) a substitution or replacement of any Construction Financing Document (prior to the SC Funding Date), (C) any new contract or agreement that involves amounts to be paid by any party or parties, prior to the Consent Date in excess of $250,000, and on and after the Consent Date, $750,000 or (D) any new contract, or any amendment, renewal or termination of any existing contract, with an Affiliate of any Class B Member, and that on and after the Consent Date, is other than on arms-length terms;
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(vi) (A) compromise, settle or consent to any decision or entry of judgment in connection with any dispute (whether or not governed by contractual dispute resolution procedure), litigation, or arbitration where any such compromise, settlement, consent or decision (I) would reasonably be expected to have a Material Adverse Effect on the Company or the Project Company, (II) involves amounts to be paid by any party or parties in excess of $500,000, and on and after the Consent Date, $1,000,000 for any single proceeding or $500,000 in the aggregate and on and after the Consent Date, $1,000,000 in the aggregate, (III) includes consent to or award of an injunction, specific performance or other equitable relief by the AC Subsidiary, the Company, the Project Company or any Member or (IV) that includes a criminal investigation or criminal proceedings against the AC Subsidiary, the Company, the Project Company the Managing Member or any of their respective officers, Managing Members or directors (but only to the extent such investigation or proceeding relates to such officer’s, Managing Member’s or director’s actions or failure to act in their capacity as an officer, Managing Member or director of the AC Subsidiary, the Company, the Project Company or the Managing Member), or (B) waive or forfeit any material claim or remedy or other material economic interest under any Transaction Document or Material Project Document or, prior to the SC Funding Date, any Construction Financing Document;
(vii) remove the EPC Contractor, Operator, Energy Manager or Asset Manager prior to the scheduled expiration or termination of the EPC Contract, O&M Agreement, Energy Management Services Agreement or Asset Management Agreement then in effect and appoint a new EPC Contractor, Operator, Asset Manager or Energy Manager;
(viii) cause the Company to permit (A) possession of property of the Company or the Project Company by any Member or (B) the assignment, mortgage, transfer, Encumbrance (other than Permitted Encumbrances) or pledge of rights of the AC Subsidiary or the Company in specific property or Assets of the Company, the AC Subsidiary or the Project Company (other than, prior to the SC Funding Date, any pledge to the Collateral Agent under the Construction Financing Documents) or to assign any monies owing or to be owing to the AC Subsidiary, the Project Company or the Company, in each case other than in accordance with the Transaction Documents;
(ix) (A) prior to the Consent Date, cause the AC Subsidiary, the Company or the Project Company to initiate any litigation or arbitration that involves amounts to be paid by any party or parties in excess of $500,000 or (B) after the Consent Date, cause the AC Subsidiary, the Company or the Project Company to initiate any litigation or arbitration that involves amounts to be paid by any party or parties in excess of $1,000,000;
(x) amend the Delaware Certificate or other organizational document of the Company or the Project Company (other than amendments to change the authorized signatories, registered agent or registered office of the Company or the Project Company or ministerial changes);
(xi) cause the Company to advance any compensation or other consideration to the Managing Member or any of its Affiliates, other than in accordance with the
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Transaction Documents or the Project Documents in place immediately prior to the payment of such compensation or consideration;
(xii) cause the AC Subsidiary, the Company or the Project Company to (A) merge or consolidate with any Member or other Person, or cause the AC Subsidiary, the Company or the Project Company to agree to an exchange of interests with any other Person, or acquire all or substantially all of the Assets or stock of any other Person or (B) purchase or own the stock or other equity interest in any other Person (other than the Company’s equity in the Project Company, the Project Company’s interests in the AC Subsidiary, and investments permitted under Section 8.5) or enter into any joint venture or partnership;
(xiii) cause the AC Subsidiary, the Company or the Project Company to convert to a general partnership or other entity or otherwise change its legal form, recapitalize, liquidate, wind-up or dissolve (other than, in the case of the Company, in accordance with the terms of this LLCA);
(xiv) cause the AC Subsidiary, the Company or the Project Company to take or file any action or institute any proceedings in Bankruptcy, serve as a petitioning creditor in connection with an involuntary petition against the Company or the Project Company, cooperate with creditors to commence an involuntary bankruptcy petition, guarantee such creditors’ claims, or take any action to encourage or assist in any way with an involuntary bankruptcy petition against the AC Subsidiary, the Company or the Project Company;
(xv) cause the Company to make any distribution to any Member, except as specified in this LLCA, or fail to distribute all Available Cash Flow on each Distribution Date in accordance with Article V, or fail to cause the Project Company to distribute all available cash to the Company in accordance with its limited liability company operating agreement;
(xvi) cause the Company or the Project Company to repurchase any membership interests in the Company or the Project Company, except, in the case of the Company, pursuant to a Buyout Event or the Purchase Option;
(xvii) admit any additional Member of the Company or the Project Company or issue, sell, dispose of, or transfer any Membership Interest of the Company, any membership interest of the Project Company, any securities convertible, exchangeable or exercisable into any Membership Interest of the Company or any membership interest of the Project Company, or warrants, options, calls, rights of first offer, rights of first refusal, tag along rights, drag along rights, preemptive rights or other commitments or rights of any character entitling any Person to acquire any Membership Interest of the Company or any membership interest of the Project Company, in each case, except as permitted under the transfer provisions of this LLCA;
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(xviii) take any action specifically reserved to the Members under this LLCA (including in their capacity as Partnership Representative or Operations Manager) or under any other Transaction Document;
(xix) (A) compromise, adjust or settle any insurance claim of the AC Subsidiary, the Company or the Project Company where the potential recovery is in excess of $1,000,000, and on and after the Consent Date, $2,000,000 or (B) cause the AC Subsidiary, the Company or the Project Company to amend, restate, revise or otherwise modify in any material respect any insurance policy of the AC Subsidiary, the Company or the Project Company or issue any additional endorsement to any such policy, that directly or indirectly would materially and adversely affect the rights or coverages afforded to the AC Subsidiary, the Company, the Project Company or the Class A Member under the existing policy;
(xx) (A) other than pursuant to Sections 3.3, 3.4, 3.5 and 3.6 and the Construction Financing Documents (prior to the SC Funding Date), incur or cause the AC Subsidiary, the Company or the Project Company to incur any Indebtedness except for unsecured Indebtedness of the Company or the applicable Project Company in a principal amount not to exceed $250,000 and on and after the Consent Date (but only if the subsections (x) and (y) of Section 6.2(b)(ii) have been achieved) $2,000,000 or (B) cause the AC Subsidiary, the Company or the Project Company to loan any funds of the AC Subsidiary, the Company or the Project Company to any Person;
(xxi) except for the Support Obligations and the Construction Financing Documents (prior to the SC Funding Date), cause the AC Subsidiary, the Company or the Project Company to guarantee, in the name or on behalf of the AC Subsidiary, the Company or the Project Company, the payment of money or the performance of any contract or other obligation of any Person;
(xxii) amend the Approved Budget to increase projected expenditures or expend funds in excess of the aggregate amounts in the Approved Budget for the AC Subsidiary, the Company and the Project Company for any Fiscal Year, except for amendments or expenditures that (A) do not increase the aggregate spending under the Approved Budget for the AC Subsidiary, the Company and the Project Company above 110% of the aggregate expenses reflected in the Approved Budget or (B) as reasonably determined by the Managing Member, are necessary on an emergency basis to preserve and protect the Assets of the AC Subsidiary, the Company or the Project Company upon an accident, mechanical failure, catastrophe or similar event or to avoid the imminent violation of law or injury or death to any natural person (and, in the case of this clause (B), with prompt notice to the Members);
(xxiii) cause the AC Subsidiary, the Company or the Project Company to make any capital expenditures, other than (A) below 110% of the expenditures as contemplated by the Approved Budget, (B) expenditures required by law or otherwise mandated by a Governmental Authority (and, in the case of this clause (B), with prompt notice to the Members), or (C) expenditures necessary to prevent or mitigate or eliminate an emergency
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situation (and, in the case of this clause (C), with prompt notice to the Members) and even then only to the extent that such action is taken to prevent or mitigate or eliminate the effects of such emergency while the emergency is ongoing and promptly thereafter;
(xxiv) cause the AC Subsidiary, the Company or the Project Company to take or omit to take any action that would result in a material breach or an event of default, or that would permit or result in the acceleration of any material obligation or termination of any right, under any Material Project Document or, prior to the SC Funding Date, any Construction Financing Document;
(xxv) cause the Company or the Project Company to decommission or permanently remove the Project from service, except as (A) required by law, consistent with the Prudent Operator Standard or (B) as required by the exercise of an early termination under the PPA for which the Company or the Project Company receives a termination payment;
(xxvi) cause the Company or the Project Company to (A) change its methods of accounting as in effect as of the Effective Date, except as required by GAAP, or take any action, other than reasonable and usual actions in the ordinary course of business or specifically contemplated under the Project Documents, with respect to accounting policies or procedures, unless required by GAAP, (B) consent to any tax audit adjustment or (C) approve any replacement of the Certified Public Accountant;
(xxvii) allow any electricity from the Project to be used to heat a swimming pool or to be sold to a Member or Affiliate of a Member;
(xxviii) other than in its capacity as the Partnership Representative (if applicable) in accordance with Article VII, make any tax election, or cause the Company to make any tax election, other than as provided herein;
(xxix) cause the AC Subsidiary, the Company or the Project Company to hire any employees, enter into or adopt any bonus, profit sharing, thrift, compensation, option, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers or employees of the AC Subsidiary, the Company or the Project Company or transfer any of the AC Subsidiary’s, the Company’s or the Project Company’s Assets to satisfy any liabilities of any Class B Member or its Affiliates arising from ERISA;
(xxx) seek any private letter ruling from the IRS relating to the transactions contemplated hereunder;
(xxxi) cause the Company or Project Company to engage in any speculative energy trading, excluding hedge or swap arrangements, renewable energy credit sales, forward contracts, transactions pursuant to the Energy Management Services Agreement, and similar transactions for the Project and replacements therefor;
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(xxxii) claim any energy community bonus credit available under Section 48(a)(14) of the Code with respect to the Project or the domestic content bonus credit available under Section 48(a)(12) of the Code credit or elect to transfer any ITCs pursuant to Section 6418 of the Code except as permitted by Section 8.11;
(xxxiii) make any amendment to or modification of any of the methodology, conventions, formulas or rules set forth in the Base Case Model, except for those expressly contemplated by, and made in accordance with, the provisions set forth in this LLCA or the ECCA;
(xxxiv) take any action that would cause the Project Company to cease to be an Exempt Wholesale Generator or fail to take any action needed for the Project Company to continue to be an Exempt Wholesale Generator;
(xxxv) take any action that would result in the loss of, or any restrictions or limitations on, the Project Company’s MBR Authority, or fail to take any action necessary for the Project Company to have MBR Authority and comply with FERC’s rules with respect to such MBR Authority; or
(xxxvi) take any action that would cause the Project Company to become a “public utility” or fail to take any action needed to prevent the Project Company from being a “public utility” under N.C. Gen. Stat. § 62-3(23);
provided, however, that each decision that relates to the AC Subsidiary identified in this Section 6.2(b) shall be subject to the Project Company’s rights (including any limitations thereon) and obligations set forth in the AC Subsidiary LLCA
(c) Any action taken by the Managing Member in compliance with the Prudent Operator Standard (i) that is necessary to comply with Applicable Law including the permanent cessation of operation of the Project that is the result of a casualty, force majeure event or other event outside of the reasonable control of the Managing Member or (ii) which arises from circumstances not within the Managing Member’s reasonable control that results in an event of default under any Project Documents shall not, in either case of clauses (i) and (ii), constitute a breach of the requirement to obtain the Consent of the Members required pursuant to Section 6.2(b).
6.3 Removal of Managing Member; Removal and Resignation of Operations Manager.
(a) The Managing Member will be subject to removal as Managing Member by the Members who are not Affiliates of the Managing Member upon written notice that any of the following has or have occurred:
(i) the Class A Member has brought a good faith claim that the Managing Member has engaged in fraud, gross negligence, or willful misconduct; provided, however, that if an Order provides that the Managing Member did not engage in fraud, gross negligence or willful misconduct, then (A) the Managing Member shall be immediately
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reinstated as the Managing Member, and (B) the Class A Member shall reimburse the Managing Member, the Company, and their respective Affiliates for all documented out-of-pocket expenses arising from or related to the Managing Member’s removal or defending such claim and shall indemnify and hold harmless the Managing Member for any actions taken by the Company between the date of removal and the date of the Order;
(ii) the Managing Member or its Affiliate breaches any of its representations and warranties or covenants in the ECCA, this LLCA or, solely with respect to the Managing Member, any other Transaction Document to which it is a party and (to the extent such material breach is capable of being cured) such material breach has not been cured within thirty (30) days of receiving written notice from the Class A Member of such breach (or within ten (10) days of receiving written notice from the Class A Member of such breach, in the case of failure to make cash distributions), and if such breach cannot be cured within such period, and the Managing Member or such Affiliate is proceeding with diligence to cure such breach, the thirty-day cure period shall be extended by an additional period of up to sixty (60) additional days for a total cure period of ninety (90) days;
(iii) the Managing Member breaches its covenants in this LLCA and such breach directly causes a failure by the Company or the Project Company to materially comply with their respective insurance requirements in such a manner as to create a situation that would reasonably be expected to result in a lapse of property or liability coverage for the Company or the Project Company and such failure has not been cured within sixty (60) days of receiving written notice from the Class A Member of such failure, provided, however, that if the Company or the Project Company, as applicable, is diligently seeking to replace such insurance coverage during such sixty (60) day period but such insurance coverage is not available on market terms then, subject to the granting of a waiver in accordance with Section 1.5 of Schedule 2 hereto, such breach shall be deemed cured for purposes of this Agreement;
(iv) the occurrence of a Change of Member Control with respect to the Managing Member that is not permitted or consented to in accordance with Article IX;
(v) the Managing Member fails to make any member loan to the Company as and when required hereunder; and
(vi) the Class B Member Guarantor or the Managing Member becomes Bankrupt.
(b) The Managing Member will be removed automatically, without any further action or notice if the Managing Member or the Class B Member Guarantor is Bankrupt, unless each of the Members who are not Affiliates of the Managing Member elect otherwise.
(c) If the Managing Member is removed, the Members who are not Affiliates of the removed Managing Member will elect a successor Managing Member, subject to the Company and the replacement Managing Member obtaining all necessary approvals from any Governmental Authority.
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(d) The Operations Manager will be subject to removal as Operations Manager by the Members who are not Affiliates of the Operations Manager upon written notice that any of the following has or have occurred:
(i) the Class B Member has brought a good faith claim that the Operations Manager has engaged in fraud, gross negligence, or willful misconduct; provided, however, that if an Order provides that the Operations Manager did not engage in fraud, gross negligence, or willful misconduct, then (A) the Operations Manager shall be immediately reinstated as the Operations Manager, and (B) the Class B Member shall reimburse the Operations Manager for all documented out-of-pocket expenses arising from or related to the Operations Manager’s removal or defending such claim and shall indemnify and hold harmless the Operations Manager for any actions taken by the Company between the date of removal and the Order;
(ii) the occurrence of a Change of Member Control with respect to the Operations Manager that is not permitted or consented to in accordance with Article IX;
(iii) upon a Transfer that, taken together with all prior Transfers of Class A Units, constitutes a Transfer of more than 50% of the aggregate number of Class A Units; or
(iv) the Operations Manager becomes Bankrupt.
(e) The Operations Manager will be removed automatically, without any further action or notice if the Operations Manager is Bankrupt, in the event of a Transfer that, taken together with all prior Transfers of Class A Units, constitutes a Transfer of more than 50% of the aggregate number of Class A Units, unless each of the Members who are not Affiliates of the Operations Manager elect otherwise.
(f) If the Operations Manager is removed, the Members who are not Affiliates of the removed Operations Manager may elect (i) a successor Operations Manager or (ii) to cause the Managing Member to perform the duties of Operations Manager, subject to the Company and the replacement Operations Manager obtaining all necessary approvals from any Governmental Authority, to the extent required.
(g) At any time upon ninety (90) days prior written notice to the Members, the Operations Manager shall be permitted to resign with twenty (20) Business Days prior notice to the other Members, and if the Operations Manager has so resigned, the Members who are not Affiliates of the resigned Operations Manager may (i) elect a successor Operations Manager or (ii) cause the Managing Member to perform the duties of Operations Manager, subject to the Company and the replacement Operations Manager or Managing Member, as applicable, obtaining all necessary approvals from any Governmental Authority.
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6.4 Indemnification and Exculpation.
(a) To the fullest extent permitted by Applicable Law, the Managing Member, the Operations Manager and the Partnership Representative and their respective officers, directors, employees and agents will be exculpated from, and the Company will indemnify such Persons from and against, all Damages any of them incurs by reason of any act or omission performed or omitted by such Person in performing, in good faith, in a manner reasonably believed to be in the best interest of the Company, and consistent with its rights and obligations under this LLCA, the Managing Member’s, the Operations Manager or the Partnership Representative duties under this LLCA or relating to the Company’s activities and business, in each case, subject to and in accordance with the terms of this LLCA and Applicable Law; provided, that this indemnity does not apply to Damages attributable to the gross negligence, willful misconduct or fraud of such Person or a material breach by the Managing Member, the Operations Manager, or the Partnership Representative or any of their respective Affiliates of their covenants, representations, or warranties in any Transaction Document, any Construction Financing Document, or Project Document to which it is a party.
(b) To the fullest extent permitted by Applicable Law, the Company shall, within 10 days after an Indemnified Party notifies the Indemnifying Party and the Company, advance reasonable and documented expenses incurred by the Indemnified Party under this Section 6.4 from Available Cash Flow prior to the final disposition of any matter but subject to each Member’s credit support obligations hereunder and only upon receipt by the Company of an undertaking from a Person with sufficient credit capacity to repay such amount if it is determined by a court of competent jurisdiction pursuant to a non-appealable ruling that the Indemnified Party is not entitled to be indemnified.
(c) The Company may purchase and maintain insurance on behalf of any officer, employee or agent of the Company (including, without limitation, the Managing Member, Operations Manager and Partnership Representative).
6.5 Company Reimbursement. The Company will directly pay and reimburse the Managing Member, the Operations Manager and the Partnership Representative for all reasonable and documented Third Party costs and expenses consistent with the Approved Budget incurred in the ordinary course of business, or otherwise permitted hereunder in emergency circumstances and incurred, by the Managing Member, the Operations Manager or the Partnership Representative on behalf of the Company in performing the duties in this LLCA, but not including amounts paid to the Asset Manager under the Asset Management Agreement and any costs and expenses attributable to the gross negligence, willful misconduct or fraud of the Managing Member, the Operations Manager or the Partnership Representative or a breach by the Managing Member, the Operations Manager or the Partnership Representative or any of their respective Affiliates of their covenants, representations or warranties in any Transaction Document, Construction Financing Document or Project Document to which it is a party.
6.6 Approved Budgets. Prior to receipt of the FERC 203 Approval, the Managing Member shall (in consultation with the Class A Member) and, on and after receipt of the FERC 203 Approval, the Managing Member shall (in consultation with the Operations Manager) prepare
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or cause to be prepared for each Fiscal Year of the Company an annual operating budget that includes the anticipated revenues and expenses of the Company and the Project Company for the Fiscal Year, including any necessary provision for expenditures or reserves for maintenance and capital items and other extraordinary expenditures, and using methodology consistent with the methodology set forth in the Base Case Model. The initial annual operating budget for the period commencing on the SC Funding Date and ending on December 31, 2025 is attached as Exhibit C. At least 60 days before the start of each subsequent Fiscal Year, the Operations Manager (or Managing Member prior to receipt of the FERC 203 Approval) will submit the proposed annual operating budget for that Fiscal Year to the Managing Member (or Class A Member prior to receipt of the FERC 203 Approval) and the other Members for their review. Consent of the Members will be required for any proposed aggregate annual operating budget only if the budget (i) is more than the lesser of 10% above the aggregate annual spending projected in the Base Case Model for the applicable Fiscal Year as of the MC Funding Date or 5% above the aggregate annual spending projected in the Approved Budget for the previous Fiscal Year, (ii) includes expenditures exceeding $200,000 and on and after the Consent Date, $500,000 in aggregate of a type not included in the Base Case Model as of the MC Funding Date for the Fiscal Year or in the Approved Budget for the previous Fiscal Year (in which case Consent of the Members is only required for those items), (iii) contains any items of a type that would be considered inconsistent with Prudent Industry Practices (in which case Consent of the Members is only required for those items) or (iv) is not approved by the Administrative Agent in accordance with the express terms of the Construction Financing Agreement and the Backleverage Financing Agreement, which non-approval shall be promptly notified in writing by the Managing Member to the other Members. If the Consent of the Members is not obtained as provided above, the Operations Manager (in consultation with the Managing Member) (or, prior to receipt of the FERC 203 Approval, the Managing Member, in consultation with the Class A Member) will promptly prepare or cause to be prepared a revised annual operating budget, which will be submitted to the Members for their approval according to this section, and upon final approval of such annual operating budget by the Consent of the Members, the budget will become an Approved Budget. If the Consent of the Members cannot be obtained for any revised proposed annual operating budget, then the budget may be submitted by the Managing Member (in consultation with the Operations Manager) (or, prior to receipt of the FERC 203 Approval, the Managing Member, in consultation with the Class A Member) to the Independent Engineer or another independent engineer selected jointly by the Parties to review and provide recommendations to the Members to accept or reject. To the extent that amounts relating to any items of a proposed budget are not approved, then the corresponding amounts for such items in the previous Fiscal Year’s Approved Budget will carry over into the next Fiscal Year. The Managing Member may propose to the Members to amend the Approved Budget.
6.7 Insurance. The Managing Member will cause the Company and the Project Company to acquire and maintain the casualty, general liability, property damage and other types of insurance, in each case, reasonably acceptable to the Class A Member in consultation with the Insurance Consultant and listed in Schedule 2 (provided, for purposes of clarity, that the requirement that such policies be reasonably acceptable to the Class A Member in consultation with the Insurance Consultant shall not apply to renewal on the same terms of any such insurance policies), provided, that the Managing Member shall (a) solely with respect to the annual renewals
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of insurance, use commercially reasonable efforts to procure casualty insurance with (i) sublimits that are more advantageous to the Company or the Project Company than any applicable sublimits that may apply to any insurance policy in place as of the Effective Date set forth in Schedule 2 and (ii) lower deductible levels that may apply to any insurance policy in place as of the Effective Date than previously procured, in each case upon expiration or renewal of the term of any insurance if such insurance is then available on customary and commercially reasonable terms and provided the total premium for all required insurance policies shall not be required to exceed $435,000, as such amount shall be escalated annual in accordance with the Base Case Model, as long as the per occurrence and annual aggregate limits of such insurance policies are at least equal to the annual aggregate limits set forth on Schedule 2 as of the Effective Date, (b) enforce its rights, and cause each of the Company and Project Company to enforce its rights, to insurance coverage, defense, and indemnification, (c) prior to the expiry of any insurance required under Schedule 2, provide certificates of replacement insurance satisfying the requirements of Schedule 2, and (d) shall cause the Company or the Project Company (as the case may be) to pursue and submit (or cause to be pursued and submitted on behalf of the Project Company or Company) any claims which may arise with respect to the Project or the Site under any insurance policies that the Company or the Project Company is required to procure and maintain under Schedule 2.
6.8 Officers. The Managing Member may appoint officers of the Company to act on behalf of the Company and assign in writing titles to the officers. Any assignment of a title will constitute the delegation to such person of the authorities and duties that are normally associated with such title or as otherwise expressly delegated to (or withheld from) such officer by the Managing Member. Each officer will hold office until his successor has been appointed or until his death, resignation or removal. Any officer may be removed by the Managing Member at any time for any reason in its sole discretion. The Managing Member will be responsible for the actions or inactions of the officers to the same extent that the Managing Member would be responsible if such actions and inactions were taken by the Managing Member.
6.9 Rebuild. If a casualty event (or a related series of casualty events) occurs at the Project which (u) results in damages in excess of $5,000,000 or (v) has a Material Adverse Effect (a “Subject Casualty”), Managing Member shall use commercially reasonable efforts to rebuild, repair, restore or replace the affected portion of the Project at the Site (“Rebuild”) subject to the following, and in each case subject to the terms of the Construction Financing Documents with respect to proceeds received prior to the SC Funding Date: Within thirty (30) days of the applicable Subject Casualty, the Managing Member shall (x) prepare an updated Base Case Model that demonstrates that the Class A Member’s Target Flip Date will not be delayed, which updated Base Case Model shall be subject to the reasonable approval of the Class A Member; (y) prepare a Restoration Plan to effect such Rebuild, pursuant to which the Project would be repaired giving due consideration to avoiding or mitigating an actual or potential Recapture Event, which Restoration Plan shall be subject to the reasonable approval of the Class A Member (and, at the Class A Member’s election, such approval in consultation with the Independent Engineer); and (z) consider in good faith and incorporate into the updated Base Case Model and Restoration Plan any comments and modifications proposed by the Class A Member. The Managing Member shall keep
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the Class A Member regularly informed of, and permit the Class A Member to monitor the progress of, the Managing Member’s implementation of the Restoration Plan.
(a) Managing Member shall determine the applicable costs to effect such Rebuild, less any Loss Proceeds received with respect to the Subject Casualty by the Class B Member, the Company or the Project Company (or any Affiliate of any of the foregoing) and any Available Cash Flow that is available for such Rebuild (such remaining amount, the “Rebuild Cost”), which cost determination shall be subject to the reasonable approval of the Class A Member (and, at the Class A Member’s election, such approval in consultation with the Independent Engineer);
(b) The Managing Member shall cause any Loss Proceeds received with respect to the Subject Casualty by the Class B Member, the Company or the Project Company (or any Affiliate of any of the foregoing) and Available Cash Flow to be used to repair the Project in accordance with the applicable Restoration Plan. In the event that such Loss Proceeds and Available Cash Flow are insufficient to satisfy the Rebuild Cost, the Managing Member will use commercially reasonable efforts to coordinate a solution with the Class A Member and Class B Member; and
(c) The Managing Member shall use commercially reasonable efforts to minimize any loss, disallowance, reduction or recapture of the ITC arising out of any Subject Casualty.
6.10 FERC 203 Approval. The Members acknowledge and agree that the Class A Member may not perform the duties and obligations of the Operations Manager with respect to the Company and the Project Company as set forth on Schedule 1 or as otherwise expressly set forth in this Agreement (1) until after the Placed In Service Date, and (2) unless and until the FERC 203 Approval has been obtained. The Operations Manager shall perform its duties and obligations in accordance with Applicable Law, Prudent Industry Practices, and this LLCA. In furtherance of the foregoing, the Class A Member shall promptly prepare, in coordination with the Managing Member, the documentation necessary to obtain the FERC 203 Approval in order to permit the Class A Member to perform the role of Operations Manager in respect of the Company and the Project Company. The Class A Member (in coordination with the Managing Member) will be responsible for and shall control the preparation of all such documentation and communicating with FERC, and the Managing Member and the Initial Class B Member shall cooperate in providing all documentation and other information requested by the Class A Member, in each case in connection with and as is reasonably necessary to obtain the FERC 203 Approval. Upon Consent of the Members (such consent not to be unreasonably withheld, conditioned or delayed), the Managing Member shall cause the Project Company to promptly file with FERC the application for the FERC 203 Approval. The Class A Member will reimburse (a) the Managing Member for any reasonable and documented, out-of-pocket third party costs associated with filing the application for the FERC 203 Approval and (b) the Managing Member and the Initial Class B Member for all reasonable and documented, out-of-pocket third party costs and expenses incurred by such Person in connection with its cooperation and providing documentation or other information associated with filing the application for the FERC 203 Approval. Notwithstanding anything to the contrary set forth in this Agreement, any action to be performed by the Operations Manager in respect of the Company and the Project Company as identified Schedule 1 or as
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otherwise expressly set forth in this Agreement prior to the receipt of the FERC 203 Approval shall be performed by the Managing Member.
6.11 Interim Period Prior to FERC 203 Approval. Prior to the receipt of the FERC 203 Approval, the Class A Member shall take all steps as reasonably necessary to prepare for its role as Operations Manager in respect of the Company and the Project Company so that it may promptly consummate such role upon the receipt of the FERC 203 Approval. In furtherance of the foregoing, upon three (3) Business Days prior written notice from the Class A Member, Managing Member shall, and shall cause its Affiliates and the Company to, at the Class A Member’s sole cost and expense, during normal business hours (i) permit representatives of the Class A Member to observe and monitor activities of the Managing Member conducted by or on behalf of or relating to the Company and the Project Company and (ii) make reasonably available to the Class A Member the relevant personnel of Managing Member, its Affiliates and the Company, and any data or other information relating thereto, in each case pertaining to the role of Operations Manager and as reasonably requested by Class A Member in connection with its preparation for the role of Operations Manager of the Company and the Project Company; provided, that no such observation, monitoring or providing of any such data or other information shall interfere with completion of construction of the Project or in the business of the Managing Member, the Company or the Project Company or their Affiliates.
6.12 AC Subsidiary. To the extent that from time to time the AC Subsidiary requires capital contributions from the Project Company pursuant to Section 4.1 of the AC Subsidiary LLCA, the Class B Members shall be solely responsible for making (or causing to be made) all such capital contributions to the Company for further contribution to the Project Company and the AC Subsidiary in order to satisfy such requirements.
ARTICLE VII
RIGHTS AND RESPONSIBILITIES OF MEMBERS
7.1 General. The rights and responsibilities of the Members will be as provided in the Delaware Certificate, this LLCA and the Act.
7.2 Member Voting Rights. Unless otherwise provided in this LLCA, the Consent of the Members is required to constitute the approval by any action by or on behalf of the Company that requires a vote, consent, approval or action of or an election by the Members set forth in this LLCA; provided, that without the prior written approval of each Member adversely affected thereby, no such consent will (a) modify the limited liability of a Member; (b) require a Member to provide funds to the Company, by loan, contribution or otherwise (or amend any of the conditions to making any loan or contribution), in each case other than as expressly provided in this LLCA; or (c) alter the interest of any Member in Capital Accounts, Company items or distributions of Available Cash Flow. Within fifteen (15) days following its receipt of such request for consent, each Member shall respond to the Managing Member in writing as to whether such Member consents and approves or objects to the proposed action. The Managing Member shall not take any action that requires the Consent of the Members until it has received the affirmative written Consent of the Members.
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7.3 Member Liability.
(a) To the fullest extent permitted under the Act and any other Applicable Law, (i) no Member Party will have any liability for the debts, obligations, expenses or liabilities of the Company or the Project Company, and (ii) the Company will indemnify, defend and hold harmless each Member Party from and against any claims for or relating to the debts, obligations, expenses or liabilities of the Company and the Project Company. The foregoing indemnification is limited to the Assets of the Company and the Project Company. In no event will any Member be liable under this LLCA to another Member for any special, incidental, consequential, punitive, or exemplary damages (including damages for lost opportunity, lost profits or revenues or loss of use of such profits or revenues, but excluding damages recovered by any Third Party) incurred by such Member arising from a breach of this LLCA; provided, that subject to the limitations in Article XI, (x) to the extent the Tax Benefits are lost or disallowed as a result of representations and warranties made by the Initial Class B Member in the ECCA or any Class B Member in this LLCA being false, or the breach of any covenant, obligation or agreement by the Managing Member, the value of such lost Tax Benefits will be recoverable as direct damages and will not constitute special, incidental, consequential, punitive, or exemplary damages and (y) losses in respect of Third Party claims will not be considered consequential damages that are not recoverable.
(b) A Member will be liable only to make its Capital Contributions as provided in this LLCA and, except to the extent expressly provided in Section 12.3, will not be required to restore a deficit balance in its Capital Account.
(c) Each Member will be entitled to rely in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company or the Project Company by any other Person who is a Member, any Affiliate Party or any officer or employee of the Company or the Project Company that is not an Affiliate of such Member, or by any other individual about matters that such Member reasonably believes are within such other Person’s professional or expert competence.
(d) Except as otherwise provided in this LLCA, and to the fullest extent permitted by the Act and any other Applicable Law, (i) none of any Member, any Member Party, the Operations Manager, the Partnership Representative or the Managing Member shall owe any fiduciary duty or similar obligation to the Company or any other Member by reason of this LLCA or such Member’s investment in the Company; (ii) none of any Member, any Member Party, the Operations Manager, the Partnership Representative or the Managing Member shall be liable including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Company or any Member for any Damages incurred by reason of any act or omission performed or omitted by such Member in its capacity as Member; (iii) to the extent that the Managing Member, a Member, any Member Party, the Operations Manager or the Partnership Representative has duties and liabilities in such capacity to the Company or to any Member or other Person bound by this LLCA, the Managing Member, such Member, such Member Party, the Operations Manager and the Partnership Representative will not be liable to the Company or to any Member or other Person bound by this LLCA for its good faith reliance on the provisions of this LLCA; and (iv) none of the Managing Member, any Member, the Operations Manager or the Partnership
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Representative will have liability under this LLCA for breach of contract or duties arising out the performance of its duties under this LLCA, so long as (in the case of clauses (iii) and (iv)), (A) in the case of the Managing Member or the Operations Manager, the Managing Member or the Operations Manager has acted in accordance with Sections 6.1 and 6.2, as applicable, and (B) the Managing Member’s or such Member’s actions (or failure to act) did not constitute willful misconduct, gross negligence, criminal violation of the law, or fraud.
7.4 Withdrawal. Except as expressly provided in this LLCA, no Member is entitled to withdraw voluntarily or resign from the Company, withdraw or demand the return of any part of its Capital Contributions from the Company or receive property other than cash in return for its Capital Contribution.
7.5 Member Compensation. No Member will receive any interest, compensation or drawing with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company, the Project Company or otherwise in its capacity as a Member, except as otherwise provided in this LLCA.
7.6 Other Ventures. The Members and their Affiliates may engage in and possess interests in other business ventures of any and every type and description, including other business ventures competitive with or of the same type and description as the Company and the Project Company, independently or with others, as long as such venture does not cause the Project Company (a) to lose its status as an Exempt Wholesale Generator or to become subject to regulation under PUHCA other than with respect to regulations applicable to Exempt Wholesale Generator status, or (b) to lose, or to have limitations or restrictions imposed upon, its MBR Authority. None of the Members or their respective Affiliates shall have any obligation to offer to the Company, the Project Company any Member or any of their Affiliates the right to participate in those activities. If any Member or its respective Affiliates acquires ownership or control of Assets, or becomes affiliated with a company that becomes or owns or controls any generation facilities or has long-term firm purchases of capacity and/or energy, inputs to electric power production, transmission facilities, or has a franchised service area, and such Member reasonably determines that such acquisition could trigger a requirement for the Company or the Project Company to submit a report or filing to FERC, then such Member shall provide the Company with a written notice of such event, within ten (10) days after such event occurs, and provide additional information as reasonably requested by the Company so that the Company can timely submit to FERC any reports or filings that it or the Project Company may need to make with FERC. Any Member shall provide the Company with information it may reasonably request in order for it or the Company to comply with any of its or the Project Company’s other obligations under the FPA or PUHCA.
7.7 Confidential Information.
(a) Except to the extent necessary for the exercise of its rights and remedies and the performance of its obligations under this LLCA, the other Transaction Documents or the Project Documents, each of the Parties will not disclose (and will not permit the disclosure by any of its Affiliates, any of the officers, directors or employees of it or its Affiliates (collectively, “Representatives”), or any of its, or its Affiliates’ advisors, auditors, counsel, fund managers and
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public accountants (collectively, “Advisors”)), directly or indirectly, any of the terms and conditions of the Project Documents, this LLCA, the other Transaction Documents or other information in respect of the Transaction (including information delivered pursuant to the terms hereof), the Company, the Project Company, the Project, or any of the Members (“Confidential Information”); provided, that (i) any Party and its Affiliates, Representatives and Advisors may disclose Confidential Information to such Party’s Affiliates, Representatives and Advisors and to the other Party and its Affiliates, Representatives and Advisors, (ii) any Party and its Affiliates, Representatives and Advisors may disclose Confidential Information that (A) has been publicly disclosed or is publicly known (other than by such Party or any of its Affiliates, Representatives or Advisors in breach of this Section 7.7), (B) has lawfully come into the possession of such Party or any of its Affiliates, Representatives or Advisors other than from another Party or a Person acting on such other Party’s behalf, or (C) has been independently developed by such Party or any of its Affiliates, Representatives or Advisors without use of information obtained under this LLCA, (iii) to the extent that such disclosure is (A) required by Applicable Law, a subpoena or any other applicable legal process, (B) by request of, or to the extent required by, any Governmental Authority having jurisdiction over such Party, any stock exchange on which such Party’s or its Affiliates securities are traded or any self-regulatory body having jurisdiction over such Party (including, to the extent applicable, any bank regulatory authority), such Party may disclose Confidential Information as so required or requested; provided, that in such case, such Party shall, unless otherwise prohibited by Applicable Law, (1) give prompt notice to the other Parties that such disclosure is or may be required and (2) cooperate in protecting the confidential or proprietary nature of the Confidential Information which must be, or is hereby permitted to be, disclosed; provided, that no such notification under clause (1) shall be required in respect of any disclosure to FERC or bank, insurance or financial industry regulatory authorities having jurisdiction over such Party, (iv) disclosures to lenders, potential lenders or other Persons providing financing to the Company or to its Representatives and Advisors, any Party or any Affiliate of any Party and potential purchasers of equity interests in or assets of the Company, any Party or any Affiliate of any Party, any Person to which the applicable Member sells or offers to sell its investment in the Company or any portion thereof, if, in each case described in this clause (iv), such Persons have agreed to abide by the terms of this Section 7.7 or have otherwise entered into a contract with restrictions on disclosure substantially the same (and not less than two years in duration) as the terms of this Section 7.7 (or in the case of Advisors, are otherwise bound by professional or legal obligations of confidentiality), (v) any Party and its Affiliates, Representatives and Advisors may disclose Confidential Information, and make such filings, as may be required by this LLCA, and (vi) any Party and its Affiliates, Representatives and Advisors may disclose Confidential Information as to the tax treatment and tax structure of the transactions and arrangements contemplated in this LLCA or in connection with any communication regarding the tax consequences of the Project, the Company’s ownership and operation of the Project or such Party’s ownership of an interest in the Company (as tax treatment and tax structure are defined in United States Treasury Regulation section 1.6011-4). Each Member will be liable under this Section 7.7 for any violation of this Section 7.7 by any of its Representatives or Advisors. Without limiting the foregoing, and other than with respect to the Representatives and Advisors of a Party, no Party will use the name of the other Parties or their Affiliates without their prior written consent, except that each Party may disclose the name of the Members as equity investors or potential equity investors.
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(b) Except as otherwise permitted by this Section 7.7, no Member shall include in a press release or otherwise disclose (other than as required to be included in a filing to FERC, PJM, NCUC, or any bank, insurance or financial industry regulatory authority having jurisdiction over such Member, its affiliates or permitted transferees) the name of any Member as an equity investor or potential equity investor without the prior written consent of such Member, which consent shall not be unreasonably withheld, conditioned or delayed.
(c) If the Company or the Project Company is required at any time to make any regulatory filing that identifies by name, or otherwise relates specifically to, any Member or any of its affiliates or permitted transferees, then the Company shall submit (or the Company shall cause the Project Company to submit) an advance draft of such regulatory filing to such Member or its affiliate or permitted transferee, as applicable, as early as practicable in advance of the specified deadline imposed by FERC, PJM, NCUC or their regulations but in no event later than ten (10) Business Days prior to such deadline (except where the specified filing deadline does not permit ten (10) Business Days). Such Member (or its affiliate or permitted transferee, as applicable) shall have the right to provide comments to such regulatory filing as it relates to such Member (or its affiliate or permitted transferee), and the Company or the Project Company shall incorporate or reasonably accommodate, prior to submitting such filing, such comments if timely received; provided, that if such Member (or its affiliate or permitted transferee) has timely received an advance draft of such FERC, PJM, or NCUC filing in accordance with this Section 7.7(c) and does not provide comments prior to the date that the Company or the Project Company, as applicable, is required by FERC, PJM, or NCUC to make a filing by a specified deadline imposed by FERC, PJM, NCUC or their regulations, then the Company or the Project Company, as applicable, may make such FERC filing without the obligation to wait for such Member (or its affiliate or permitted transferee) comments.
7.8 Retirement, Resignation, Expulsion, Incompetency, Bankruptcy or Dissolution of a Member. The retirement, resignation, expulsion, bankruptcy or dissolution of a Member will not dissolve the Company. The successors interest to the Member that is Bankrupt will, for the purpose of settling the estate, have all of the rights of such Member, including the same rights and subject to the same limitations that such Member would have had under the provisions of this LLCA to Transfer its Membership Interest. A successor interest to a Member will not become a substituted Member except as provided in this LLCA.
ARTICLE VIII
ADMINISTRATIVE AND TAX MATTERS
8.1 Intention for Income Tax Purposes. The Members intend that the Company be treated as a partnership for federal, state and local income tax purposes and that it be operated in a manner consistent with such treatment.
8.2 Books and Records; Bank Accounts; Company Procedures. The Managing Member will keep the records required to be kept pursuant to the Act and any other books and records with respect to the Company as the Managing Member deems necessary or desirable. Any information reasonably sufficient to substantiate the tax documents, reports, records, and other tax information will be kept and maintained for six (6) tax years after the statute of limitations expires on any tax
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audit of such returns or reports of the Company. The Company will use the calendar year as its Fiscal Year. It will use the same year as its tax year, unless required to use a different year by the Code or Treasury Regulations. The Company’s books of account will be prepared and maintained in accordance with GAAP for the type of business of the Company. The Managing Member will cause the Company and the Project Company to maintain its respective existence separate and distinct from any other Person, including causing each of the Company and the Project Company to take the following actions:
(a) acting solely in its own limited liability company name and not that of any other Person, including the Managing Member, any Affiliate Party and their respective Affiliates;
(b) except as provided in the Construction Financing Documents (prior to the SC Funding Date), not holding itself out as having agreed to pay, or as being liable for, the obligations of the Managing Member, any Member and their respective Affiliates or any other Person;
(c) observing all limited liability company formalities required in this LLCA and by the Delaware Certificate or the certificate of formation;
(d) not acquiring obligations of its Members, the Managing Member, the Operator, the Energy Manager, the Asset Manager, any Affiliate Party or their respective Affiliates or any other Person;
(e) conducting its affairs separately from and maintaining separate books and records from its Members, the Managing Member, and their respective Affiliates and any other Person, and holding itself out as a separate entity;
(f) correcting any known misunderstanding regarding its separate identity; and
(g) except as provided in the Construction Financing Documents (prior to the SC Funding Date) and except for the Final Completion Account and a single operating account of the Company or the Project Company, not commingling its assets with those of any other Person.
8.3 Information and Access Rights. Each Member will have the right to inspect, at reasonable times and at its own expense, the Project and the Company’s Assets and to audit, examine and make copies of all relevant documents, books and records of the Company or the Project Company upon reasonable prior notice to the Managing Member. The foregoing rights may be exercised by any agent or employee designated by the Member or by an independent public accountant, engineer, attorney or other consultant so designated. Any such inspection will be conducted during normal business hours and so as not to unreasonably interfere with the business of the Company and the Managing Member.
8.4 Reports. The Managing Member will, at the Company’s expense, deliver or make available, or cause to be delivered or made available, to each Member, the following items at the times indicated below:
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(a) Annually (in the case of the following clauses (i) and (iii), commencing with the Fiscal Year in which the Effective Date occurs):
(i) within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements for the Company prepared in accordance with GAAP effective as of the end of the immediately-preceding year, including a balance sheet and statements of income, members’ equity and changes in cash flows and accompanied by a report of the Certified Public Auditor stating that their examination was made in accordance with generally accepted auditing standards and that in their opinion such financial statements of the Company fairly present the Company’s cash flows, results of operations and changes in financial position on a GAAP basis;
(ii) within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements for Class B Member Guarantor prepared in accordance with GAAP effective as of the end of the immediately-preceding year, including a consolidated balance sheet and consolidated statements of income, members’ equity and changes in cash flows and accompanied by a report of the Certified Public Auditor stating that their examination was made in accordance with generally accepted auditing standards and that in their opinion such financial statements of the Class B Member Guarantor and its consolidated subsidiaries fairly present the Class B Member Guarantor’s and its consolidated subsidiaries’ cash flows, results of operations and changes in financial position on a GAAP basis; provided, however, that notwithstanding anything else herein to the contrary, the Class B Member Guarantor shall not be obligated to deliver any such audited financial statements immediately as of the date on which the Guaranty is terminated or expires pursuant to its terms; and
(iii) within one hundred twenty (120) days after the end of each Fiscal Year, the Tracking Model prepared pursuant to Section 10.1;
(b) Annually, within seventy-five (75) days after the end of each Fiscal Year (commencing with the Fiscal Year in which the Effective Date occurs), a draft Schedule K-1 for such Member for the prior tax year;
(c) Annually, by no later than March 31, a projection of any Adjusted Capital Account Deficit for a Member that might lead to a reallocation of losses for the tax year to the other Members;
(d) Each of the following reports; provided, that Managing Member may satisfy its obligation to deliver or make available such report to the extent covered in a report by Energy Manager, Asset Manager or Operator by delivering or making available to the Members copies of the applicable reports prepared by such Person:
(i) monthly, within thirty (30) days after the end of a calendar month following the SC Funding Date, a report, in the form of Exhibit F (a “Monthly Report”), showing (A) details of actual production, insolation and availability versus applicable projections for such calendar month and (B) any substantial technical or operational issues for the
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Project, as well as updates with respect to such matters previously reported in a prior Monthly Report;
(ii) quarterly, within sixty (60) days after the end of a calendar quarter following the SC Funding Date, a report, in the form of Exhibit G, showing (A) the revenues and expenses of the Company and the Project Company for such quarter and (B) the information provided in the Monthly Report on a quarterly basis; and
(iii) annually, within sixty (60) days after the end of each Fiscal Year (commencing with the Fiscal Year in which the Effective Date occurs), an annual report in the form of Exhibit H, showing (A) details of actual production, insolation and availability versus applicable projections for such Fiscal Year, (B) the revenues and expenses of the Company and Project Company for the Fiscal Year, and (C) any substantial technical or operational issues for the Project, as well as updates with respect to such matters previously reported in a prior Monthly Report or quarterly report;
(e) Within five (5) Business Days after receipt thereof, copies of all operating reports delivered to the Project Company or the Company by the Operator in connection with the O&M Agreement, the Energy Manager in connection with the Energy Management Services Agreement and the Asset Manager in connection with the Asset Management Agreement;
(f) Quarterly within sixty (60) days after the end of each calendar quarter, unaudited quarterly financial statements of the Company and the Class B Member Guarantor for the calendar quarter then ended;
(g) Within five (5) Business Days of becoming aware of any of the following events or circumstances, notice of (i) any litigation pending or, to the knowledge of the Managing Member, threatened against the Company or the Project Company or, if related to the Project or could reasonably be expected to result in a Material Adverse Effect, the Managing Member, any Class B Member, the Class B Member Guarantor or any Affiliate Party, (ii) any force majeure event that would reasonably be expected to have a Material Adverse Effect, any material breach or any event of default under any Project Document, any Construction Financing Document (prior to the SC Funding Date) or any Governmental Approvals, (iii) any material noncompliance with or material violations of law, including Environmental Law, Anti-Terrorism Law and law of a Compliance Authority, the Company, the Project Company, the Managing Member, any Class B Member or if related to the Project or could reasonably be expected to result in a Material Adverse Effect, the Class B Member Guarantor or any Affiliate Party, (iv) any material communications by the Managing Member, any Class B Member, the Company or the Project Company with any Governmental Authority outside the ordinary course of business, (v) the aggregate expenses of the Company within a calendar year exceeding (or anticipated to exceed) the Approved Budget for such calendar year by 10% or more, and (vi) any other event or circumstance that results in, or could reasonably be expected to result in a Material Adverse Effect;
(h) Within ten (10) Business Days following any request therefor, make available such other reports and information to the extent commercially relevant to the operations of the Company and the Project Company and in the possession of the Managing Member as reasonably requested
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by the Members and, within sixty (60) days following any request therefor such other reports reasonably requested by and paid for by the requesting Member to the extent external costs are incurred with respect to the preparation of such reports;
(i) Within ten (10) Business Days following receipt or delivery thereof, copies of all material notices of default delivered to or by the Company or the Project Company, in each case, pursuant to, or in respect of any Construction Financing Document (prior to the SC Funding Date) or Material Project Document;
(j) Within thirty (30) Business Days after renewal, copies of policies of insurance owned or held by or on behalf of the Company, including current certificates of insurance, and promptly following receipt, any notices of nonpayment of premium, nonrenewal or cancellation;
(k) Promptly upon execution thereof, a copy of: (i) any amendment, modification, waiver or termination of any Material Project Document or, prior to the SC Funding Date, any Construction Financing Document, (ii) any new, or substitution or replacement of, any Construction Financing Document entered into prior to the SC Funding Date or of any Support Obligation and (iii) any new contract between the Company or the Project Company and an Affiliate of any Member and any amendment or modification of any existing Affiliate Contract and (iv) any Additional Material Project Document; and
(l) Within five (5) Business Days following receipt or delivery thereof, deliver to each Member notice of any amendments or other modifications to the budget approval process or methodology for preparing the budget contained in the Construction Financing Agreement or any Backleverage Financing Agreement to the extent different from the process and methodology therefor set forth in the Construction Financing Agreement as of the Effective Date.
8.5 Permitted Investments. Cash of the Company may only be invested and reinvested in the following investment alternatives (provided, that such investment alternatives shall not include any investment directly or indirectly in any “public utility,” “public-utility company,” “holding company,” “electric utility,” “transmission and distribution utility,” “alternative retail electric suppliers” or “electric suppliers” as those terms are defined under the FPA, PUHCA or the NCUC regulations, as applicable, unless applicable prior FERC, PUHCA or NCUC approvals have been obtained):
(a) direct obligations of the United States of America or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America, in each case maturing within one year from the date of acquisition;
(b) checking or interest-bearing demand or time deposits that are either (i) insured by the Federal Deposit Insurance Corporation, or (ii) held in banks and savings and loan associations, having general obligations rated at least “A-” by S&P, “A3” by ▇▇▇▇▇’▇ or equivalent, or if not so rated, secured at all times, in the manner and to the extent provided by law, by collateral security described in clause (a) above or this clause (b), of a market value of no less than the amount of monies so invested;
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(c) obligations of any state of the United States or any agency or instrumentality of any of the foregoing which are rated at least “AA” by S&P or at least “Aa” by Moody’s, in each case maturing within one (1) year from the date of acquisition thereof;
(d) commercial paper rated (on the date of acquisition thereof) at least “A-1” or “P-1” or equivalent by S&P or ▇▇▇▇▇’▇, respectively (or an equivalent rating by another nationally recognized credit rating agency of similar standing if neither of such corporations is then in the business of rating commercial paper), maturing not more than ninety (90) days from the date of creation thereof but excluding any such commercial paper issued by any Member or any Affiliate of the Managing Member;
(e) money market mutual funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, and operated in accordance with Rule 2a-7 and that at the time of such investment are rated “Aaa” by Moody’s and/or “AAA” by S&P; or
(f) any other investments agreed to by Consent of the Members and agreement of the Managing Member.
8.6 Tax Elections. The Company shall make the following U.S. federal income tax elections on the appropriate Company Tax Returns:
(a) to the extent permitted under section 706 of the Code, elect the calendar year as the Company’s tax year;
(b) elect the accrual method of accounting;
(c) elect to amortize any organizational and start-up expenses of the Company or the Project Company ratably over a period of 180 months as permitted by Section 709(b) of the Code;
(d) elect not to claim any “bonus depreciation” otherwise available under Section 168(k) of the Code and elect to use MACRS for all depreciation with respect to any “5-year MACRS” property; provided, however, that the Class A Member may require the Company to elect to claim “bonus depreciation” under Section 168(k) of the Code for one or more classes of property by written notice to the Managing Member at least 5 Business Days prior to the U.S. federal income tax return filing deadline (including extensions) of the applicable Company Tax Return;
(e) make an election under section 754 of the Code if requested by any Member; and
(f) if approved by the Consent of the Members, any other election.
Notwithstanding the foregoing, the Company may make ministerial tax elections that (i) are made in the ordinary course of preparing the Company’s Tax Returns or (ii) do not materially affect the economic consequences to the Class A Member shown in the Base Case Model without the Consent of the Members. In addition, the Partnership Representative may elect to extend the time for filing any Company Tax Return as provided for under the Code and applicable state statutes.
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None of the Class B Member, the Company or the Project Company or their respective Affiliates (and no successor entity of any of the foregoing) shall elect to receive production tax credits, claim credits under Section 48E of the Code, make the election under Sections 6417 or 6418 of the Code or elect to receive cash grant or similar benefit in lieu of tax credits with respect to the Project except as permitted by Section 8.11. None of the Class B Member, the Company or the Project Company or their respective Affiliates (and no successor entity of any of the foregoing) shall claim the energy community bonus credit available under Section 48(a)(14) of the Code with respect to the Project or the domestic content bonus credit available under Section 48(a)(12) of the Code with respect to the Project without the prior written consent of the Class A Member, which may be withheld in its sole discretion.
8.7 Partnership Representative and Tax Audits.
(a) The Managing Member will be the initial “partnership representative” under section 6223(a) of the Code (the “Partnership Representative”) with all of the rights, duties and powers and subject to the limitations provided for in sections 6221 through 6234 of the Code. The Partnership Representative shall appoint the “designated individual” pursuant to Treasury Regulation Section 301.6223-1(b) and the Company may engage accountants and legal counsel to assist the Partnership Representative in discharging its duties hereunder. The Partnership Representative shall represent the Company in connection with all examinations of the Company’s affairs by tax authorities, including resulting administrative and judicial proceedings.
(b) If (i) the Managing Member designated as Partnership Representative (A) resigns as Managing Member of the Company or (B) is removed pursuant to this LLCA, or (ii) the Managing Member (A) has engaged in gross negligence, misconduct or fraud, (B) has performed any action or omitted to take any material action that is a breach or violation of the obligations of the Partnership Representative under this LLCA, or (C) is declared bankrupt, then the Class A Member shall designate a successor Partnership Representative in accordance with applicable rules of the Code, Treasury Regulations, and the IRS that apply to audits conducted thereunder (the “Applicable Rules”) and the successor Partnership Representative shall take such action, including notifying the IRS of its designation as such, as may be necessary or appropriate under the Applicable Rules.
(c) Notwithstanding any provision in this LLCA to the contrary, but subject to this Section 8.7(c), to the extent permitted by the Applicable Rules, the Partnership Representative shall not take any of the following actions without the consent of the Class A Member:
(i) enter into any agreement to extend the period for assessing any tax that is attributable to any item that may be the subject of an audit of any Tax Return being audited;
(ii) enter into a settlement agreement with the IRS or any other tax authority (other than for claims for which the Class B Members have agreed to indemnify the Class A Member in accordance with Article XI in immediately available funds and on an After Tax Basis from any adverse tax consequences of the underlying claims, including interest and penalties and have acknowledged in writing to the Class A Member their
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responsibility to so indemnify, and the Class A Member is reasonably satisfied with the Class B Member’s financial ability to make such indemnification payments);
(iii) commence, settle or compromise any judicial or administrative proceeding with respect to any income Tax Return being audited;
(iv) make any submission to a tax authority in respect of an audit, contest or other tax matter or proceeding which affects any tax item reported to the Class A Member on the Schedule K-1 without providing such submission for review and comment by the Class A Member and incorporating the Class A Member’s reasonable comments thereto;
(v) file any voluntary request for an administrative adjustment with respect to any partnership item;
(vi) waive any restrictions imposed on any taxing authority with respect to any assessment of tax imposed on the Company or any Member;
(vii) enter into any closing agreement under Section 7121 of the Code or any other binding settlement agreement with respect to any income Tax Return of the Company (including IRS Form 1065 and any related Schedule K-1) with the IRS or any state or local taxing authority; or
(viii) take or not take any non-ministerial action in respect of an audit, contest or other tax matter or proceeding, the taking or omission of which, respectively, affects any material tax item reported to the Class A Member on Schedule K-1 or that would delay the expected timing of the Class A Member achieving the Target IRR or would materially impact the Class A Member’s negative Capital Account balance.
(d) In the event of any pending tax action, investigation, claim or controversy at the Company level that may result in an adjustment to any item reported on an income Tax Return of any Member (a “Tax Contest”), the Partnership Representative will alert the Members promptly, consult with them about the defense, keep them reasonably informed of all material developments in the proceeding (including delivering to each Member promptly upon receipt a copy of all material notices, communications, reports and writings received from any federal, state or local taxing authority), show them drafts of any proposed submissions to the tax authorities with sufficient time to review and comment on the drafts, consider in good faith any such comments, incorporate reasonable comments into the drafts and, to the extent permitted under Applicable Law, allow the Members and their counsel to participate in all substantive meetings, presentations, proceedings or calls with the tax authorities about the matter, and take such action as may be required (to the extent permitted) to enable such participation, whether such meeting, presentation or proceeding is in person, or by electronic, telephonic or other means. Notwithstanding the previous sentence, if at any point it becomes clear that the Class A Member will not be indemnified under Section 11.1 for Tax Losses that result from any Tax Contest that involves Tax Benefits for any Allocation Period (or portion thereof) ending before the Flip Date, then any action taken by the Partnership Representative with respect to a Tax Contest shall be solely at the direction of the
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Class A Member; provided, that the Partnership Representative shall not be required to advocate for any position at the direction of any Member if the Partnership Representative obtains a written legal opinion from nationally recognized tax counsel, selected jointly by the Members, that there is no reasonable basis for such position.
(e) Notwithstanding anything herein to the contrary, the Partnership Representative shall cause the Company to elect application of Section 6226 of the Code and shall comply with all of the requirements and procedures required in connection therewith, to have the Members of the Company for the year which is under examination pay the applicable tax liability. The Partnership Representative shall provide the IRS and each affected Member with such information as required by Section 6226 of the Code and any Applicable Rules. Each Member agrees to cooperate with the Company in utilizing the procedures under Section 6226 of the Code, whether or not such person is a Member at the time of a final partnership adjustment. For the avoidance of doubt, to the extent that any Class B Member is required to indemnify the Class A Member for any Tax Loss, such obligation shall include indemnifying the Class A Member for any special underpayment interest rate provided by Section 6226(c)(2) of the Code.
(f) Notwithstanding anything herein to the contrary, upon the receipt by the Company of a notice of final partnership adjustment pursuant to Section 6231(a)(3) of the Code (“Notice of Final Partnership Adjustment”) that would result in a Tax Loss for which any of the Class B Members would be required to indemnify the Class A Member pursuant to Article XI, the Class B Members shall cause to be paid to the Class A Member (or into escrow under terms reasonably acceptable to the Class A Member) an amount equal to the full amount of such Tax Loss set forth in the Notice of Final Partnership Adjustment. In the event that, upon Final Determination, the Tax Loss for which the Class B Members are required to indemnify pursuant to Article XI is an amount less than the amount so paid, the excess shall be promptly repaid to the Class B Members.
(g) Any cost or expense incurred by the Partnership Representative in connection with its duties, including, if relevant, the preparation for or pursuit of administrative or judicial proceedings, will be paid by the Company; provided, however, that the Class B Members shall be solely responsible for all costs and expenses incurred by the Company or Partnership Representative in connection with any action or proceeding described in this Section 8.7 to the extent such action is taken without consent of the Class A Member by reason of an assertion that the action or proceeding involved a Tax Contest that the Class B Members are entitled to control pursuant to this Section 8.7.
(h) This Section 8.7 will survive the termination of the Company and the termination of any Member’s interest in the Company and will remain binding on the Members for the period necessary to resolve any tax controversies.
8.8 Preparation of Tax Returns.
(a) The Partnership Representative will cause the Certified Public Accountant to prepare and timely file all federal, state and local Tax Returns required to be filed by the Company. Subject to the provisions of this Section 8.8(a), all Tax Returns of the Company shall be prepared on a basis consistent with this LLCA, including the Fixed Tax Assumptions and other assumptions
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contained in the Base Case Model as adjusted pursuant to Section 2.1(d) of the ECCA unless, (i) the Company is required to file an inconsistent Tax Return as a result of (A) a Final Determination in a federal income tax audit or administrative or judicial proceeding conducted in accordance with the terms of this LLCA and involving such Tax Return or a Tax Return for a prior period, (B) a breach by the Class A Member of any of its representations, warranties or covenants in the Transaction Documents, (C) a Change in Tax Law or other change in Applicable Law; provided, that the Partnership Representative provides an opinion to the Class A Member from a nationally recognized law firm reasonably acceptable to all Members that there is no reasonable basis to take a position on such Tax Return consistent with this LLCA, the Base Case Model or the Fixed Tax Assumptions, or (ii) the Class A Member delivers its express written consent that such Tax Return may be filed in a manner inconsistent with the Fixed Tax Assumptions. Notwithstanding the foregoing or anything to the contrary in the LLCA, the Partnership Representative’s obligation to file any Tax Return or provide the Members with copies thereof or related tax information under this Section 8.8(a) shall be suspended, and the Partnership Representative shall not be considered in breach of any such of its obligations under this Section 8.8(a), to the extent that the Certified Public Accountant preparing the Tax Returns for the Company is unwilling to sign a Tax Return prepared consistent with the Base Case Model and the Fixed Tax Assumptions and the requisite Consent of the Members for an inconsistent Tax Return is not obtained due to one or more Members (other than the Partnership Representative) failing or refusing to consent thereto, it being understood that the suspension of such obligations shall not be deemed to permit the Partnership Representative to file, or cause to be filed, any inconsistent Tax Return; provided, that, promptly upon the Partnership Representative becoming aware that the Certified Public Accountant is unwilling or unable to sign a Tax Return consistent with the Base Case Model and the Fixed Tax Assumptions and a Member refusing to consent to filing an inconsistent Tax Return, the Partnership Representative shall notify the Class A Member in writing and shall either (x) propose a replacement for such Certified Public Accountant, reasonably acceptable to the Class A Member, who is willing to so sign a consistent Tax Return, or (y) permit the Class A Member to appoint a Certified Public Accountant so long as such Certified Public Accountant is affiliated with a firm of independent public accountants with national reputation and expertise in the relevant subject tax matters, and in the case of (x) or (y) such replacement Certified Public Accountant shall thereafter serve as the Certified Public Accountant for all purposes under this LLCA; provided, further, that if the Class A Member after good faith effort is unable to identify a Certified Public Accountant who is willing to sign a Tax Return consistent with the Base Case Model and the Fixed Tax Assumptions within a reasonable time prior to the due date for filing such Tax Return (taking into account available extensions), the Partnership Representative shall be permitted to file an inconsistent Tax Return without the consent of the Class A Member; provided, further, that for the avoidance of doubt none of the Partnership Representative, the Managing Member or any Class B Member shall be relieved of any liability pursuant to Article XI arising out of or resulting from the breach of any representation or other obligation of the Partnership Representative, the Managing Member or any Class B Member under any Transaction Document. Each Member will furnish to the Partnership Representative all pertinent information in its possession relating to the Company’s operations that the Certified Public Accountant requests that is reasonably necessary to allow the Company’s Tax Returns to be prepared and filed. The Company will furnish to the Members (a) by no later than 75 days after the end of the taxable year, drafts of Schedules K-1 proposed to be delivered to the Members and filed by the Company with
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its Tax Return for such taxable year and (b) by no later than July 31 of each year, copies of the U.S. federal, state and local Tax Returns proposed to be filed by the Company for the immediately preceding tax year, together with all accompanying schedules and tax work papers; provided, however, that any such Tax Return for any year in which the Company claims an ITC shall be provided no later than May 31st. The Partnership Representative shall incorporate all reasonable changes or comments to such proposed Tax Return and information returns requested by the other Members at least 10 days prior to the filing date for such Tax Returns (as extended). After making such requested changes, the Partnership Representative shall, on behalf of the Company, file all Tax Returns in a timely manner, taking into account any applicable extensions; provided, however, that any such Tax Return for any year in which the Company claims an ITC shall be filed no later than July 31st. Within 20 days after filing, the Partnership Representative shall, on behalf of the Company, deliver to each Member a copy of such Tax Returns and information returns as filed, together with any additional tax-related information in the possession of the Partnership Representative or the Company that such Member may reasonably and timely request in order to prepare its own income Tax Returns. The Company will bear the costs of the preparation and filing of its returns, including the fees of the Certified Public Accountant and any costs incurred by the Partnership Representative.
8.9 Representations, Warranties and Covenants of the Members. Each of the Class A Member and Class B Members represents, warrants and covenants to the Company and the other Members that the following statements are true and correct as of (x) with respect to the Class A Member and the Initial Class B Member, the Effective Date and each Funding Date and (y) with respect to any other Person hereafter admitted as a Member pursuant to this LLCA, the date such Person is so admitted as a Member and each Funding Date occurring thereafter (in each case, unless otherwise noted):
(a) It (i) is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) has the full right, power and authority to perform its obligations under this LLCA, (iii) will at all times report the Transaction in accordance with this LLCA and its own applicable regulatory requirements, (iv) has discussed the Transaction and the accounting and tax treatment that it intends to accord the Transaction with its independent advisors, and it is solely responsible for deciding to enter into the Transaction and has not relied on any other party (save for any representations made in this LLCA), other than its independent advisors, in respect of the accounting or tax treatment to be applied to the Transaction or the overall suitability of the Transaction, (v) is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act and is able to bear the economic risk of losing its entire investment in the Company, (vi) has such sophistication, knowledge and experience in financial and business matters that it is capable of evaluating the merits, risks and suitability of entering into the Transaction, (vii) is acquiring its interest for its own account and not as a nominee or agent, (viii) understands its interest has not been, and will not be, registered under the Securities Act and is being acquired in a transaction not involving a public offering by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of each Member’s investment intent and the accuracy of the Members’ respective representations as expressed herein, (ix) understands that no public market now exists for the Membership Interests or any of the securities of the Company and that
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neither the Company nor any Member or its affiliate has made any assurances that a public market will ever exist for the Membership Interests or the Company’s securities, (x) (or if it is a disregarded entity, the Person treated as owning such Member’s assets for U.S. federal income tax purposes) is and will continue to be a “United States person” as defined in section 7701(a)(30) of the Code and (xi) (or if it is a disregarded entity, the Person treated as owning such Member’s assets for U.S. federal income tax purposes) is and will remain not subject to withholding under Section 1446 of the Code.
(b) This LLCA is a legal valid and binding obligation of the Member, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and by general equitable principles.
(c) That either (i) no part of the aggregate Capital Contributions made by the Member and used by the Member to acquire its membership interest constitutes Assets of any “employee benefit plan” within the meaning of section 3(3) of ERISA or other “benefit plan investor” (as defined in U.S. Department of Labor Reg. §§ 2510.3-101 et seq. or in section 3(42) of ERISA) or Assets allocated to any insurance company separate account or general account in which any such employee benefit plan or benefit plan investor (or related trust) has any interest or (ii) the source of the funding used to pay the Capital Contributions made by the Member is an “insurance company general account” within the meaning of Department of Labor Prohibited Transaction Exemption 95-60, issued July 12, 1995, and there is no employee benefit plan, treating as a single plan all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan exceeds 10% of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the National Association of Insurance Commissioners “Annual Statement” filed with such Member’s state of domicile.
(d) Neither the Member (or if it is a disregarded entity, the Person treated as owning such Member’s assets for U.S. federal income tax purposes) nor any of its direct or indirect owners is a Disqualified Entity or will become, within the Recapture Period, a Disqualified Entity. Neither the tax status of the Member (or if it is a disregarded entity, the Person treated as owning such Member’s assets for U.S. federal income tax purposes) nor any of its direct or indirect owners causes, or will cause, any portion of the Project to be subject to the alternative depreciation system under Section 168(g) of the Code.
(e) Such Member (or if such Member is a disregarded entity, the person treated as owning the Member’s assets for federal income tax purposes) is not and will not be a Related Person.
(f) Such Member (A) will not take a position on any Tax Return that is inconsistent with any Project and any property that is part of such Project being Placed In Service by the Company and the “original use” (within the meaning of Code Section 48) of any Project and any property that is part of such Project commencing with the Company and (B) will not claim on any Tax Return any depreciation or amortization deductions, ITCs, PTCs or any other tax credits or deductions that are available with respect to ownership or operation of any Project or any property
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that is part of such Project (except to the extent claimed by the Company and allocated to such Member).
(g) No Covered Entity relating to such Member (i) is a Sanctioned Person, (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority. Each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any laws of the United States, including but not limited to any Anti-Terrorism Laws.
(h) The proceeds of any Transaction Document will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority and the funds used with respect to the Project are not derived from any unlawful activity.
8.10 Additional Representations and Warranties of the Managing Member. The Managing Member represents, warrants and covenants to the Company and the other Members that the following will be true and corre