Formation Agreement

MASTER FORMATION AGREEMENT BY AND BETWEEN FIRST SOLAR, INC. AND SUNPOWER CORPORATION Dated as of March 10, 2015

Exhibit 2.1

EXECUTION VERSION

 

 

 

MASTER FORMATION AGREEMENT

BY AND BETWEEN

FIRST SOLAR, INC.

AND

SUNPOWER CORPORATION

 

 

Dated as of March 10, 2015

 

 

 

 

 


TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

  1   

1.01

Definitions

  1   

1.02

Construction; Interpretation

  20   

ARTICLE II FORMATION, CONTRIBUTION AND RELATED MATTERS

  22   

2.01

Formation of Entities; Execution of Organizational Documents

  22   

2.02

Project Model Adjustments

  23   

2.03

Contributions and Related Matters

  25   

ARTICLE III CLOSING

  27   

3.01

Closing

  27   

3.02

Closing Deliveries of First Solar

  27   

3.03

Closing Deliveries of SunPower

  28   

3.04

Updated Disclosure Schedules

  29   

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FIRST SOLAR

  30   

4.01

Organization; Qualification

  30   

4.02

Authority and Power

  30   

4.03

Valid and Binding Obligation

  30   

4.04

No Violation or Conflict

  31   

4.05

Consents and Approvals

  31   

4.06

Transfer of FS Contributed Interests

  31   

4.07

Capital Stock

  31   

4.08

Financial Statements

  32   

4.09

Undisclosed Liabilities

  33   

4.10

FS SEC Reports and Compliance

  33   

4.11

Real Property

  34   

4.12

Personal Property; Sufficiency of Assets

  35   

4.13

Contracts

  35   

4.14

Compliance With Laws

  37   

4.15

Permits

  38   

4.16

Taxes

  38   

4.17

Litigation

  40   

4.18

Absence of Material Adverse Effect

  40   

4.19

Insurance

  40   

4.20

Employees; Employee Benefits

  40   

4.21

Environmental Matters

  41   

4.22

No Brokers

  41   

4.23

[Reserved]

  41   

4.24

Regulation

  41   

4.25

Related Party Transactions

  42   

4.26

Credit Support

  42   

4.27

Accuracy of Partnership IPO Information

  42   

4.28

8point3 Entities

  43   

 

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4.29

Knowledge Persons

  43   

4.30

Limitation of Representations and Warranties

  43   

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SUNPOWER

  43   

5.01

Organization; Qualification

  43   

5.02

Authority and Power

  44   

5.03

Valid and Binding Obligation

  44   

5.04

No Violation or Conflict

  44   

5.05

Consents and Approvals

  45   

5.06

Transfer of SP Contributed Interests

  45   

5.07

Capital Stock

  45   

5.08

Financial Statements

  46   

5.09

Undisclosed Liabilities

  46   

5.10

SP SEC Reports and Compliance

  47   

5.11

Real Property

  48   

5.12

Personal Property; Sufficiency of Assets

  49   

5.13

Contracts

  49   

5.14

Compliance With Laws

  51   

5.15

Permits

  52   

5.16

Taxes

  52   

5.17

Litigation

  54   

5.18

Absence of Material Adverse Effect

  54   

5.19

Insurance

  54   

5.20

Employees; Employee Benefits

  55   

5.21

Environmental Matters

  55   

5.22

No Brokers

  56   

5.23

[Reserved]

  56   

5.24

Regulation

  56   

5.25

Related Party Transactions

  57   

5.26

Credit Support

  57   

5.27

Accuracy of Partnership IPO Information

  57   

5.28

Knowledge Persons

  57   

5.29

Residential Solar Portfolio

  57   

5.30

8point3 Entities

  58   

5.31

Limitation of Representations and Warranties

  58   

ARTICLE VI COVENANTS

  58   

6.01

Conduct of Business Prior to the Closing

  58   

6.02

Consummation of Transactions; Required Consents

  62   

6.03

Access to Information; Confidentiality

  63   

6.04

Partnership IPO

  64   

6.05

Credit Facility

  65   

6.06

Further Assurances

  66   

6.07

Public Announcements

  66   

6.08

Brokerage Agreements

  66   

6.09

Expenses

  66   

6.10

Insurance

  66   

6.11

Independent Directors; Officers

  67   

 

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ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FIRST SOLAR

  67   

7.01

Representations and Warranties of SunPower

  67   

7.02

Covenants and Agreements

  68   

7.03

No Adverse Order

  68   

7.04

Required Consents

  68   

7.05

Qualified Public Offering

  68   

7.06

Reorganization; Related Matters

  68   

7.07

Closing Deliverables

  69   

7.08

Credit Facility; Credit Support

  69   

7.09

No Material Adverse Effect

  70   

7.10

Related First Solar Transactions

  70   

7.11

Real Property

  70   

7.12

Residential Project Matters

  70   

7.13

Interim Period Material Contracts

  70   

7.14

Repayment of Quinto Debt

  70   

ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUNPOWER

  71   

8.01

Representations and Warranties of First Solar

  71   

8.02

Covenants and Agreements

  71   

8.03

No Adverse Order

  71   

8.04

Required Consents

  71   

8.05

Qualified Public Offering

  71   

8.06

Contribution; Related Matters

  72   

8.07

Closing Deliverables

  72   

8.08

Credit Facility; Credit Support

  73   

8.09

No Material Adverse Effect

  73   

8.10

Real Property

  73   

8.11

Interim Period Material Contracts

  73   

ARTICLE IX SURVIVAL AND INDEMNIFICATION

  73   

9.01

Survival of Representations, Warranties and Agreements

  73   

9.02

Indemnification by First Solar

  74   

9.03

Indemnification by SunPower

  74   

9.04

Liability Limitations

  74   

9.05

Indemnification Procedures

  75   

9.06

Certain Indemnification Matters

  77   

ARTICLE X TAX MATTERS

  77   

10.01

FS Contributed Company Taxes

  77   

10.02

SP Contributed Company Taxes

  78   

10.03

Tax Allocation

  78   

10.04

Tax Cooperation

  78   

10.05

Tax Indemnification

  79   

 

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10.06

Tax Equity Indemnification

  79   

10.07

Transfer Taxes

  79   

10.08

Survival

  79   

ARTICLE XI TERMINATION; EFFECT OF TERMINATION

  79   

11.01

Termination

  79   

11.02

Termination Fee

  80   

11.03

Effect of Termination

  80   

ARTICLE XII MISCELLANEOUS

  80   

12.01

Parties in Interest

  80   

12.02

Assignment

  81   

12.03

Notices

  81   

12.04

Waiver; Remedies

  82   

12.05

Captions

  83   

12.06

Severability

  83   

12.07

Governing Law

  83   

12.08

Consent to Jurisdiction

  83   

12.09

Entire Agreement

  84   

12.10

Amendment

  84   

12.11

Counterparts

  84   

 

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SCHEDULES

 

Schedule I - Qualified Expenses
Schedule II - Valuation Criteria
Schedule III - Project Model Due Diligence Matters
FS Disclosure Schedule
Schedule 1.1(a) Knowledge Persons
Schedule 1.1(c) Related First Solar Transactions
Schedule 1.1(d) Permitted Equity Liens
Schedule 1.1(e) Permitted Liens
Schedule 1.1(f) Tax Equity Financings
Schedule 4.05 FS Required Consents
Schedule 4.06 FS Contributed Interests
Schedule 4.07 FS Contributed Companies
Schedule 4.08(a) FS Financial Statements
Schedule 4.11(a) FS Real Property
Schedule 4.11(d) Mineral Rights
Schedule 4.12(b) Sufficiency of Assets
Schedule 4.12(c) Force Majeure Claims or Delays
Schedule 4.13(a) FS Material Contracts
Schedule 4.13(b) Defaults
Schedule 4.14 Compliance with Laws
Schedule 4.15 Permits
Schedule 4.16 Taxes
Schedule 4.17 Litigation
Schedule 4.19 Insurance
Schedule 4.22 Brokers
Schedule 4.21(a) Environmental Matters
Schedule 4.24(b) Regulation
Schedule 4.25 Related Party Transactions
Schedule 4.26 FS Support Obligations
Schedule 4.28 8point3 Entities Permitted Actions
Schedule 6.01(a) Permitted Interim Actions
Schedule 6.01(c) Interim Period Contracts & Amendments
Schedule 8.10 Real Property Closing Deliverables
SP Disclosure Schedule
Schedule 1.1(a) Knowledge Persons
Schedule 1.1(d) Permitted Equity Liens
Schedule 1.1(e) Permitted Liens
Schedule 1.1(f) Tax Equity Financings
Schedule 2.01(d)(ii) SP Reorganization
Schedule 5.05 SP Required Consents
Schedule 5.06 SP Contributed Interests
Schedule 5.07 SP Contributed Companies
Schedule 5.08(a) SP Financial Statements

 

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Schedule 5.11(a) SP Real Property
Schedule 5.11(d) Mineral Rights
Schedule 5.12(b) Sufficiency of Assets
Schedule 5.12(c) Force Majeure Claims or Delays
Schedule 5.13(a) SP Material Contracts
Schedule 5.13(b) Defaults
Schedule 5.14 Compliance with Laws
Schedule 5.15 Permits
Schedule 5.16 Taxes
Schedule 5.17 Litigation
Schedule 5.19 Insurance
Schedule 5.22 Brokers
Schedule 5.21(a) Environmental Matters
Schedule 5.24(b) Regulation
Schedule 5.25 Related Party Transactions
Schedule 5.26 SP Support Obligations
Schedule 5.29 Residential Solar Portfolio
Schedule 5.30 8point3 Entities Permitted Actions
Schedule 6.01(a) Permitted Interim Actions
Schedule 6.01(c) Interim Period Contracts & Amendments
Schedule 7.11 Real Property Closing Deliverables
EXHIBITS
Exhibit A-1 - Form of Holdings Amended and Restated Limited Liability Company
Agreement
Exhibit A-2 - Form of YieldCo General Partner Amended and Restated Limited
Liability Company Agreement
Exhibit A-3 - Form of Amended and Restated Agreement of Limited Partnership of the
Partnership
Exhibit A-4 - Form of Operating Company Amended and Restated Limited Liability
Company Agreement
Exhibit B - [Reserved]
Exhibit C - Form of Omnibus Agreement
Exhibit D-1 - Form of FS ROFO Agreement
Exhibit D-2 - Form of SP ROFO Agreement
Exhibit E - Form of Exchange Agreement
Exhibit F - Form of Registration Rights Agreement
Exhibit G-1 - Form of FS Management Services Agreement
Exhibit G-2 - Form of SP Management Services Agreement
Exhibit H - Form of Purchase Agreement
Exhibit I - Form of FIRPTA Certificate

 

vi


MASTER FORMATION AGREEMENT

THIS MASTER FORMATION AGREEMENT (the “Agreement”), dated as of March 10, 2015 (the “Execution Date”), by and between First Solar, Inc., a Delaware corporation (“First Solar”), and SunPower Corporation, a Delaware corporation (“SunPower” and together with First Solar, each a “Party” and collectively, the “Parties”). Capitalized terms used herein shall have the meanings set forth in Article I hereof.

RECITALS

WHEREAS, First Solar owns, directly or indirectly, the Equity Interests in the Persons set forth on Section 4.07 of the FS Disclosure Schedule, which shall constitute the FS Contributed Interests in the FS Contributed Companies;

WHEREAS, SunPower owns, directly or indirectly, the Equity Interests in the Persons set forth on Section 5.07 of the SP Disclosure Schedule, which shall constitute the SP Contributed Interests in the SP Contributed Companies; and

WHEREAS, the Parties desire to form a joint venture consisting of their respective interests in the FS Contributed Companies and the SP Contributed Companies, and to effect a sale of a portion of such joint venture through a subsequent initial public offering, and to enter into, and cause their respective Affiliates to enter into, a series of transactions, on the terms and subject to the conditions set forth in this Agreement, to form such joint venture, effectuate the contribution of interests thereto and consummate such initial public offering.

NOW, THEREFORE, in consideration of the premises, the mutual agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement each hereby agrees as follows:

ARTICLE I

DEFINITIONS

1.01 Definitions. In this Agreement (including the Preamble hereof), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):

8point3 Entity” means each of Holdings, the YieldCo General Partner, the Partnership and the Operating Company, as the context may require.

Action” means any action, notice, claim, suit, arbitration, investigation, information, audit, request or proceeding by or before any arbitrator, court, or other Governmental Entity.

Adjustment Date” has the meaning set forth in Section 2.02(b).

Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with,


the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. Notwithstanding anything in the foregoing to the contrary, for purposes of this Agreement, (a) no Sponsor will be deemed to constitute an Affiliate of Holdings, the YieldCo General Partner or the Partnership, and (b) SunPower and its Affiliates (other than the 8point3 Entities), on the one hand, and First Solar and its Affiliates (other than the 8point3 Entities), on the other hand, will not be deemed to be Affiliates of one another hereunder unless there is an independent basis for such Affiliation.

Annual Performance Report” means the annual performance report and certification that the Cash Grant terms and conditions required to be submitted with respect to Projects on which Cash Grants have been paid.

Aggregate Project Value” means the FS Aggregate Project Value or the SP Aggregate Project Value, as the context may require.

Agreement” has the meaning set forth in the Preamble.

Board of Directors” has the meaning that shall be ascribed to the term “Board of Directors” in the YieldCo General Partner Limited Liability Company Agreement.

Business” means (a) with respect to any of the FS Contributed Companies, the business of the FS Contributed Companies, or (b) with respect to any of the SP Contributed Companies, the business of the SP Contributed Companies.

Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

Cash Grant” means any payment for specified energy property in lieu of tax credits under Section 1603 of Division B of the American Recovery and Reinvestment Act of 2009, P.L. 111-5, as amended, or any successor provision.

Charter Documents” means, with respect to any Person, all charter, organizational and other documents by which such Person (other than an individual) establishes its legal existence or which govern its internal affairs, and shall include: (a) in respect of a corporation, its certificate or articles of incorporation or association and its by-laws; (b) in respect of a partnership, its certificate of partnership and its partnership agreement; and (c) in respect of a limited liability company, its certificate of formation and operating or limited liability company agreement.

Class A Share” means a “Class A Share” (as defined in the Partnership Agreement) of the Partnership issued pursuant to the Partnership Agreement.

Class B Share” means a “Class B Share” (as defined in the Partnership Agreement) of the Partnership issued pursuant to the Partnership Agreement.

Closing” has the meaning set forth in Section 3.01.

 

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Closing Date” has the meaning set forth in Section 3.01.

Closing Master Project Model” means the Master Project Model as revised to reflect the Revised Models.

Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

Combined Aggregate Project Value” means, as of any date of calculation, the sum of (a) the FS Aggregate Project Value plus (b) the SP Aggregate Project Value.

Commercial Operation Date” means, with respect to a Project, the date on which such Project has (or in the case of (i) a Residential Project, the first date all of the Residential Systems within such Residential Project, or (ii) a C&I Project, the first date all of the solar generation systems within such C&I Project, in each case have) achieved substantial completion or similar milestone (including, for example, block or phase completion for each block or phase of such Project) under each construction contract for the construction of such Project or Residential System and has achieved commercial operation or similar milestone under each interconnection agreement and each power purchase agreement, lease or hedging agreement pursuant to which such Project delivers or transmits Electricity from such Project or Residential System.

Confidentiality Agreement” means that certain Mutual Non-Disclosure Agreement, dated July 9, 2014, as amended August 5, 2014 and January 28, 2015, between SunPower and First Solar.

Consents” means consents, approvals, exemptions, waivers, clearances, authorizations, filings, registrations or notifications, including consents, notifications or waivers as may be required by any Person to acquire, own, lease or occupy land.

Contract” means any contract, agreement, license, guarantee, purchase order, sales order, lease (including leases of real and personal property), indenture, promissory note, evidence of Indebtedness, mortgage or instrument of any nature.

Contributed Asset” means any FS Contributed Asset or SP Contributed Asset, as the context may require.

Contributed Company” means any FS Contributed Company or SP Contributed Company, as the context may require.

Contributed Company Interests” means the FS Contributed Interests or the SP Contributed Interests, as the context may require.

Credit Facility” has the meaning set forth in Section 6.05(a).

Damages” means losses, Liabilities, claims, damages, payments, charges, Taxes, costs and expenses (including costs and expenses of Actions, amounts paid in connection with any assessments, fines, judgments or settlements relating thereto, interest and penalties recovered by

 

3


a third party with respect thereto, and out-of-pocket expenses and reasonable attorneys’, accountants’ and other experts’ fees and expenses incurred in defending against any such Actions); provided that Damages shall not include any special, exemplary, incidental, consequential, indirect or punitive losses or damages, except to the extent any of the foregoing (a) shall be payable pursuant to a Third Party Claim or (b) shall constitute lost profits, which would have been distributed by the Operating Company to any Indemnified Party, resulting from a failure by any Contributed Company to realize revenues under a Contract to which it is a party.

Deductible Amount” has the meaning set forth in Section 9.04(a).

Default” has the meaning set forth in Section 4.04.

Delaware Courts” has the meaning set forth in Section 12.08.

De Minimis Claim” has the meaning set forth in Section 9.04(a).

Disclosure Schedule” means the FS Disclosure Schedule or the SP Disclosure Schedule, as the context may require.

Disqualified Person” means (a) a “tax-exempt entity” (unless such Person would be subject to tax under Section 511 of the Code on all income from the Company) or “tax-exempt controlled entity” (unless with respect to a “tax-exempt controlled entity,” an election is made under Section 168(h)(6)(F)(ii) of the Code) as those terms are defined in Section 168(h) of the Code; (b) a Person described in Section 50(b)(3) (unless such Person would be subject to tax under Section 511 of the Code on all income from the Company), Section 50(b)(4) or Section 50(d) of the Code; (c) an entity described in paragraph (4) of Section 54(j) of the Code; or (d) any partnership or other pass-through entity (including a single-member disregarded entity) any direct or indirect partner of which (or other direct or indirect holder of an equity or profits interest) is described in clauses (a) through (c) above, unless such Person holds its interest in the partnership or other pass-through entity indirectly through an entity taxable as a corporation for U.S. federal income tax purposes, other than (i) a “tax-exempt controlled entity” as defined in Section 168(h) (unless with respect to a “tax-exempt controlled entity,” an election is made under Section 168(h)(6)(F)(ii) of the Code) or (ii) a corporation with respect to which the rules of Section 50(d) would apply.

Electricity” means electric energy, measured in kilowatt hours.

Environmental Claim” means any and all administrative or judicial actions, suits, orders, claims, Liens, notices of violations or complaints by any Person based upon, alleging, asserting, or claiming any (a) violation of any Environmental Law, or (b) Liabilities under any Environmental Law for investigatory costs, cleanup costs, removal costs, remedial costs, response costs, natural resource damages, property damage, personal injury, fines, or penalties arising out of, based on, resulting from, or related to the presence, Release or threatened Release of, or any exposure of any Person to, any Hazardous Substances.

Environmental Laws” means any Law pertaining to pollution, the protection, restoration, or remediation of the environment or natural resources (including the protection of wildlife and sensitive environmental areas), or protection of human health or safety, including

 

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Laws relating to: (a) the exposure to, or Releases or threatened Releases of, Hazardous Substances; (b) the generation, manufacture, processing, distribution, use treatment, containment, disposal, storage, transport or handling of Hazardous Substances; or (c) recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances.

Environmental Permits” means Permits required under any Environmental Law.

Equity Interests” means all shares, participations, capital stock, partnership or limited liability company interests, units, participations or similar equity interests issued by any Person, however designated.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

ERISA Affiliate” means, with respect to any Person, any trade or business (whether or not incorporated) that is or ever was treated as a single employer together with such Person under Section 414 of the Code or is or ever was part of a “controlled group” or is or ever was under “common control” with such Person under Section 4001(a)(14) of ERISA.

EWG” means an “exempt wholesale generator” under PUHCA.

Exchange Act” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

Exchange Agreement” means that certain Exchange Agreement to be entered into by the Partnership, the YieldCo General Partner, the Operating Company, FS Holdings Member and SP Holdings Member, substantially in the form of Exhibit E hereto (with such modifications as may be mutually agreed by the Parties).

Execution Date” has the meaning set forth in the Preamble.

FERC” means the United States Federal Energy Regulatory Commission.

FICO Score” means a score based on the credit risk rating system established and maintained by the Fair Isaac Corporation.

First Solar” has the meaning set forth in the Preamble.

FPA” means the Federal Power Act, as amended, including the implementing regulations adopted by FERC thereunder.

FS Aggregate Project Value” means the aggregate net present value of the FS Contributed Interests, as determined based on the Valuation Criteria and calculated pursuant to the Master Project Model (or, as of the Closing, the Closing Master Project Model).

FS Contributed Assets” has the meaning set forth in Section 4.12(a).

 

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FS Contributed Companies” means the Persons identified as the “FS Contributed Companies” on Schedule 4.07 of the FS Disclosure Schedule.

FS Contributed Interests” means the Equity Interests of the FS Contributed Companies set forth on Schedule 4.07 of the FS Disclosure Schedule.

FS Contribution” has the meaning set forth in Section 2.03(a).

FS Contribution Agreement” means that certain contribution, conveyance, assignment and assumption agreement (or similar Contract or Contracts) to be entered into by FS Holdings Member, MD Solar Holdings and the Operating Company in a form reasonably acceptable to each of First Solar and SunPower.

FS Contribution Percentage” means the ratio of (a) the FS Aggregate Project Value divided by (b) the Combined Aggregate Project Value, in each case, as determined pursuant to the Closing Master Project Model.

FS Contributor” means each of FS Holdings Member and MD Solar Holdings.

FS Controlled Company” means each FS Contributed Company identified as an “FS Controlled Company” on Schedule 4.07.

FS Disclosure Schedule” means the disclosure schedule prepared and delivered by First Solar to SunPower as of the Execution Date, as the same may be amended in accordance herewith.

FS Financial Statements” has the meaning set forth in Section 4.08(a).

FS Group” has the meaning set forth in Section 9.03.

FS Holdings Member” means First Solar 8point3 Holdings, LLC, a Delaware limited liability company.

FS Indemnified Taxes” means (i) all Tax liabilities attributable to the ownership, management and operation of the FS Contributed Companies or the ownership and operation of the assets or Business of the FS Contributed Companies and incurred on or prior to the Closing Date (as determined under Section 10.3), including (a) any such Tax liabilities of First Solar and its Affiliates (including any FS Contributed Company) that may result from the consummation of the transactions contemplated by this Agreement, (b) any such Tax liabilities arising under Treasury Regulations Section 1.1502-6 and any similar provisions of state, local or foreign Law, by contract, as successor, transferee or otherwise, or which are attributable to having been a member of a consolidated, combined or unitary group, and (c) any Tax imposed on any FS Contributed Company that results from the business or operation of any other Affiliate of First Solar, (ii) any payment required to be made following Closing as the result of the reduction, disallowance, preclusion of the availability, or recapture of any Cash Grant claimed or received with respect to any FS Project prior to Closing, and (iii) all Tax liabilities resulting from any reduction, disallowance, preclusion of the availability, or recapture under Section 50 of the Code of tax credits claimed, allowed, or allowable with respect to any FS Project or allocated by any

 

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FS Contributed Company prior to Closing; provided, however, that the Parties hereby agree that in no event shall any payment, liability or other Damages whatsoever arising as the result of, or that otherwise would not have been incurred except through, any action of the Operating Company or the Partnership following Closing be deemed to constitute FS Indemnified Taxes.

FS Insurance Policies” has the meaning set forth in Section 4.19.

FS Leased Real Property” has the meaning set forth in Section 4.11(a)(ii).

FS Management Services Agreement” means that certain Management Services Agreement to be entered into by the Operating Company, the Partnership, YieldCo General Partner, Holdings and FS Service Provider, substantially in the form of Exhibit G-1 hereto (with such modifications as may be mutually agreed by the Parties).

FS Material Adverse Effect” means a Material Adverse Effect with respect to the FS Contributed Companies, taken as a whole, or a material adverse effect on the ability of First Solar or any FS Contributor to consummate the transactions contemplated hereby or to perform its material obligations hereunder or under the other Transaction Documents to which such Person is a Party.

FS Material Contract” has the meaning set forth in Section 4.13(a).

FS Non-Controlled Company” means each FS Contributed Company identified as an “FS Non-Controlled Company” on Schedule 4.07 of the FS Disclosure Schedule; provided that, for all purposes hereunder, each such FS Contributed Company shall constitute an “FS Non-Controlled Company” solely with respect to the period from and after the date set forth for such FS Contributed Company on Schedule 4.07 of the FS Disclosure Schedule.

FS Owned Real Property” has the meaning set forth in Section 4.11(a)(i).

FS Project” means each photovoltaic solar generating facility owned or controlled (in whole or in part) by an FS Contributed Company.

FS Project Model” means the financial model for the FS Contributed Companies which is included in the Master Project Model.

FS Project Permits” has the meaning set forth in Section 4.15(a).

FS Real Property Interests” has the meaning set forth in Section 4.11(c).

FS Required Consents” has the meaning set forth in Section 4.05.

FS Revised Model” means the Revised Model delivered by First Solar pursuant to Section 2.02(b), as the same may be revised pursuant to Section 2.02(c).

FS ROFO Agreement” means that certain Right of First Offer Agreement to be entered into by First Solar and the Operating Company, substantially in the form of Exhibit D-1 hereto (with such modifications as may be mutually agreed by the Parties).

 

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FS SEC Reports” means all reports, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, forms, schedules, statements and other documents First Solar was required to file with or furnish to the SEC, as applicable, pursuant to the Exchange Act or the Securities Act.

FS Service Provider” means First Solar 8point3 Management Services, LLC, a Delaware limited liability company.

FS Specified Representations” means those representations and warranties made in Sections 4.01, 4.02, 4.03, 4.06 and 4.07.

FS Support Obligations” has the meaning set forth in Section 4.26.

FS Transaction Party” has the meaning set forth in Section 4.01(a).

GAAP” means United States generally accepted accounting principles.

Governmental Entity” means any (a) multinational, federal, national, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, administrative agency, board, bureau, agency or other statutory body, domestic or foreign, (b) subdivision, agent, commission, board, or authority of any of the foregoing, or (c) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under, or for the account of, any of the foregoing (including the New York Stock Exchange and NASDAQ Stock Market), in each case, that has jurisdiction or authority with respect to the applicable party or the Projects.

Hazardous Substance” means (a) asbestos and polychlorinated biphenyls; (b) petroleum, petroleum hydrocarbons, petroleum products, natural gas, crude oil, and any components, fractions, or derivatives thereof; (c) any material, substance, chemical or waste (or combination thereof) that is defined, listed or identified as hazardous, toxic, a pollutant, or a contaminant, radioactive, or words of similar meaning or effect under any Law relating to pollution, waste, the environment or human health and safety; or (d) any other material, substance, chemical or waste (or combination thereof) that can form the basis for any Liability under any Law relating to pollution, waste, the environment or human health and safety.

Holdings” means 8point3 Holding Company, LLC, a Delaware limited liability company.

Holdings Economic Units” has the meaning that shall be ascribed to the term “Economic Units” in the Holdings Limited Liability Company Agreement.

Holdings Limited Liability Company Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 Holding Company, LLC, to be entered into at the Closing, substantially in the form of Exhibit A-1 hereto (with such modifications as may be mutually agreed by the Parties).

Holdings Management Units” has the meaning that shall be ascribed to the term “Management Units” in the Holdings Limited Liability Company Agreement.

 

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Host Customer” has the meaning set forth in Section 5.29(a).

Indebtedness” of any Person at any date means, without duplication, all obligations and indebtedness of that Person as of that date (a) for borrowed money (other than trade debt and other accrued current liabilities or obligations incurred in the ordinary course of business); (b) evidenced by a note, bond, debenture or similar instrument; (c) created or arising under any capital lease, conditional sale, earn out or other arrangement for the deferral of purchase price of any property; (d) under letters of credit, banker’s acceptances or similar credit transactions; (e) under interest rate protection agreements or similar agreements, or foreign currency or commodity hedge, exchange or similar agreements of such Person (excluding power purchase and sales agreements); (f) for any other Person’s obligation or indebtedness of the same type as any of the foregoing, whether as obligor, guarantor or otherwise; (g) for interest on any of the foregoing and (h) for any premiums, prepayment or termination fees, expenses or breakage costs due upon prepayment of any of the foregoing.

Indemnifiable Tax Equity Payment” means any payment by a Contributed Company or any 8point3 Entity under any Tax Equity Financing agreement that is made as the result of, or any distribution to any other Person of cash to which the Operating Company would have been entitled but for, any inaccuracy or breach of any representation, warranty, covenant or similar provision of such agreement, including any payment made as the result of a change in the allocation of U.S. federal income tax credits; provided, however, that the Parties hereby agree that in no event shall any payment, liability, or other Damages whatsoever arising as the result of, or that otherwise would not have been incurred except through, any action of the Operating Company or the Partnership following Closing be considered included in this definition of Indemnifiable Tax Equity Payment.

Indemnified Party” means any Person within the definition of the FS Group or the SP Group that may seek indemnification under this Agreement.

Indemnifying Party” means a Person against which indemnification may be sought under this Agreement.

Independent Valuation Expert” means (a) Merrill Lynch, Pierce, Fenner & Smith Incorporated or (b) another nationally recognized investment banking firm of similar quality approved by each Party (which approval shall not be unreasonably withheld, delayed or conditioned).

Interim Period” has the meaning set forth in Section 6.01(a).

Knowledge” means (a) with respect to First Solar, the actual knowledge or, solely with respect to any FS Non-Controlled Company as of the Closing, actual knowledge after due inquiry to the applicable controlling person, of each individual listed in Schedule 1.1(a) of the FS Disclosure Schedule and (b) with respect to SunPower, the actual knowledge of each individual listed in Schedule 1.1(a) of the SP Disclosure Schedule; provided, with respect to each individual set forth on any such Schedule, such knowledge shall be limited to (i) the specific Project under which such individual is listed thereon and (ii) his or her respective professional capacity.

 

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Launch Date” means the date of the launch of the road show for a Qualified Public Offering.

Laws” means any applicable laws, statutes, rules, regulations, statutory rules, orders, judgments, ordinances, codes, injunctions, decrees, other legally enforceable requirements, rules of common law and terms and conditions of any Permit.

Liability” means any and all Indebtedness, liabilities and obligations of any nature whatsoever, whether known or unknown, direct or indirect, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, or due or to become due, whenever or wherever arising. For the avoidance of doubt, any Liabilities arising in connection with an obligation to pay a Tax shall include any interest and penalties associated therewith.

Lien” means any lien (including environmental and tax liens), security interest, pledge, encumbrance, claim, restriction on voting, hypothecation, option, profits or participation interests, preferential purchase right, restrictive covenant, right of first refusal, preemptive right, community property interest, mortgage, charge, title retention agreement or other encumbrance of any nature whatsoever.

Lost Hills Sale Transaction” means the transactions described in Part I of Schedule 1.1(c) of the FS Disclosure Schedule.

Management Services Agreements” means the FS Management Services Agreement and the SP Management Services Agreement.

Maryland Solar Project” means that certain approximately 20 MWAC solar PV electric generating facility located in Washington County, Maryland that is directly owned by MD Solar.

Master Project Model” means the FS Project Model and the SP Project Model, combined in one Microsoft Excel document, as transmitted by email from Goldman, Sachs & Co. to First Solar and SunPower on March 10, 2015 at 1:50 a.m. (New York time).

Material Adverse Effect” means, with respect to any given Person, any actual change, event or effect that, individually or in the aggregate, together with other actual changes, events or effects, has had or would reasonably be expected to have a material and adverse effect on the condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of such Person; provided, however, a Material Adverse Effect shall not include any effect on the condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of such Person to the extent arising out of or attributable to (a) any decrease in the market price of such Person’s (or such Person’s parent’s) publicly traded equity securities (but not any change or effect underlying such decrease to the extent such change or effect would otherwise contribute to a Material Adverse Effect), (b) changes in the general state of the industries in which such Person operates to the extent that such changes would have the same general effect on companies engaged in such industries, (c) changes in general economic conditions (including changes in commodity prices or interest rates), financial or securities markets or political conditions, in each case to the

 

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extent that such changes would have the same general effect on companies engaged in the same lines of business as those conducted by such Person, (d) the negotiation, announcement or proposed consummation of the transactions contemplated by this Agreement, including the loss or departure of officers or other employees of such Person or its Subsidiaries or any adverse change in customer, distributor, supplier or similar relationships resulting therefrom (provided that the exceptions in this clause (d) shall not apply to that portion of any representation or warranty contained in this Agreement to the extent that the purpose of such portion of such representation or warranty is to address the consequences resulting from the execution and delivery of this Agreement, the public announcement or pendency of the transactions contemplated by this Agreement or the performance of obligations or satisfaction of conditions under this Agreement), (e) changes in GAAP or the interpretation thereof or changes in Law or the interpretation or enforcement thereof, (f) acts of terrorism, war, sabotage or insurrection not directly damaging or impacting such Person, to the extent that such acts have the same general effect on companies engaged in the same lines of business as those conducted by such Person, (g) the failure to take any action as a result of any restrictions or prohibitions set forth in Section 6.01(a) with respect to which the other Party refused, following the subject Party’s request, to provide a waiver in a timely manner or at all, (h) compliance with the terms of, or the taking of any action required by, this Agreement, (i) the downgrade in rating of any debt or debt securities of First Solar or SunPower (it being understood and agreed that the facts and circumstances that may have given rise or contributed to such downgrade that are not otherwise excluded from the definition of a Material Adverse Effect may be taken into account in determining whether there has been a Material Adverse Effect), (j) any legal proceedings arising out of or related to this Agreement or any of the transactions contemplated hereby or (k) the failure by such Person or any of its Subsidiaries to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (it being understood and agreed that the facts and circumstances that may have given rise or contributed to such failure that are not otherwise excluded from the definition of a Material Adverse Effect may be taken into account in determining whether there has been a Material Adverse Effect).

Material Contract” means any FS Material Contract or SP Material Contract, as the context may require.

Materiality Requirement” means any requirement in a representation or warranty that a condition, event or state of fact be “material,” correct or true in “all material respects,” have an “FS Material Adverse Effect” or an “SP Material Adverse Effect” or be or not be “reasonably expected to have an FS Material Adverse Effect” or “reasonably expected to have an SP Material Adverse Effect” (or other words or phrases of similar effect or impact) in order for such condition, event or state of facts to cause such representation or warranty to be inaccurate.

MBR Authority” means, with respect to any Person, an order of FERC (a) authorizing such Person to sell electric capacity, energy and ancillary services at wholesale at market-based rates, (b) accepting such Person’s market-based rate tariff for filing without condition or modification that reasonably could be expected to result in a material adverse effect on such Person, and (c) granting such Person waivers and blanket authorizations customarily granted to holders of market-based rate authority, including blanket authorization to issue securities and assume liabilities under Section 204 of the FPA and FERC’s regulations thereunder.

 

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MD Solar Holdings” means Maryland Solar Holdings, Inc., a Delaware corporation.

MD Solar Lease Transaction” means the transactions described in Part II of Schedule 1.1(c) of the FS Disclosure Schedule.

Model Adjustment Dispute” has the meaning set forth in Section 2.02(c).

Model Adjustment Dispute Notice” has the meaning set forth in Section 2.02(c)(i).

North Star Sale Transaction” means the transactions described in Part III of Schedule 1.1(c) of the FS Disclosure Schedule.

Omnibus Agreement” means that certain Omnibus Agreement to be entered into by First Solar, SunPower, the Operating Company, the Partnership, YieldCo General Partner and Holdings, substantially in the form of Exhibit C hereto (with such modifications as may be mutually agreed by the Parties).

Operating Company” means 8point3 Operating Company, LLC, a Delaware limited liability company.

Operating Company Common Unit” means a “Common Unit” (as defined in the Operating Company Limited Liability Company Agreement) of the Operating Company issued pursuant to the Operating Company Limited Liability Company Agreement.

Operating Company IDR” means an “Incentive Distribution Right” (as defined in the Operating Company Limited Liability Company Agreement) issued by the Operating Company pursuant to the Operating Company Limited Liability Company Agreement.

Operating Company Limited Liability Company Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 Operating Company, LLC, to be entered into at the Closing, substantially in the form of Exhibit A-4 hereto (with such modifications as may be mutually agreed by the Parties).

Operating Company Subordinated Units” means a “Subordinated Unit” (as defined in the Operating Company Limited Liability Company Agreement) of the Operating Company issued pursuant to the Operating Company Limited Liability Company Agreement.

Order” means any judgment, decision, order, writ, charge, injunction, stipulation, ruling, decree or award of a Governmental Entity.

Partnership” means 8point3 Energy Partners LP, a Delaware limited partnership.

Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of 8point3 Energy Partners LP, to be entered into at the Closing, substantially in the form of Exhibit A-3 hereto (with such modifications as may be mutually agreed by the Parties).

Partnership IPO Filing Deadline” means May 1, 2015.

 

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Partnership IPO Registration” has the meaning set forth in Section 6.04(a).

Party” or “Parties” has the meaning set forth in the Preamble.

Permits” means written permits, licenses, certificates, franchises, registrations, exemptions, authorizations, variances, consents and approvals obtained from any Governmental Entity.

Permitted Equity Liens” means (a) restrictions on transfer imposed by applicable securities Laws, (b) with respect to any Contributed Company Interests, restrictions on transfer set forth in the Charter Documents of such Contributed Company, (c) Liens that arise as the result of any Tax Equity Financing and (d)(i) in the case of the FS Contributed Interests, those matters set forth in Part I of Schedule 1.1(d) of the FS Disclosure Schedule, and (ii) in the case of the SP Contributed Interests, those matters set forth in Part I of Schedule 1.1(d) of the SP Disclosure Schedule.

Permitted Interim Actions” has the meaning set forth in Section 6.01(a).

Permitted Liens” means (a) Liens for Taxes not yet due and payable or for Taxes being contested in good faith through appropriate proceedings and for which in each case appropriate reserves in accordance with GAAP have been recorded on the FS Financial Statements or the SP Financial Statements (as applicable); (b) mechanics’, materialmens’ or other similar Liens arising in the ordinary course of business for sums that are not yet due and payable or for which adequate reserves have been taken on the FS Financial Statements or the SP Financial Statements (as applicable); (c) other Liens arising in the ordinary course of business for sums that are immaterial in amount to the Contributed Company affected by such Lien and not yet due and payable and do not materially detract from the value of or materially impair the existing or contemplated use of the property affected by such Lien; (d) zoning, entitlement, conservation restriction and other land use and environmental regulations by Governmental Entities that do not, in each case, materially detract from the value or materially impair the existing or contemplated use of the land or other property affected by such restrictions or regulations; (e) any matters of record that are not material in amount to the affected Contributed Company and do not materially detract from the value of or materially impair or inhibit the existing or contemplated use or operation of the property affected by such Lien; (f) customary set-off and similar netting arrangements in favor of banks in connection with deposit accounts, security accounts and similar banking arrangements arising in the ordinary course of business; (g)(i) in the case of the FS Contributed Interests, those matters set forth on Schedule 1.1(e) of the FS Disclosure Schedule, and (ii) in the case of the SP Contributed Interests, those matters set forth on Schedule 1.1(e) of the SP Disclosure Schedule; and (h) any Permitted Equity Lien.

Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association, government agency or political subdivision thereof or other entity.

Plan” means any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, restricted stock, phantom stock, stock or cash award, deferred compensation, leave of absence,

 

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layoff, stay, vacation, day or dependent care, legal services, cafeteria, life, health, welfare, post-retirement, accident, disability, worker’s compensation or other insurance, severance, separation, change of control, employment or other employee benefit plan, practice, policy, agreement or arrangement of any kind, whether written or oral, or whether for the benefit of a single individual or more than one individual including any “employee benefit plan” within the meaning of Section 3(3) of ERISA.

Pre-Closing Event” has the meaning set forth in Section 2.02(e).

Project” means any FS Project or SP Project, as the context many require.

Project Model” means the FS Project Model or the SP Project Model, as the context may require.

Project Permits” means any FS Project Permit or SP Project Permit, as the context may require.

Project Tax Credit” means the investment tax credit under Section 48 of the Code and the production tax credit under Section 45 of the Code.

Prospectus” means the prospectus included in a Registration Statement (including a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Class A Shares covered by a Registration Statement, and all other amendments and supplements to the Prospectus, and all information incorporated by reference or deemed to be incorporated by reference in such Prospectus.

Prudent Solar Industry Practice” means those practices, methods, and acts that a nationally recognized owner, developer or operator of projects of good standing, at a particular time, in the exercise of prudent judgment in light of the facts known or that reasonably should have been known at the time a decision was made, would have taken to accomplish the desired result in a manner consistent with law, regulation, permits, codes, standards, equipment manufacturer’s recommendations, reliability, safety, environmental protection, economy, and expedition. “Prudent Solar Industry Practice” does not necessarily mean the best practice, method, or standard of care, skill, safety and diligence in all cases, but is instead intended to encompass a range of acceptable practices, methods and standards.

PUHCA” means the Public Utility Holding Company Act of 2005, and FERC’s regulations and orders thereunder.

Purchase Agreement” means that certain Equity Purchase Agreement to be entered into by the Partnership and the Operating Company, substantially in the form of Exhibit H hereto (with such modifications as may be mutually agreed by the Parties).

PURPA” means the Public Utility Regulatory Policies Act of 1978, as amended, including the regulations and orders publicly promulgated by FERC thereunder.

 

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QF” means a “qualifying facility” or a “qualifying small power production facility” under PURPA.

Qualified Expenses” means those transaction fees and expenses described in Schedule I.

Qualified Public Offering” means (a) an underwritten offering of Class A Shares pursuant to an effective Registration Statement filed by the Partnership with the SEC under the Securities Act, pursuant to which the aggregate offering price of the offered securities sold in such offering is at least $100,000,000 and (b) the listing of such Class A Shares on the NASDAQ Stock Market, the New York Stock Exchange, any successor exchange to the foregoing or any other securities exchange agreed to in writing by the parties.

Quinto Credit Agreement” has the meaning set forth in Section 7.14.

Real Property Interests” means the FS Real Property Interests or SP Real Property Interests, as the context may require.

Recoveries” has the meaning set forth in Section 9.06(d).

Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into by the Partnership, FS Holdings Member and SP Holdings Member, substantially in the form of Exhibit F hereto (with such modifications as may be mutually agreed by the Parties).

Registration Statement” means a registration statement in the form required to register the sale of the Class A Shares under the Securities Act, and including any Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all information incorporated by reference or deemed to be incorporated by reference in such registration statement (other than (i) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (ii) a registration incidental to an issuance of securities under Rule 144A, (iii) a registration on Form S-4 or any successor form, or (iv) a registration on Form S-8 or any successor form).

Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing into the indoor or outdoor environment (including, without limitation, soil, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Substances through or in the air, soil, surface water, groundwater or property.

Representatives” means, with respect to any Person, such Person’s directors, officers, employees, agents and other representatives, including legal counsel, accountants and consultants.

Residential Project” means a portfolio of Residential Systems owned directly or indirectly by a Contributed Company.

 

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Residential System” means a ground-mounted or roof-top distributed solar generation system designed and installed for residential applications, which is leased by, or subject to a power purchase agreement with, the owner of a residence for the purpose of generating electricity for that residence.

Review Period” has the meaning set forth in Section 3.04(b).

Revised Model” has the meaning set forth in Section 2.02(b).

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from time to time, and any successor to such statute.

SP Aggregate Project Value” means the aggregate net present value of the SP Contributed Interests, as determined based on the JV Valuation Criteria and calculated pursuant to the Master Project Model (or, as of the Closing, the Closing Master Project Model).

SP Contributed Assets” has the meaning set forth in Section 5.12(a).

SP Contributed Companies” means the Persons identified as the “SP Contributed Companies” on Schedule 5.07 of the SP Disclosure Schedule.

SP Contributed Interests” means the Equity Interests of the SP Contributed Companies set forth on Schedule 5.07 of the SP Disclosure Schedule.

SP Contribution Percentage” means the ratio of (a) the SP Aggregate Project Value divided by (b) the Combined Aggregate Project Value, in each case, as determined pursuant to the Closing Master Project Model.

SP Contributor” means each of SP Holdings Member, the Operating Company, SunPower Capital, LLC, a Delaware limited liability company, SunPower AssetCo, LLC, a Delaware limited liability company and SunPower Corporation, Systems, a Delaware corporation.

SP Disclosure Schedule” means the disclosure schedule prepared and delivered by SunPower to First Solar as of the Execution Date, as the same may be amended in accordance herewith.

SP Financial Statements” has the meaning set forth in Section 5.08(a).

SP Group” has the meaning set forth in Section 9.02.

SP Holdings Member” means SunPower YC Holdings, LLC, a Delaware limited liability company.

SP Indemnified Taxes” means (i) all Tax liabilities attributable to the ownership, management and operation of the SP Contributed Companies or the ownership and operation of

 

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the assets or Business of the SP Contributed Companies and incurred on or prior to the Closing Date (as determined under Section 10.3), including (a) any such Tax liabilities of SunPower and its Affiliates (including any SP Contributed Company and the Operating Company) that may result from the consummation of the transactions contemplated by this Agreement, (b) any such Tax liabilities arising under Treasury Regulations Section 1.1502-6 and any similar provisions of state, local or foreign Law, by contract, as successor, transferee or otherwise, or which are attributable to having been a member of a consolidated, combined or unitary group, and (c) any Tax imposed on any SP Contributed Company or the Operating Company that results from the business or operation of any other Affiliate of SunPower, (ii) any payment required to be made following Closing as the result of the reduction, disallowance, preclusion of the availability, or recapture of any Cash Grant claimed or received with respect to any SP Project prior to Closing, and (iii) all Tax liabilities resulting from any reduction, disallowance, preclusion of the availability, or recapture under Section 50 of the Code of tax credits claimed, allowed, or allowable with respect to any SP Project or allocated by any SP Contributed Company prior to Closing; provided, however, that the Parties hereby agree that in no event shall any payment, liability, or other Damages whatsoever arising as the result of, or that otherwise would not have been incurred except through, any action of the Operating Company or the Partnership following Closing be deemed to constitute SP Indemnified Taxes.

SP Insurance Policies” has the meaning set forth in Section 5.19.

SP Leased Real Property” has the meaning set forth in Section 5.11(a)(ii).

SP Management Services Agreement” means that certain Management Services Agreement to be entered into by the Operating Company, the Partnership, YieldCo General Partner, Holdings and SP Service Provider, substantially in the form of Exhibit G-2 hereto (with such modifications as may be mutually agreed by the Parties).

SP Material Adverse Effect” means a Material Adverse Effect with respect to the SP Contributed Companies, taken as a whole, or a material adverse effect on the ability of SunPower, the Operating Company or any SP Contributor to consummate the transactions contemplated hereby or to perform its material obligations hereunder or under the other Transaction Documents to which such Person is a party.

SP Material Contract” has the meaning set forth in Section 5.13(a).

SP Owned Real Property” has the meaning set forth in Section 5.11(a)(i).

SP Project” means each photovoltaic solar generating facility owned or controlled (in whole or in part) by an SP Contributed Company.

SP Project Model” means the financial model for the SP Contributed Companies which is included in the Master Project Model.

SP Project Permits” has the meaning set forth in Section 5.15(a).

SP Real Property Interests” has the meaning set forth in Section 5.11(c).

 

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SP Reorganization” has the meaning set forth in Section 2.01(d)(ii).

SP Reorganization Agreements” means those certain contribution, conveyance, assignment and assumption agreements, agreements and plans of merger and other Contracts to be entered into by the SP Contributors, in each case, in a form reasonably acceptable to each of First Solar and SunPower, in order to effect the transactions described on Schedule 2.01(d)(ii) of the SP Disclosure Schedules.

SP Required Consents” has the meaning set forth in Section 5.05.

SP Residential Leases” has the meaning set forth in Section 5.29(a).

SP Revised Model” means the Revised Model delivered by SunPower pursuant to Section 2.02(b), as the same may be revised pursuant to Section 2.02(c).

SP ROFO Agreement” means that certain Right of First Offer Agreement to be entered into by SunPower and the Operating Company, substantially in the form of Exhibit D-2 hereto (with such modifications as may be mutually agreed by the Parties).

SP SEC Reports” means all reports, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, forms, schedules, statements and other documents SunPower was required to file with or furnish to the SEC, as applicable, pursuant to the Exchange Act or the Securities Act.

SP Service Provider” means SunPower Capital Services, LLC, a Delaware limited liability company.

SP Specified Representations” means those representations and warranties made in Sections 5.01, 5.02, 5.03, 5.06 and 5.07.

SP Support Obligations” has the meaning set forth in Section 5.26.

SP Transaction Party” has the meaning set forth in Section 5.01(a).

Specified Representations” means each of the FS Specified Representations and SP Specified Representations, as the context may require.

Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if such Person, one or more Subsidiaries of such Person, or a combination thereof, controls such partnership on the date of hereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, directly or by one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has the power to elect or direct the election of a majority of the directors or other governing body of such Person.

 

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SunPower” has the meaning set forth in the Preamble.

Tax” or “Taxes” shall mean any federal, state, local or foreign taxes and other taxes, charges, fees, duties, levies or other assessments, imposts, deductions, withholdings, including, without limitation, income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, leasing, fuel, and utility taxes, unclaimed property or escheat obligations, or other governmental charges of any kind whatsoever, that are imposed by any Governmental Entity of any country or political subdivision of any country, including any interest, penalty or addition thereto, whether disputed or not.

Tax Equity Breach” means (a) with respect to First Solar, the occurrence of any event resulting in an Indemnifiable Tax Equity Payment with respect to the FS Contributed Companies, and (b) with respect to SunPower, the occurrence of any event resulting in an Indemnifiable Tax Equity Payment with respect to the SP Contributed Companies.

Tax Equity Financing” means (a) in the case of First Solar, those transactions described in Schedule 1.1(f) of the FS Disclosure Schedule, and (b) in the case of SunPower, those transactions described in Schedule 1.1(f) of the SP Disclosure Schedule.

Tax Returns” means any return, report, declaration, information return, statement, property Tax rendition, or other document filed or required to be filed with any Governmental Entity (including any schedule, appendix or attachment thereto, and including any amendment thereof) in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax.

Third Party Claim” has the meaning set forth in Section 9.05(a).

Transaction Documents” means this Agreement, the FS Contribution Agreement, SP Reorganization Agreements, the Holdings Limited Liability Company Agreement, the YieldCo General Partner Limited Liability Company Agreement, the Partnership Agreement, the Operating Company Limited Liability Company Agreement, the Management Services Agreements, the Omnibus Agreement, the FS ROFO Agreement, the SP ROFO Agreement, the Exchange Agreement, the Purchase Agreement and the Registration Rights Agreement.

Transaction Parties” means the FS Transaction Parties or the SP Transaction Parties, as the context may require.

Transfer Taxes” has the meaning set forth in Section 10.07.

Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

 

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Updated Disclosure Schedules” has the meaning set forth in Section 3.04(a).

Updating Party” has the meaning set forth in Section 3.04(a).

Valuation Criteria” means the methodology, criteria, policies and procedures related to calculating the net present value of a Contributed Company, as set forth in Schedule II.

YieldCo General Partner” means 8point3 General Partner, LLC, a Delaware limited liability company.

YieldCo General Partner Limited Liability Company Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 General Partner LLC, to be entered into at the Closing, substantially in the form of Exhibit A-2 hereto (with such modifications as may be mutually agreed by the Parties).

YieldCo General Partner Closing Board Resolutions” means the written consent, in a form to be mutually agreed by the Parties, to be executed and delivered on the Closing Date by the Board of Directors.

YieldCo General Partner Closing Member Consent” means the written consent, in a form to be mutually agreed by the Parties, to be executed and delivered on the Closing Date by Holdings.

1.02 Construction; Interpretation. Except where expressly provided or unless the contract otherwise necessarily requires, in this Agreement:

(a) Reference to a given Article, Section, clause or Exhibit is a reference to an Article, Section, clause or Exhibit of this Agreement, unless otherwise specified. The Exhibits and Schedules attached to this Agreement are hereby incorporated by reference into this Agreement and form part hereof. The terms “hereof”, “herein”, “hereunder” and “herewith” refer to this Agreement as a whole (including the FS Disclosure Schedule, the SP Disclosure Schedule, the Exhibits and Schedules).

(b) The FS Disclosure Schedule and the SP Disclosure Schedule set forth items of disclosure with specific reference to the particular Section or subsection of this Agreement to which the information in the FS Disclosure Schedule or SP Disclosure Schedule, as the case may be, relates; provided, that any fact or item that is disclosed in any section of the FS Disclosure Schedule or the SP Disclosure Schedule that is reasonably apparent on its face, upon a reading of the disclosure together with the corresponding representation or warranty and without any independent knowledge on the part of the reader regarding the matter disclosed, to qualify another representation or warranty of First Solar or SunPower, as applicable, shall be deemed also to be disclosed in the other sections of the FS Disclosure Schedule or the SP Disclosure Schedule, as the case may be, notwithstanding the omission of any appropriate cross-reference thereto. Notwithstanding anything in this Agreement to the contrary, the inclusion of an item in either such disclosure schedule as an exception to a representation or warranty will not

 

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be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or could reasonably be expected to have an FS Material Adverse Effect or an SP Material Adverse Effect, as the case may be.

(c) Unless otherwise specifically indicated or the context otherwise requires, (i) all references to “dollars” or “$” mean United States dollars, (ii) words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders, (iii) all references to “days” means calendar days, (iv) “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and (v) all words used as accounting terms shall have the meanings assigned to them under GAAP applied on a consistent basis and as amended from time to time.

(d) If any date on which any action is required to be taken hereunder by any of the Parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day.

(e) Reference to a given agreement, instrument, document or Law is a reference to that agreement, instrument, document or Law as modified, amended, supplemented and restated through the date as of which such reference is made, and, as to any Law, any successor Law.

(f) Reference to a Person includes its predecessors, successors and permitted assigns. Any reference to any federal, state, local, or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.

(g) The word “will” shall be construed to have the same meaning and effect as the word “shall.” The word “or” shall not be exclusive.

(h) Amounts calculated or determined under this Agreement shall be without double-counting.

(i) No provision of this Agreement will be interpreted in favor of, or against, any of the Parties to this Agreement by reason of the extent to which any such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of this Agreement, and no rule of strict construction will be applied against any Party hereto.

(j) No Person will be required to take any action, or fail to take any action, if to do so would violate any Law.

(k) The term “made available” and words of similar import means that the relevant documents, instruments or materials were (i) posted and made available to the other Party on the Intralinks due diligence data site maintained by any Party for the purpose of the transactions contemplated by this Agreement, prior to the date hereof, or (ii) publicly available by virtue of the relevant Party’s filing of a publicly available document on such Party’s website or with the SEC, including any of the FS SEC Reports or SP SEC Reports and any final registration statement, prospectus, report, form, schedule or definitive proxy statement filed with the SEC pursuant to the Securities Act or the Exchange Act, and in all cases (with respect to this clause (ii)) publicly available on or after December 31, 2013 and prior to the Execution Date.

 

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ARTICLE II

FORMATION, CONTRIBUTION AND RELATED MATTERS

2.01 Formation of Entities; Execution of Organizational Documents. On the terms and subject to the conditions set forth in this Agreement:

(a) Formation of Holdings. On March 3, 2015, SunPower caused to be formed Holdings by filing all required documents with the Secretary of State’s Office of the State of Delaware, and, as of the Execution Date, First Solar caused FS Holdings Member, and SunPower caused SP Holdings Member, respectively, to enter into that certain Limited Liability Company Agreement of Holdings;

(b) Formation of the YieldCo General Partner. On March 3, 2015, SunPower caused to be formed YieldCo General Partner by filing all required documents with the Secretary of State’s Office of the State of Delaware, and, as of the Execution Date, First Solar and SunPower, indirectly through FS Holdings Member and SP Holdings Member, respectively, caused Holdings to enter into that certain Limited Liability Company Agreement of YieldCo General Partner;

(c) Formation of the Partnership. On March 3, 2015, SunPower caused to be formed the Partnership by filing all required documents with the Secretary of State’s Office of the State of Delaware, and, as of the Execution Date, First Solar caused FS Holdings Member, SunPower caused SP Holdings Member, and First Solar and SunPower, indirectly through FS Holdings Member and SP Holdings Member, respectively, caused Holdings to cause YieldCo General Partner to enter into that certain Limited Partnership Agreement of the Partnership;

(d) Formation of the Operating Company; SP Reorganization.

(i) No later than twenty (20) Business Days after the Execution Date, SunPower shall cause to be formed the Operating Company by filing all required documents (in forms reasonably acceptable to each of First Solar and SunPower) with the Secretary of State’s Office of the State of Delaware, and SunPower shall enter into a Limited Liability Company Agreement of the Operating Company (in a form reasonably acceptable to each of First Solar and SunPower); and

(ii) Prior to the Closing, SunPower shall cause SP Holdings Member and the other SP Contributors, as applicable, to take all actions necessary to consummate the transactions described on Schedule 2.01(d)(ii) of the SP Disclosure Schedules, in form and substance substantially in accordance with such Schedule, including the contribution, assignment and conveyance to the Operating Company of 100% of the SP Contributed Interests, free and clear of all Liens other than Permitted Equity Liens (the “SP Reorganization”); provided, however, notwithstanding the substance of Schedule 2.01(d)(ii) of the SP

 

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Disclosure Schedules or anything to the contrary herein, neither SunPower, any SP Contributor nor any SP Contributed Company shall have any obligation to consummate a tax equity financing as part of the SP Reorganization;

(e) Holdings Limited Liability Company Agreement. At the Closing, First Solar shall cause FS Holdings Member, and SunPower shall cause SP Holdings Member, respectively, to execute and deliver the Holdings Limited Liability Company Agreement, and Holdings will issue to each of FS Holdings Member and SP Holdings Member, (i) Holdings Economic Units in a quantity which shall represent fifty percent (50%) of the total number of Holdings Economic Units then issued and outstanding and (ii) Holdings Management Units in a quantity which shall represent fifty percent (50%) of the total number of Holdings Management Units then issued and outstanding;

(f) YieldCo General Partner Limited Liability Company Agreement. At the Closing, First Solar shall cause FS Holdings Member, and SunPower shall cause SP Holdings Member, respectively, to cause Holdings to execute and deliver the YieldCo General Partner Limited Liability Company Agreement;

(g) Partnership Agreement. At the Closing, First Solar shall cause FS Holdings Member, and SunPower shall cause SP Holdings Member, respectively, to execute and deliver, and to cause Holdings to cause the YieldCo General Partner to execute and deliver, the Partnership Agreement; and

(h) Operating Company Limited Liability Company Agreement. At the Closing, First Solar shall cause FS Holdings Member, and SunPower shall cause SP Holdings Member, respectively, to execute and deliver, to cause Holdings to execute and deliver, and, indirectly through Holdings and the YieldCo General Partner, to cause the Partnership to execute and deliver, the Operating Company Limited Liability Company Agreement.

2.02 Project Model Adjustments.

(a) The Master Project Model sets forth the FS Aggregate Project Value and the SP Aggregate Project Value as of the Execution Date. The Parties acknowledge that the Master Project Model does not yet reflect the resolution of the diligence matters set forth in Schedule III. The Parties shall use good faith efforts to reach agreement within forty-five (45) days following the Execution Date regarding the treatment, if any, of such diligence matters in the Master Project Model. Following the expiration of such period (or such later date as may be mutually agreed by the Parties) any matter on Schedule III that has not been resolved by the Parties may be referred by either Party to the Independent Valuation Expert for resolution in accordance with the procedures set forth in Section 2.02(c). The Independent Valuation Expert shall render a decision on such matter as promptly as practicable, which decision shall be final and binding on the Parties.

(b) No later than ten (10) Business Days prior to the anticipated Launch Date (any such date, the “Adjustment Date”), each Party shall deliver by email to the other Party a revised version of such Party’s Project Model, which shall constitute such Party’s “Revised Model”. In preparing such Revised Model, each Party shall revise the inputs in its Project Model

 

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(in a manner consistent with the Valuation Criteria) to reflect changes in relevant factual conditions and assumptions reflected in such Project Model that occur from and after the date of this Agreement. Each Party shall provide a written notice describing such changes and reasonable supporting information together with its Revised Model. Upon delivery of the Revised Model, the delivering Party shall grant the receiving Party access to such books and records as the receiving Party reasonably requests to confirm the Revised Model. Without limiting the other express provisions of this Section 2.02, neither Party shall change or revise the calculations embedded in any Project Model for any reason, including the discovery of a mathematical or formulaic error or purported error therein, absent consent of the other Party (which may be withheld at such Party’s sole discretion).

(c) The receiving Party may dispute any of the changes proposed in the other Party’s Revised Model, or suggest additional changes, on grounds that such Revised Model does not accurately reflect the then-current Aggregate Project Value of the relevant Contributed Companies (a “Model Adjustment Dispute”), in accordance with the following procedures:

(i) Such receiving Party shall deliver notice by email to the other Party and the Independent Valuation Expert (a “Model Adjustment Dispute Notice”), which notice shall describe the underlying facts of the dispute (or proposed additional changes) and set forth such Party’s position in connection therewith. Any such Model Adjustment Dispute Notice shall be delivered no more than five (5) Business Days following receipt of the Revised Model and shall include a detailed written explanation of the calculation or determination under dispute (or proposed to be changed) and reasonable supporting information as may be appropriate under the circumstances.

(ii) If a Party timely delivers a Model Adjustment Dispute Notice, the Independent Valuation Expert shall promptly review such Model Adjustment Dispute Notice and any requested changed inputs to the Revised Model. Each Party shall provide the Independent Valuation Expert with additional information, including access to all relevant books and records, as the Independent Valuation Expert may reasonably request in order to expeditiously analyze such Model Adjustment Dispute. As promptly as practicable, but in no event later than three (3) Business Days after receipt of such Model Adjustment Dispute Notice, the Independent Valuation Expert shall deliver to the Parties by email a written award, which shall set forth its decision regarding such Model Adjustment Dispute, including any required changes to the Revised Model under its review (which shall be incorporated into such Revised Model as promptly as practicable, but no later than the Business Day prior to the Launch Date). The award of the Independent Valuation Expert with respect to a Model Adjustment Dispute shall be final and binding on the Parties.

(iii) Any costs and expenses attributable to the resolution by the Independent Valuation Expert of a Model Adjustment Dispute shall be paid by the non-prevailing Party or as otherwise reasonably determined by the Independent Valuation Expert.

 

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(d) Absent delivery of a Model Adjustment Dispute Notice by the receiving Party, or upon resolution of any such Model Adjustment Dispute by the Independent Valuation Expert, (i) the Parties shall be deemed to have agreed with the calculation of all items and amounts contained in each Party’s Revised Model, (ii) neither Party may thereafter dispute any such calculation or determination, and (iii) such Revised Model shall be reflected in the Closing Master Project Model for purposes of determining the FS Aggregate Project Value and the SP Aggregate Project Value (as applicable), and each Party agrees to be bound by the FS Aggregate Project Value or SP Aggregate Project Value (as applicable) as determined thereby, for all purposes hereunder.

(e) Notwithstanding any other provision of this Agreement, if and to the extent that, on or prior to the Adjustment Date, (i) any representation or warranty made by a Party in this Agreement shall fail to be true and correct or (ii) a Party shall fail to perform any covenant or agreement contained in this Agreement (any of the foregoing, a “Pre-Closing Event”), and the Parties mutually agree that the economic effect of such Pre-Closing Event can be reflected by adjusting the breaching Party’s Project Model, then notwithstanding any other provision of this Agreement and so long as the effect of such Pre-Closing Event is solely economic, (A) an adjustment to such Project Model pursuant to this Section 2.02 shall be the sole and exclusive remedy of the non-breaching Party with respect thereto (and in such case, the breaching Party will adjust the necessary inputs to reflect such economic effect in its Project Model), and (B) following such adjustment (I) any condition precedent set forth in Article VII (if the breaching Party is First Solar) or Article VIII (if the breaching Party is SunPower) that shall not be satisfied by reason of such Pre-Closing Event shall not be deemed to have not been satisfied as a consequence thereof and (II) the non-breaching Party shall not have any other remedy with respect to the adjustment for such failure nor shall the breaching Party be obligated to indemnify any Person pursuant to Article IX with respect thereto; provided that any claims that were not included in such adjustment may be subject to indemnification pursuant to Article IX. If no such adjustment is made with respect to a Pre-Closing Event prior to the Closing, neither Party shall have any right or obligation to update its Project Model pursuant to this Section 2.02(e) following the Closing and the non-breaching Party may instead exercise any other right or remedy available to it hereunder. Notwithstanding anything to the contrary set forth herein, neither the Partnership nor the Operating Company shall have any remedy with respect to any adjustments made pursuant to this Section 2.02(e).

2.03 Contributions and Related Matters. On the terms and subject to the conditions set forth in this Agreement:

(a) At the Closing, First Solar shall cause FS Holdings Member and MD Solar Holdings, respectively, to contribute, assign and convey to the Operating Company 100% of the FS Contributed Interests, free and clear of all Liens other than Permitted Equity Liens (the “FS Contribution”);

(b) Simultaneously with the FS Contribution:

(i) SunPower will cause the Operating Company to (A) issue to the FS Contributors (I) Operating Company Common Units in a quantity which shall represent the FS Contribution Percentage of the total number of Operating

 

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Company Common Units issued and outstanding following the consummation of the transactions contemplated by this Section 2.03 (but excluding all Operating Company Common Units purchased by the Partnership pursuant to the Purchase Agreement in accordance with Section 6.04(e)), and (II) Operating Company Subordinated Units, in a quantity which shall represent the FS Contribution Percentage of the total number of Operating Company Subordinated Units issued and outstanding following the consummation of the transactions contemplated by this Section 2.03, and (B) pay to the FS Contributors cash consideration in an amount equal to the FS Contribution Percentage of the difference of (I) the aggregate amount received by the Operating Company (x) from the Partnership under the Purchase Agreement as consideration for the Operating Company Common Units, pursuant to Section 6.04(e), and (y) from the proceeds of the term loan facility under the Credit Facility that are drawn by the Operating Company on the Closing Date, less (II) the portion of such amount (if any) that the Parties mutually agree will be retained by the Operating Company;

(ii) the Partnership will issue to FS Holdings Member that number of Class B Shares equal to the aggregate number of Operating Company Common Units and Operating Company Subordinated Units issued to FS Holdings Member pursuant to Section 2.03(b)(i);

(iii) SunPower will cause the Operating Company to (A) recapitalize the interests held by SP Holdings Member in the Operating Company into, (I) Operating Company Common Units, in a quantity which shall represent the SP Contribution Percentage of the total number of Operating Company Common Units issued and outstanding following the consummation of the transactions contemplated by this Section 2.03 (but excluding all Operating Company Common Units purchased by the Partnership pursuant to the Purchase Agreement in accordance with Section 6.04(e)), and (II) Operating Company Subordinated Units, in a quantity which shall represent the SP Contribution Percentage of the total number of Operating Company Subordinated Units issued and outstanding following the consummation of the transactions contemplated by this Section 2.03, and (B) pay to SP Holdings Member cash consideration in an amount equal to the SP Contribution Percentage of the difference of (I) the aggregate amount received by the Operating Company (x) from the Partnership under the Purchase Agreement as consideration for the Operating Company Common Units, pursuant to Section 6.04(e), and (y) from the proceeds of the term loan facility under the Credit Facility that are drawn by the Operating Company on the Closing Date, less (II) the portion of such amount (if any) that the Parties mutually agree will be retained by the Operating Company; and

(iv) the Partnership will issue to SP Holdings Member that number of Class B Shares equal to the aggregate number of Operating Company Common Units and Operating Company Subordinated Units issued to SP Holdings Member pursuant to Section 2.03(b)(iii).

 

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(c) The Parties agree that the total number of Operating Company Common Units issued pursuant to Section 2.03(b)(i), created via recapitalization pursuant to Section 2.03(b)(iii) and issued pursuant to the Purchase Agreement (excluding any Operating Company Common Units to be issued in connection with any over-allotment option) will equal the total number of Operating Company Subordinated Units issued pursuant to Section 2.03(b)(i) and created via recapitalization pursuant to Section 2.03(b)(iii).

(d) Simultaneously with the FS Contribution and the actions described in Section 2.03(b), the Operating Company will issue the Operating Company IDRs to Holdings in accordance with the terms of the Operating Company Limited Liability Company Agreement.

ARTICLE III

CLOSING

3.01 Closing. Subject to the satisfaction or waiver of the conditions to closing set forth in Article VII and Article VIII, the closing of the transactions contemplated by Article II (the “Closing”) shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036 upon the satisfaction or waiver of all of the conditions set forth in Article VII and Article VIII (other than those conditions that by their nature are to be satisfied at the Closing) (such date, the “Closing Date”), commencing at 10:00 a.m., New York time, or such other place, date and time as may be mutually agreed upon in writing by the Parties.

3.02 Closing Deliveries of First Solar. At the Closing, First Solar will deliver, or cause to be delivered, the following to SunPower:

(a) a counterpart to the Holdings Limited Liability Company Agreement, duly executed by FS Holdings Member;

(b) the YieldCo General Partner Closing Board Resolutions, duly executed by the “Directors” (as defined in the YieldCo General Partner Limited Liability Company Agreement) nominated by First Solar;

(c) a counterpart to the Partnership Agreement, duly executed by FS Holdings Member;

(d) a counterpart to the Operating Company Limited Liability Company Agreement, duly executed by FS Holdings Member;

(e) a counterpart to the FS Management Services Agreement, duly executed by FS Service Provider;

(f) counterparts to the FS Contribution Agreement, duly executed by FS Holdings Member and MD Solar Holdings;

(g) a counterpart to the Omnibus Agreement, duly executed by First Solar;

 

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(h) a counterpart to the FS ROFO Agreement, duly executed by First Solar;

(i) a counterpart to the Exchange Agreement, duly executed by FS Holdings Member;

(j) a counterpart to the Registration Rights Agreement, duly executed by FS Holdings Member;

(k) a certification of non-foreign status, in the form of Exhibit I, in respect of each “transferor” of the FS Contributed Interests, in accordance with United States Treasury Regulations Section 1.1445-2(b)(2); and

(l) each of the closing certificates referred to in Sections 8.01(c) and 8.02.

3.03 Closing Deliveries of SunPower. At the Closing, SunPower will deliver, or cause to be delivered, the following to First Solar:

(a) a counterpart to the Holdings Limited Liability Company Agreement, duly executed by SP Holdings Member;

(b) the YieldCo General Partner Closing Board Resolutions, duly executed by the “Directors” (as defined in the YieldCo General Partner Limited Liability Company Agreement) nominated by SunPower;

(c) a counterpart to the Partnership Agreement, duly executed by SP Holdings Member;

(d) a counterpart to the Operating Company Limited Liability Company Agreement, duly executed by SP Holdings Member;

(e) a counterpart to the SP Management Services Agreement, duly executed by SP Service Provider;

(f) a counterpart to each of the SP Reorganization Agreements, duly executed by SP Holdings Member, the Operating Company, each other SP Contributor, each SP Contributed Company and each other Person party thereto (as applicable);

(g) a counterpart to the Omnibus Agreement, duly executed by SunPower;

(h) a counterpart to the SP ROFO Agreement, duly executed by SunPower;

(i) a counterpart to the Exchange Agreement, duly executed by SP Holdings Member;

(j) a counterpart to the Registration Rights Agreement, duly executed by SP Holdings Member;

 

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(k) a certification of non-foreign status, in the form of Exhibit I, in respect of each “transferor” of the SP Contributed Interests, in accordance with United States Treasury Regulations Section 1.1445-2(b)(2); and

(l) each of the closing certificates referred to in Sections 7.01(c) and 7.02.

3.04 Updated Disclosure Schedules.

(a) Updating Schedules. Until the Adjustment Date, each of First Solar and SunPower (in such case, the “Updating Party”) shall have the continuing right to supplement, modify or amend the information set forth on its respective Disclosure Schedule as to representations or warranties made by such Updating Party with respect to any matter arising during the Interim Period (such information and additional schedules, the “Updated Disclosure Schedules”). The Updating Party shall deliver a written notice to the non-Updating Party by email setting forth in reasonable detail the facts, circumstances and information relating to any such Updated Disclosure Schedules (and copies of any relevant information, if not otherwise made available by the Updating Party).

(b) Review Period. Upon receipt of Updated Disclosure Schedules from the Updating Party, the non-Updating Party shall have the right to review such information for a period of five (5) Business Days after receipt thereof (the “Review Period”). No later than the expiration of such Review Period, the non-Updating Party shall notify the Updating Party by email whether the non-Updating Party accepts or rejects such Updated Disclosure Schedules; provided that the non-Updating Party shall have no right to reject, and shall be required to accept, Updated Disclosure Schedules to the extent that (i) the Updating Party agrees to address the updated information therein through an adjustment to its Project Model pursuant to Section 2.02(e) and such adjustment covers all impacts of the Updated Disclosure Schedule, or (ii) the updated information therein has arisen in accordance with a Permitted Interim Action. If the non-Updating Party fails to accept or reject the Updated Disclosure Schedules before the expiration of the Review Period, the Updated Disclosure Schedules shall be deemed to be accepted by the non-Updating Party.

(c) Effect of Updating Information. Upon the acceptance of any Updated Disclosure Schedules by the non-Updating Party pursuant to Section 3.04(b), the Disclosure Schedules of the Updating Party shall be deemed to be supplemented, modified or amended by such Updated Disclosure Schedules for all purposes of this Agreement, including to cure any incorrectness or breach of a representation or warranty that would have occurred absent such Updated Disclosure Schedules.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF FIRST SOLAR

First Solar hereby represents and warrants to SunPower as follows as of the Execution Date and on the Closing Date (if the Closing shall occur):

4.01 Organization; Qualification.

(a) Each of First Solar, each FS Contributor and each FS Contributed Company (each, an “FS Transaction Party”) has been duly formed and is validly existing and in good standing as a corporation, general partnership, limited partnership or limited liability company, as applicable, under the Laws of its jurisdiction of formation with all requisite corporate, partnership or limited liability company, as applicable, power and authority to own, lease or otherwise hold and operate its properties and assets and to carry on its business as presently conducted, except in each case where the failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect.

(b) Each FS Transaction Party is duly qualified and in good standing to do business as a foreign corporation, foreign limited partnership or foreign limited liability company, as the case may be, in each jurisdiction in which the conduct or nature of its business or the ownership, leasing, holding or operating of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect.

(c) First Solar has heretofore made available to SunPower complete and correct copies of the Charter Documents of each FS Transaction Party.

4.02 Authority and Power. Each FS Transaction Party (a) has all requisite corporate, partnership or limited liability company, as applicable, power and authority to execute and deliver this Agreement (solely in the case of First Solar) and each of the other Transaction Documents to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby, and (b) has taken all necessary corporate, partnership or limited liability company, as applicable, action to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is or will be a party (as applicable).

4.03 Valid and Binding Obligation.

(a) This Agreement has been duly and validly executed and delivered by First Solar and, assuming this Agreement has been duly and validly authorized, executed and delivered by SunPower, constitutes a legal, valid and binding obligation of First Solar, enforceable against First Solar in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

(b) Each of the Transaction Documents to which an FS Transaction Party will become a party at the Closing will be duly and validly executed and delivered by such Person and, upon execution and delivery thereof, and assuming such Transaction Document has been duly and validly authorized, executed and delivered by each SP Transaction Party that will be a party thereto, will constitute a legal, valid and binding obligation of such FS Transaction Party,

 

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enforceable against such FS Transaction Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

4.04 No Violation or Conflict. Except as set forth on Schedule 4.05 of the FS Disclosure Schedule, none of the execution, delivery or performance of this Agreement or any of the other Transaction Documents by each FS Transaction Party, nor the consummation of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Charter Documents of any FS Transaction Party, (b) constitute, with or without notice or the passage of time or both, a violation, breach or default, create a Lien, conflict with, or require any consent or approval, or give rise to any right of termination, modification, cancellation, prepayment, suspension, limitation, revocation, preemption, right of first refusal (or similar right to purchase) or acceleration (any or all of the foregoing, a “Default”) under any Permit or Contract to which any FS Transaction Party is a party or by which any of their respective properties are bound except, in each case, as would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect, (c) contravene any Law, except as would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect, or (d) entitle any Person to exercise any preemptive rights, rights of first refusal or similar rights to purchase any Contributed Company Interests.

4.05 Consents and Approvals. Except as set forth on Schedule 4.05 of the FS Disclosure Schedule (such scheduled matters, the “FS Required Consents”), no Consent of, with or to any Governmental Entity or other Person is required to be obtained or made by or with respect to any FS Transaction Party in connection with the execution and delivery of this Agreement and the other Transaction Documents, or the consummation of the transactions contemplated hereby or thereby, except where the failure to obtain or make such Consent would not reasonably be expected to have an FS Material Adverse Effect.

4.06 Transfer of FS Contributed Interests. As of the Closing Date, the FS Contributors will be the record and beneficial direct owner of and will hold good, valid and transferable title to the FS Contributed Interests described on Schedule 4.06 of the FS Disclosure Schedule and there will not be any outstanding Liens, rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements or other obligations of any character relating to such FS Contributed Interests (other than Permitted Equity Liens). The delivery by the FS Contributors of the FS Contribution Agreement, duly executed by each FS Contributor, will transfer to the Operating Company good and valid title to such FS Contributed Interests free and clear of any Liens, rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements, or other obligations of any character relating to such FS Contributed Interests (other than Permitted Equity Liens).

4.07 Capital Stock.

(a) Schedule 4.07 of the FS Disclosure Schedule sets forth a true and complete list of (i) the name of each FS Contributed Company, (ii) the nature of the legal organization of each FS Contributed Company, (iii) the jurisdiction of formation of each FS

 

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Contributed Company, (iv) each FS Contributor’s and FS Contributed Company’s, as applicable, ownership interest in each FS Contributed Company as of the Closing Date, and (v) where applicable, the FS Project directly owned or controlled, in whole or in part, by such FS Contributed Company. The FS Contributed Companies have no Subsidiaries and do not own, directly or indirectly, any Equity Interests in any corporation, partnership, limited liability company or other Person, except for those Subsidiaries and Equity Interests listed on Schedule 4.07 of the FS Disclosure Schedule. Except for Permitted Equity Liens and as otherwise set forth on Schedule 4.07 of the FS Disclosure Schedule, there are no outstanding Liens relating to such FS Contributed Interests, and no outstanding rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements or other agreements pursuant to which any FS Contributor or FS Contributed Company is, or may be, obligated to sell, issue or acquire any FS Contributed Interests. Except as set forth on Schedule 4.07, no FS Contributed Interests are represented by any certificate or other instrument.

(b) None of the FS Contributed Interests are subject to any voting trust, member or partnership agreement or voting agreement or other agreement, right, instrument or understanding with respect to any purchase, sale, issuance, transfer, repurchase, redemption or voting of any such FS Contributed Interests, other than those contained in the Charter Documents thereof or otherwise set forth on Schedule 4.07 of the FS Disclosure Schedule. The FS Contributed Interests, as shown on Schedule 4.07 of the FS Disclosure Schedule, were duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive rights, rights of first refusal or similar rights.

4.08 Financial Statements.

(a) Attached hereto at Schedule 4.08(a) of the FS Disclosure Schedule are true and complete copies of (i) the audited combined balance sheet as of December 31, 2014, and the related audited combined statement of operations, changes in owners’ equity and cash flows for the year ended December 31, 2014, of SG2 Imperial Valley, LLC (limited solely to the FS Contributed Interests thereof), Maryland Solar, LLC, Lost Hills Blackwell Holdings, LLC, and North Star Solar, LLC, and (ii) the audited consolidated balance sheet as of December 31, 2014, and the related audited consolidated statement of operations, changes in owners’ equity and cash flows for the period from September 5, 2014 to December 31, 2014, of SG2 Holdings, LLC and its Subsidiary (clauses (i) and (ii), collectively, the “FS Financial Statements”).

(b) Except as set forth therein and, solely with respect to any FS Non-Controlled Company, to the Knowledge of First Solar, the FS Financial Statements (i) present fairly the combined or consolidated (as applicable) financial position, results of operations and cash flows of the FS Contributed Companies covered by such FS Financial Statements (limited, for purposes of the FS Financial Statements described in clause (i) of Section 4.08(a), in the case of SG2 Imperial Valley, LLC, solely to the FS Contributed Interests thereof), at the date set forth therein and for the periods covered thereby in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except that any unaudited balance sheets and financial statements referred to in this Section 4.08(b) are prepared without footnotes and are subject to normal year-end adjustments, which are not expected to be material either individually or in the aggregate, and (ii) have been prepared from, are in accordance with and accurately reflect, the books and the accounting and financial records of the FS Contributed Companies covered by such FS Financial Statements, which books and records are accurate and complete in all material respects.

 

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4.09 Undisclosed Liabilities. Except for (a) liabilities or obligations that are reflected on or reserved against in the FS Financial Statements, to the extent so reflected or reserved thereon, (b) liabilities or obligations incurred in the ordinary course of business, after the date of the most recent FS Financial Statements, or (c) liabilities of the FS Contributed Companies that, individually or in the aggregate, are not material to the FS Contributed Companies, taken as a whole, the FS Contributed Companies have no liabilities that would be required to be reflected on a balance sheet prepared in accordance with GAAP.

4.10 FS SEC Reports and Compliance.

(a) Since December 31, 2013, all FS SEC Reports have been filed with or furnished to the SEC. All FS SEC Reports filed since December 31, 2013, to the extent they contained any information related to any FS Contributed Company, (i) complied as to form in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, and the rules and regulations thereunder, as applicable, and (ii) as of its filing date in the case of any Exchange Act report or as of its effective date in the case of any Securities Act filing, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) There are no material outstanding comments from, or material unresolved issues raised by, the SEC with respect to the FS SEC Reports relating to any FS Contributed Company. No enforcement action has been initiated against First Solar by the SEC relating to disclosures contained in any FS SEC Report relating to any FS Contributed Company.

(c) To the extent related to any FS Contributed Company, since December 31, 2013:

(i) none of First Solar, the FS Contributors or the FS Controlled Companies has received and, solely with respect to any FS Non-Controlled Company, First Solar has no Knowledge of any FS Non-Controlled Company having received, any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any FS Transaction Party or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that an FS Transaction Party has engaged in questionable accounting or auditing practices;

(ii) to the Knowledge of First Solar, no officer or director of an FS Transaction Party has received any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any FS Transaction Party or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that any FS Transaction Party has engaged in questionable accounting or auditing practices; and

 

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(iii) to the Knowledge of First Solar, no attorney representing any FS Transaction Party, regardless of whether employed thereby, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by an FS Transaction Party or any of their respective officers, directors, employees or agents, to the board of directors of First Solar or any FS Contributor or any committee thereof or to any director or officer of First Solar or any FS Contributor.

4.11 Real Property.

(a) Schedule 4.11(a) of the FS Disclosure Schedule sets forth a true and complete list, as of the Execution Date, of the following (which shall be categorized by the relevant FS Contributed Company and FS Project):

(i) all real property owned in fee by any FS Contributed Company (“FS Owned Real Property”); and

(ii) all real property (A) leased or subleased to an FS Contributed Company or (B) subject to a material easement or other similar interest in real property in favor of an FS Contributed Company (all such real property together with all buildings and other improvements thereon, “FS Leased Real Property”).

(b) Each FS Contributed Company has good, marketable and indefeasible fee title to the FS Owned Real Property owned by it, subject to no Liens other than Permitted Liens. Each FS Contributed Company has a valid and subsisting leasehold or subleasehold estate in, and the right to make use of, the FS Leased Real Property subject to the terms and conditions of the applicable lease or sublease agreement and subject to no Liens other than Permitted Liens. No FS Contributed Company has granted any assignment, lease, license, sublease, easement, concession, option or other agreement granting to any Person the right to possess, use, control, or occupy the FS Real Property Interests or any portion thereof, except as would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect.

(c) With respect to the FS Owned Real Property and FS Leased Real Property (collectively, the “FS Real Property Interests”), neither First Solar, any FS Contributor nor any FS Controlled Company has received and, solely with respect to any FS Non-Controlled Company, First Solar has no Knowledge of any FS Non-Controlled Company having received, any written notice of any material appropriation, condemnation or like proceeding, or of any material violation of any applicable zoning or land use law, regulation or rule or other law, order, regulation, rule or requirement relating to or affecting any of the FS Real Property Interests.

(d) Except as set forth in Schedule 4.11(d) of the FS Disclosure Schedule, to First Solar’s Knowledge:

(i) there are no existing severed or other mineral rights affecting the FS Real Property Interests that, if exercised, could materially and adversely affect the development, construction, ownership, operation, use or management of any FS Project;

 

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(ii) neither First Solar nor any FS Contributed Company has received any written notice of any mining, mineral or water extraction or development projects under construction or for which Permits are currently being obtained, located, or planned to be located on or under the properties constituting the FS Real Property Interest, or any portion thereof, which would materially and adversely affect any FS Project; and

(iii) no portion of any FS Project encroaches on property outside the boundaries of the FS Real Property Interests without the written consent of the owner of that property.

4.12 Personal Property; Sufficiency of Assets.

(a) The FS Contributed Companies own and have good and marketable title to, or, in the case of leased assets, a valid and marketable leasehold interest in, or, in the case of licensed assets, a valid license to, any and all material equipment, facilities and other tangible and intangible assets and rights used by or held for use by or in connection with their Business (the “FS Contributed Assets”), free and clear of any Lien, other than Permitted Liens.

(b) The FS Contributed Assets have been maintained in accordance with Prudent Solar Industry Practices. Except as set forth on Schedule 4.12(b) of the FS Disclosure Schedule, and except for material equipment, facilities and tangible personal property that is entitled to be repaired, replaced or otherwise remediated under an existing manufacturers’ warranty or other contractual warranty which remains in effect, the FS Contributed Assets, taken as a whole, are in good repair and proper operating condition (ordinary wear and tear excepted).

(c) Except as set forth on Part I of Schedule 4.12(c) of the FS Disclosure Schedule, there are no written force majeure claims or, to the Knowledge of First Solar, no delays in completing any FS Project that are reasonably likely to result in the Commercial Operation Date for such FS Project failing to occur prior to the date set forth for such FS Project on Part II of Schedule 4.12(c) of the FS Disclosure Schedule or in an FS Material Adverse Effect.

(d) The FS Contributed Assets and the FS Real Property Interests, taken as a whole, constitute all of the material assets the use or benefit of which are reasonably necessary and sufficient for the operation of the Business of the FS Contributed Companies as currently conducted and as contemplated pursuant to the FS Material Contracts and FS Project Permits.

4.13 Contracts.

(a) Schedule 4.13(a) of the FS Disclosure Schedule sets forth a true and complete list of all of the following Contracts to which any FS Contributed Company is a party or by which any FS Contributed Company or its properties or other assets are otherwise bound (each, an “FS Material Contract”):

(i) loan agreements, credit agreements, sale-leaseback agreements, security agreements, indentures and other Contracts that provide for (A) the borrowing of moneys by or extensions of credit to any FS Contributed Company by any other Person, (B) the guaranty by any FS Contributed Company of obligations in respect of the borrowings of money by or extensions of credit to any other Person, (C) the guaranty by First Solar or any of its Affiliates (other than any FS Contributed Company) of obligations of any FS Contributed Company or (D) reimbursement agreements relating to guarantees;

 

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(ii) commodity, currency or interest rate hedge, exchange or similar agreements;

(iii) partnership, shareholder, joint venture, joint development or limited liability company agreements or other agreements setting forth arrangements between the members or partners thereto;

(iv) power purchase, sale or exchange agreements (including sales of capacity, energy, ancillary services or related attributes or renewable energy credits or renewable attributes);

(v) (A) electricity interconnection agreements and (B) transmission agreements;

(vi) (A) engineering, procurement and construction agreements, (B) equipment supply agreements, (C) warranty agreements and performance guarantee agreements and (D) operation and maintenance agreements;

(vii) labor agreements, collective bargaining agreements or similar agreements with any union, works council or similar body;

(viii) non-competition, non-interference, non-solicitation, exclusivity or similar agreements which restrict the ability of any FS Contributed Company to engage in any line of business, acquire any property, develop or distribute any product, provide any service (including geographic restrictions) or to compete with any Person, in any market, field or territory;

(ix) agreements (other than any Transaction Document) between (I) First Solar or any of its Affiliates (excluding the FS Contributed Companies), on the one hand, and (II) any of the FS Contributed Companies, on the other hand;

(x) leases, subleases, licenses, access agreements, occupancy agreements, franchise agreements, agreements for payments in lieu of taxes, and any other material agreements affecting, benefiting, or burdening all or any part of the FS Real Property Interests or any FS Project;

(xi) any lease agreement in respect of one or more Residential Systems;

 

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(xii) agreements giving any FS Contributed Company the right to acquire directly or indirectly any ownership interest in, or subjecting such FS Contributed Company to any obligation or requirement to provide for or to make any investment in, any Person; and

(xiii) any agreement, other than those set forth in the foregoing clauses (i) through (xii), which expressly provides for future payment to or from, or Liabilities of, any FS Contributed Company of at least $1,000,000 over the term of such Contract.

(b) Except as set forth on Schedule 4.13(b) of the FS Disclosure Schedule and for such other defaults as would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect, there is no default (i) on the part of any FS Contributed Company or (ii) to First Solar’s Knowledge, on the part of any other Person, in each case, under any FS Material Contract. Each FS Contributed Company and, to the Knowledge of First Solar, each other Person, in each case, has complied with and is in compliance with the provisions of each FS Material Contract to which it is a party, except for such noncompliance as would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect.

(c) Each FS Material Contract constitutes a legal, valid and binding obligation of the FS Contributed Company party thereto (and, to First Solar’s Knowledge, each other Person party thereto), and is in full force and effect and enforceable against the FS Contributed Company party thereto (and, to First Solar’s Knowledge, each other Person party thereto) in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity), in each case, unless the failure to be so would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect.

(d) Except as set forth on Schedule 4.13(a) of the FS Disclosure Schedule, First Solar has made available to SunPower true, complete and correct copies of all FS Material Contracts (including all written amendments, modifications, extensions and renewals thereof and related notices and agreements thereto).

4.14 Compliance With Laws. Each FS Contributed Company is in compliance, in all material respects, with all material Laws. Except as set forth on Schedule 4.14 of the FS Disclosure Schedule, there are no material investigations by any Governmental Entity pending or, to First Solar’s Knowledge, threatened against any FS Contributed Company or any FS Contributed Assets and, to First Solar’s Knowledge, there are no facts or circumstances that will give rise to a material investigation by a Governmental Entity. Neither First Solar nor any FS Controlled Company has received and, solely with respect to any FS Non-Controlled Company, First Solar has no Knowledge of any FS Non-Controlled Company having received, any written communication from any Governmental Entity that alleges that any FS Contributed Company is not in compliance, in any material respect, with any material Law which has not been resolved.

 

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4.15 Permits.

(a) Except as noted on Schedule 4.15 of the FS Disclosure Schedule, (i) the applicable FS Contributed Companies own or otherwise hold all the material Permits (including Environmental Permits) necessary to enable each such FS Contributed Company to own, lease or otherwise hold and operate its properties and to carry on its business as currently conducted and as contemplated pursuant to the FS Material Contracts, including all Permits required to be obtained under Law, including Environmental Law, relating to the development, construction, operation, ownership and maintenance of each FS Project (the “FS Project Permits”), except where the failure to own or hold such FS Project Permit would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect, (ii) each such FS Project Permit is valid and in full force and effect, except where the failure of such FS Project Permit to be valid and effective would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect and (iii) the applicable FS Contributed Company is not in material violation of, and, to the Knowledge of First Solar, no condition exists that with notice or lapse of time or both would constitute a material violation of, any FS Project Permit.

(b) None of First Solar or the FS Controlled Companies has received and, solely with respect to any FS Non-Controlled Company, First Solar has no Knowledge of any FS Non-Controlled Company having received, any written communication that any Governmental Entity intends to revoke, cancel or terminate, or to amend in a manner materially adverse to the interests of an FS Contributed Company, any such FS Project Permit. True and correct copies of each such FS Project Permit (including all written amendments, modifications, extensions and renewals thereof and related notices and agreements thereof) that has been obtained or made by or for the benefit of the FS Contributed Companies has been made available to SunPower.

4.16 Taxes. Except as noted on Schedule 4.16 of the FS Disclosure Schedule:

(a) each FS Contributed Company is treated and has always been treated, for U.S. federal income Tax purposes as either (i) a partnership, and is not treated and has not been treated, as a corporation or a “publicly traded partnership” (within the meaning of Section 7704 of the Code) taxable as a corporation, or (ii) an entity disregarded as separate from its owner;

(b) each of the FS Contributed Companies has timely filed or, in the event not so timely filed, filed without material tax consequences for being untimely, all Tax Returns (other than immaterial Tax Returns for Taxes other than income Taxes) required to be filed by or with respect to it, and all such filed Tax Returns are true, complete and correct in all material respects;

(c) each of the FS Contributed Companies has (i) paid all Taxes shown as due on any Tax Return, and (ii) withheld or collected and deposited with, or paid over to, the appropriate Governmental Entities all Taxes required by applicable law to be withheld or collected by it;

(d) the FS Contributed Companies have not received from any Governmental Entity any written notice of a proposed adjustment, deficiency or underpayment of any Taxes, which notice has not been satisfied by payment or withdrawn, and there are no claims that have been asserted or threatened relating to any Taxes against the FS Contributed Companies;

 

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(e) there is no present, pending or threatened Action by any Governmental Entity for the assessment or collection of any Tax payable by or with respect to the assets or Business of any of the FS Contributed Companies;

(f) neither First Solar nor any of its Affiliates have waived or agreed to any extension of any statute of limitations for any Taxes of or with respect to the assets or Business of any of the FS Contributed Companies that is currently in effect;

(g) no Governmental Entity in a jurisdiction where any FS Contributed Company does not file a Tax Return has made a claim or assertion or threatened that any FS Contributed Company is or may be subject to Tax in such jurisdiction;

(h) there are no Tax rulings, requests for rulings, or closing agreements for or on behalf of an FS Contributed Company which could affect the liability for Taxes of any FS Contributed Company;

(i) none of the FS Contributed Companies is or has been a party to any “listed transaction” as defined in Treasury Regulations Section 1.6011-4(b)(2);

(j) none of the assets held by any of the FS Contributed Companies is “tax-exempt use property” within the meaning of Section 168(h) of the Code or subject to the alternative depreciation system under Section 168(g) of the Code;

(k) there are no Liens (other than Permitted Liens) or encumbrances for Taxes on any of the assets of any of the FS Contributed Companies;

(l) no Cash Grant has been applied for or received with respect to any FS Project or FS Contributed Company;

(m) to First Solar’s Knowledge, neither First Solar nor any of its Affiliates nor any of the FS Contributed Companies has received any written notification, and does not otherwise have Knowledge, of any fact, event, condition or circumstance that could be expected to result in a reallocation, recapture or denial of any Project Tax Credit with respect to any FS Project or FS Contributed Company;

(n) to First Solar’s Knowledge, all Tax Returns for which any Project Tax Credit has been claimed have been timely filed in accordance with applicable law and all such filings are true, correct and complete in all material respects;

(o) First Solar is not a Disqualified Person; and

(p) none of the FS Contributed Companies is a party to any Tax sharing, Tax indemnification or similar agreement, other than customary Tax indemnification provisions contained in the FS Material Contracts.

 

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4.17 Litigation. Except as disclosed on Schedule 4.17 of the FS Disclosure Schedule, there are no material Actions pending or, to First Solar’s Knowledge, threatened (and to First Solar’s Knowledge, as of the Execution Date, there are no facts or circumstances that will give rise to a material Action) against any FS Contributed Company or FS Project, or any current or former member, director or officer of any FS Contributed Company acting in such capacity. Except as set forth on Schedule 4.17 of the FS Disclosure Schedule, there are no outstanding Orders to which any FS Contributed Company is a party, or by which any FS Contributed Company (or any of the assets of any FS Contributed Company) is bound by or with any Governmental Entity, except any such Order that is not material and that does not challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated in this Agreement and in the other Transaction Documents.

4.18 Absence of Material Adverse Effect. From and after December 31, 2013, there has not been any event, circumstance, condition or change that, individually or in the aggregate, has had an FS Material Adverse Effect.

4.19 Insurance. The FS Contributed Companies carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is available on commercially reasonable terms and generally maintained by companies engaged in the same or similar business and owning similar properties in the same general areas and in similar stages of development or operation, as applicable. Except as set forth on Schedule 4.19 of the FS Disclosure Schedule, all such insurance policies carried by or maintained for the benefit of the FS Contributed Companies (the “FS Insurance Policies”) are in full force and effect, all premiums in respect of such insurance have been paid in full when and as due and there is no material claim by or on behalf of any FS Contributed Company pending under any such policies as to which coverage has been denied or disputed by the underwriters of such policies. No notice of cancellation or non-renewal of any FS Insurance Policy, or any material changes that are required in the conduct of the FS Contributed Companies as a condition to the continuation of coverage under or renewal of any such FS Insurance Policy, has been received by an FS Controlled Company or, to the Knowledge of First Solar, an FS Non-Controlled Company.

4.20 Employees; Employee Benefits.

(a) No FS Contributed Company has nor, to the Knowledge of First Solar, since their respective inceptions has ever had, any employees. The FS Contributed Companies are neither party to, nor bound by, any collective bargaining agreements or any other labor-related agreements with any labor union or labor organization. There are no strikes, lockouts, work stoppages, slowdowns or other material labor disputes against or affecting, in any material respect, any FS Contributed Company or FS Project.

(b) No FS Controlled Company and, to the Knowledge of First Solar, no FS Non-Controlled Company maintains, sponsors or contributes or is required to contribute to any Plan. There does not exist now, nor do any circumstances exist that reasonably could be expected to result in any Liability of any FS Controlled Company or, to the Knowledge of First Solar, of any FS Non-Controlled Company with respect to any Plan now maintained or previously maintained by any FS Contributed Company or any ERISA Affiliate of any FS Contributed Company (or to which such an entity ever contributed or was required to contribute).

 

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4.21 Environmental Matters.

(a) Except as set forth on Schedule 4.21(a) of the FS Disclosure Schedule and for such matters that would not, individually or in the aggregate, reasonably be expected to have an FS Material Adverse Effect:

(i) (A) none of the FS Contributed Companies has received written notice of any Environmental Claim or Action under Environmental Law against any such FS Contributed Company, and (B) to the Knowledge of First Solar, no Environmental Claim is threatened in writing against any FS Contributed Company and there are no actions, activities, circumstances, facts, conditions, events or incidents that would be reasonably likely to form the basis of any such Environmental Claim against any FS Contributed Company; and

(ii) there is no contamination of, and there have been no Releases or threatened Releases of Hazardous Substances at any FS Real Property Interest or, to First Solar’s Knowledge, on any real property formerly owned, leased or operated by any FS Contributed Company (or any of their predecessors).

(b) First Solar has delivered to, or has otherwise made available for inspection by SunPower, all written reports of environmental investigations, studies, audits and tests in the possession, control or custody of First Solar, any FS Controlled Company or, to the Knowledge of First Solar, any FS Non-Controlled Company, relating to the Release or threatened Release of Hazardous Substances at, in, on, under or from any FS Real Property Interests. True, correct and complete copies of all of the foregoing reports have been made available to SunPower.

4.22 No Brokers. Except as set forth on Schedule 4.22 of the FS Disclosure Schedule, neither First Solar nor any of its Affiliates has authorized any Person to act as broker, finder or in any other similar capacity in connection with the transactions contemplated by this Agreement and the negotiations leading to it which will have a right of payment or claim against SunPower or any of its Affiliates, or against any FS Contributed Company.

4.23 [Reserved].

4.24 Regulation.

(a) Neither First Solar nor any of the FS Contributed Companies is, nor following the consummation of the transactions contemplated by this Agreement will First Solar or any of the FS Contributed Company be, an “investment company” or a company “controlled by” an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

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(b) Except as set forth on Schedule 4.24(b) of the FS Disclosure Schedules:

(i) the Maryland Solar Project is a QF, and has been a QF since the first delivery or sale of Electricity from such FS Project, and the FS Contributed Company that directly owns the Maryland Solar Project is eligible for the exemptions, as set forth in Sections 292.601 and 292.602 of FERC’s regulations, from the FPA (including exemption from FPA Sections 205 and 206), PUHCA and state laws and regulations respecting the rates of electric utilities and the financial and organizational regulation of electric utilities; and

(ii) each FS Contributed Company that directly owns an FS Project (other than the Maryland Solar Project) either (A) has received MBR Authority and status as an EWG, or (B) if such FS Contributed Company has not received MBR Authority and status as an EWG, (I) to First Solar’s Knowledge, there is no reason why such FS Contributed Company would not receive MBR Authority or be eligible for status as an EWG, in each case, prior to the first delivery or sale of Electricity from such FS Project, and (II) is not, and prior to the earlier of (x) the date of FERC’s order granting it MBR Authority or (y) the effective date of its MBR Authority, will not be, subject to regulation as a “public utility” under the FPA or subject to regulation under PUHCA, and each such SP Contributed Company is either not subject to or is exempt from regulation as a “public utility,” “electric utility,” “electric corporation,” or similar term under the public utility laws and regulations of any state.

4.25 Related Party Transactions. Except for FS Material Contracts or as set forth on Schedule 4.25 of the FS Disclosure Schedule:

(a) neither First Solar nor any Affiliate thereof (other than any FS Contributed Company) is a party to, or is subject to, any Contract entered into by any FS Contributed Company; and

(b) no FS Contributed Asset is owned or controlled by First Solar or any Affiliate thereof (other than any FS Contributed Company), other than indirectly by virtue of its ownership interest in any FS Contributed Company.

4.26 Credit Support. Schedule 4.26 of the FS Disclosure Schedule sets forth a list of all currently effective letters of credit, guarantees, deposits and other credit support provided by or on behalf of First Solar or its Affiliates to or on behalf of any FS Contributed Company relating to the ownership and operation of the FS Projects or as required pursuant to any FS Material Contract or FS Project Permit (the “FS Support Obligations”).

4.27 Accuracy of Partnership IPO Information. As of the Launch Date, the information regarding First Solar and the FS Transaction Parties contained in certain sections of the then most recent Registration Statement or Prospectus filed with the SEC in connection with a Qualified Public Offering, which sections shall be mutually agreed by the Parties and set forth on a Schedule to this Agreement prior to the Launch Date, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading.

 

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4.28 8point3 Entities. Except as set forth on Schedule 4.28 of the FS Disclosure Schedules or with the consent of SunPower, First Solar and its Affiliates have not (a) caused any 8point3 Entity to take any action, or to incur any Liability, (b) issued, delivered or sold or authorized or proposed the issuance, delivery or sale of, any Equity Interests of any 8point3 Entity or securities convertible into such Equity Interests, (c) caused any 8point3 Entity to incur, assume or guarantee any Indebtedness, or (d) granted any security interest with respect to, pledged or otherwise encumbered, or caused any 8point3 Entity to grant any security interest, pledge or otherwise encumber, any Equity Interests or other assets of any 8point3 Entity (other than Permitted Equity Liens).

4.29 Knowledge Persons. The individuals listed on Schedule 1.1(a) of the FS Disclosure Schedule with respect to each FS Project include the individuals responsible for leading the development or operation of such FS Project and the identified individuals are the most knowledgeable persons employed by First Solar or its Affiliates (excluding legal personnel) with respect to the applicable FS Project.

4.30 Limitation of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV, FIRST SOLAR IS NOT MAKING ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING THE FS CONTRIBUTED COMPANIES, THE FS CONTRIBUTED INTERESTS, THE FS PROJECTS, OR THE BUSINESS, ASSETS OR LIABILITIES OF ANY FS CONTRIBUTED COMPANY, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SUNPOWER

SunPower hereby represents and warrants to First Solar as follows as of the Execution Date and on the Closing Date (if the Closing shall occur):

5.01 Organization; Qualification.

(a) Each of SunPower, each SP Contributor and each SP Contributed Company (each, an “SP Transaction Party”) has been duly formed and is validly existing and in good standing as a corporation, general partnership, limited partnership or limited liability company, as applicable, under the Laws of its jurisdiction of formation with all requisite corporate, partnership or limited liability company, as applicable, power and authority to own, lease or otherwise hold and operate its properties and assets and to carry on its business as presently conducted, except in each case where the failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect.

(b) Each SP Transaction Party is duly qualified and in good standing to do business as a foreign corporation, foreign limited partnership or foreign limited liability

 

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company, as the case may be, in each jurisdiction in which the conduct or nature of its business or the ownership, leasing, holding or operating of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect.

(c) SunPower has heretofore made available to First Solar complete and correct copies of the Charter Documents of each SP Transaction Party.

5.02 Authority and Power. Each SP Transaction Party (a) has all requisite corporate, partnership or limited liability company, as applicable, power and authority to execute and deliver this Agreement (solely in the case of SunPower) and each of the other Transaction Documents to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby, and (b) has taken all necessary corporate, partnership or limited liability company, as applicable, action to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is or will be a party (as applicable).

5.03 Valid and Binding Obligation.

(a) This Agreement has been duly and validly executed and delivered by SunPower and, assuming this Agreement has been duly and validly authorized, executed and delivered by First Solar, constitutes a legal, valid and binding obligation of SunPower, enforceable against SunPower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

(b) Each of the Transaction Documents to which an SP Transaction Party will become a party at the Closing will be duly and validly executed and delivered by such Person and, upon execution and delivery thereof, and assuming such Transaction Document has been duly and validly authorized, executed and delivered by each FS Transaction Party that will be a party thereto, will constitute a legal, valid and binding obligation of such SP Transaction Party, enforceable against such SP Transaction Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity.

5.04 No Violation or Conflict. Except as set forth on Schedule 5.05 of the SP Disclosure Schedule, none of the execution, delivery or performance of this Agreement or any of the other Transaction Documents by each SP Transaction Party, nor the consummation of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Charter Documents of any SP Transaction Party, (b) constitute, with or without notice or the passage of time or both, a Default under any Permit or Contract to which any SP Transaction Party is a party or by which any of their respective properties are bound except, in each case, as would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect, (c) contravene any Law, except as would not, individually or in the aggregate,

 

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reasonably be expected to have an SP Material Adverse Effect, or (d) entitle any Person to exercise any preemptive rights, rights of first refusal or similar rights to purchase any Contributed Company Interests.

5.05 Consents and Approvals. Except as set forth on Schedule 5.05 of the SP Disclosure Schedule (such scheduled matters, the “SP Required Consents”), no Consent of, with or to any Governmental Entity or other Person is required to be obtained or made by or with respect to any SP Transaction Party in connection with the execution and delivery of this Agreement and the other Transaction Documents, or the consummation of the transactions contemplated hereby or thereby, except where the failure to obtain or make such Consent would not reasonably be expected to have an SP Material Adverse Effect.

5.06 Transfer of SP Contributed Interests. As of the Closing Date, SP Holdings Member and the Operating Company will be the record and beneficial direct owner of and will hold good, valid and transferable title to the SP Contributed Interests described on Schedule 5.06 of the SP Disclosure Schedule, and there will not be any outstanding Liens, rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements, or other obligations of any character relating to such SP Contributed Interests (other than Permitted Equity Liens). As of the Closing Date, the Operating Company has good and valid title to such SP Contributed Interests, and the SP Holdings Member has good and valid title to 100% of the Equity Interests of the Operating Company, in each case, free and clear of any Liens, rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements, or other obligations of any character relating to such SP Contributed Interests (including such Equity Interests of the Operating Company), other than Permitted Equity Liens.

5.07 Capital Stock.

(a) Schedule 5.07 of the SP Disclosure Schedule sets forth a true and complete list of (i) the name of each SP Contributed Company (including the Operating Company), (ii) the nature of the legal organization of each SP Contributed Company, (iii) the jurisdiction of formation of each SP Contributed Company (including the Operating Company), (iv) SP Holdings Member’s, the Operating Company’s and each other SP Contributed Company’s, as applicable, ownership interest in each SP Contributed Company (including the Operating Company) as of the Closing Date, and (v) where applicable, the SP Project directly owned or controlled, in whole or in part, by such SP Contributed Company. The Operating Company and the other SP Contributed Companies have no Subsidiaries and do not own, directly or indirectly, any Equity Interests in any corporation, partnership, limited liability company or other Person, except for those Subsidiaries and Equity Interests listed on Schedule 5.07 of the SP Disclosure Schedule. Except for Permitted Equity Liens and as otherwise set forth on Schedule 5.07 of the SP Disclosure Schedule, there are no outstanding Liens relating to such SP Contributed Interests, and no outstanding rights, options, warrants, rights of first refusal, calls, preemptive rights, conversion rights, subscriptions, commitments, arrangements or other agreements pursuant to which SP Holdings Member, the Operating Company, any other SP Contributor or other SP Contributed Company is, or may be, obligated to sell, issue or acquire any SP Contributed Interests. Except as set forth on Schedule 5.07 of the SP Disclosure Schedule, no SP Contributed Interests (including Equity Interests in the Operating Company) are represented by any certificate or other instrument.

 

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(b) None of the SP Contributed Interests or Equity Interests in the Operating Company are subject to any voting trust, member or partnership agreement or voting agreement or other agreement, right, instrument or understanding with respect to any purchase, sale, issuance, transfer, repurchase, redemption or voting of any such SP Contributed Interests or Equity Interests in the Operating Company, other than those contained in the Charter Documents thereof or otherwise set forth on Schedule 5.07 of the SP Disclosure Schedule. The SP Contributed Interests and the Equity Interests in the Operating Company, as shown on Schedule 5.07 of the SP Disclosure Schedule, were duly authorized, validly issued, fully paid and nonassessable and were not issued in violation of any preemptive rights, rights of first refusal or similar rights.

5.08 Financial Statements.

(a) Attached hereto at Schedule 5.08(a) of the SP Disclosure Schedule are true and complete copies of the audited combined carve-out financial statements of “Select Project Entities and Leases of SunPower Corporation (Predecessor),” including the audited combined balance sheets as of December 28, 2014 and December 29, 2013, and the related audited combined statements of operations and comprehensive loss, changes in equity and cash flows for the years ended December 28, 2014 and December 29, 2013 (the “SP Financial Statements”).

(b) Except as set forth therein, the SP Financial Statements (i) present fairly the combined financial position, results of operations and cash flows of each of (A) Solar Star California XIII, LLC (“Quinto”) (B) Solar Star California XXXII, LLC (“UC Davis”), (C) Solar Star California XXXI, LLC (“RPU”), (D) Solar Star California XXX, LLC (“Macy’s”) and (E) the SP Contributed Companies to be merged with and into a Subsididiary of the Operating Company pursuant to “Step 2” set forth on Schedule 2.01(d)(ii) of the SP Disclosure Schedules, at the date set forth therein and for the periods covered thereby in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except that any unaudited balance sheets and financial statements referred to in this Section 5.08(b) are prepared without footnotes and are subject to normal year-end adjustments, which are not expected to be material either individually or in the aggregate, and (ii) have been prepared from, are in accordance with and accurately reflect, the books and the accounting and financial records of such SP Contributed Companies, which books and records are accurate and complete in all material respects.

5.09 Undisclosed Liabilities. Except for (a) liabilities or obligations that are reflected on or reserved against in the SP Financial Statements, to the extent so reflected or reserved thereon, (b) liabilities or obligations incurred in the ordinary course of business after the date of the most recent SP Financial Statements, or (c) liabilities of the Operating Company or the SP Contributed Companies that, individually or in the aggregate, are not material to the SP Contributed Companies, taken as a whole, the Operating Company and the SP Contributed Companies have no liabilities that would be required to be reflected on a balance sheet prepared in accordance with GAAP.

 

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5.10 SP SEC Reports and Compliance.

(a) Since December 31, 2013, all SP SEC Reports have been filed with or furnished to the SEC. All SP SEC Reports filed since December 31, 2013, to the extent they contained any information related to any SP Contributed Company, (i) complied as to form in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, and the rules and regulations thereunder, as applicable, and (ii) as of its filing date in the case of any Exchange Act report or as of its effective date in the case of any Securities Act filing, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) There are no material outstanding comments from, or material unresolved issues raised by, the SEC with respect to the SP SEC Reports relating to the Operating Company or any SP Contributed Company. No enforcement action has been initiated against SunPower by the SEC relating to disclosures contained in any SP SEC Report relating to the Operating Company or any SP Contributed Company.

(c) To the extent related to the Operating Company or any SP Contributed Company, since December 31, 2013:

(i) no SP Transaction Party has received any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any SP Transaction Party or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that an SP Transaction Party has engaged in questionable accounting or auditing practices;

(ii) to the Knowledge of SunPower, no officer or director of an SP Transaction Party has received any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of any SP Transaction Party or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that any SP Transaction Party has engaged in questionable accounting or auditing practices; and

(iii) to the Knowledge of SunPower, no attorney representing any SP Transaction Party, regardless of whether employed thereby, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by an SP Transaction Party or any of their respective officers, directors, employees or agents, to the board of directors of SunPower or any SP Contributor or any committee thereof or to any director or officer of SunPower or any SP Contributor.

 

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5.11 Real Property.

(a) Schedule 5.11(a) of the SP Disclosure Schedule sets forth a true and complete list, as of the Execution Date, of the following (which shall be categorized by the relevant SP Contributed Company and SP Project):

(i) all real property owned in fee by any SP Contributed Company (“SP Owned Real Property”); and

(ii) all real property (A) leased or subleased to an SP Contributed Company or (B) subject to a material easement or other similar interest in real property in favor of an SP Contributed Company (all such real property together with all buildings and other improvements thereon, “SP Leased Real Property”).

(b) Each SP Contributed Company has good, marketable and indefeasible fee title to the SP Owned Real Property owned by it, subject to no Liens other than Permitted Liens. Each SP Contributed Company has a valid and subsisting leasehold or subleasehold estate in, and the right to make use of, the SP Leased Real Property subject to the terms and conditions of the applicable lease or sublease agreement and subject to no Liens other than Permitted Liens. No SP Contributed Company has granted any assignment, lease, license, sublease, easement, concession, option or other agreement granting to any Person the right to possess, use, control, or occupy the SP Real Property Interests or any portion thereof, except as would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect.

(c) With respect to the SP Owned Real Property and SP Leased Real Property (collectively, the “SP Real Property Interests”), neither SunPower, any SP Contributor nor any SP Contributed Company has received any written notice of any material appropriation, condemnation or like proceeding, or of any material violation of any applicable zoning or land use law, regulation or rule or other law, order, regulation, rule or requirement relating to or affecting any of the SP Real Property Interests.

(d) Except as set forth in Schedule 5.11(d) of the SP Disclosure Schedule, to SunPower’s Knowledge:

(i) there are no existing severed or other mineral rights affecting the SP Real Property Interests that, if exercised, could materially and adversely affect the development, construction, ownership, operation, use or management of any SP Project;

(ii) neither SunPower nor any SP Contributed Company has received any written notice of any mining, mineral or water extraction or development projects under construction or for which Permits are currently being obtained, located, or planned to be located on or under the properties constituting the SP Real Property Interest, or any portion thereof, which would materially and adversely affect any SP Project; and

(iii) no portion of any SP Project encroaches on property outside the boundaries of the SP Real Property Interests without the written consent of the owner of that property.

(e) There is no real property (i) owned in fee by the Operating Company, (ii) leased or subleased to the Operating Company or (iii) otherwise subject to a material easement or other similar interest in real property in favor of the Operating Company.

 

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5.12 Personal Property; Sufficiency of Assets.

(a) The SP Contributed Companies own and have good and marketable title to, or, in the case of leased assets, a valid and marketable leasehold interest in, or, in the case of licensed assets, a valid license to, any and all material equipment, facilities and other tangible and intangible assets and rights used by or held for use by or in connection with their Business (the “SP Contributed Assets”), free and clear of any Lien, other than Permitted Liens.

(b) The SP Contributed Assets have been maintained in accordance with Prudent Solar Industry Practices. Except as set forth on Schedule 5.12(b) of the SP Disclosure Schedule, and except for material equipment, facilities and tangible personal property that is entitled to be repaired, replaced or otherwise remediated under an existing manufacturers’ warranty or other contractual warranty which remains in effect, the SP Contributed Assets, taken as a whole, are in good repair and proper operating condition (ordinary wear and tear excepted).

(c) Except as set forth on Part I of Schedule 5.12(c) of the SP Disclosure Schedule, there are no written force majeure claims or, to the Knowledge of SunPower, no delays in completing any SP Project that are reasonably likely to result in the Commercial Operation Date for such SP Project failing to occur prior to the date set forth for such SP Project on Part II of Schedule 5.12(c) of the SP Disclosure Schedule or in an SP Material Adverse Effect.

(d) The SP Contributed Assets and the SP Real Property Interests, taken as a whole, constitute all of the material assets the use or benefit of which are reasonably necessary and sufficient for the operation of the Business of the SP Contributed Companies as currently conducted and as contemplated pursuant to the SP Material Contracts and SP Project Permits.

5.13 Contracts.

(a) Schedule 5.13(a) of the SP Disclosure Schedule sets forth a true and complete list of all of the following Contracts to which any SP Contributed Company is a party or by which any SP Contributed Company or its properties or other assets are otherwise bound (each, an “SP Material Contract”):

(i) loan agreements, credit agreements, sale-leaseback agreements, security agreements, indentures and other Contracts that provide for (A) the borrowing of moneys by or extensions of credit to any SP Contributed Company by any other Person, (B) the guaranty by any SP Contributed Company of obligations in respect of the borrowings of money by or extensions of credit to any other Person, (C) the guaranty by SunPower or any of its Affiliates (other than any SP Contributed Company) of obligations of any SP Contributed Company or (D) reimbursement agreements relating to guarantees;

 

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(ii) commodity, currency or interest rate hedge, exchange or similar agreements;

(iii) partnership, shareholder, joint venture, joint development or limited liability company agreements or other agreements setting forth arrangements between the members or partners thereto;

(iv) power purchase, sale or exchange agreements (including sales of capacity, energy, ancillary services or related attributes or renewable energy credits or renewable attributes);

(v) (A) electricity interconnection agreements and (B) transmission agreements;

(vi) (A) engineering, procurement and construction agreements, (B) equipment supply agreements, (C) warranty agreements and performance guarantee agreements and (D) operation and maintenance agreements;

(vii) labor agreements, collective bargaining agreements or similar agreements with any union, works council or similar body;

(viii) non-competition, non-interference, non-solicitation, exclusivity or similar agreements which restrict the ability of any SP Contributed Company to engage in any line of business, acquire any property, develop or distribute any product, provide any service (including geographic restrictions) or to compete with any Person, in any market, field or territory;

(ix) agreements (other than any Transaction Document) between (I) SunPower or any of its Affiliates (excluding the SP Contributed Companies), on the one hand, and (II) any of the SP Contributed Companies, on the other hand;

(x) leases, subleases, licenses, access agreements, occupancy agreements, franchise agreements, agreements for payments in lieu of taxes, and any other material agreements affecting, benefiting, or burdening all or any part of the SP Real Property Interests or any SP Project;

(xi) any lease agreement in respect of one or more Residential Systems;

(xii) agreements giving any SP Contributed Company the right to acquire directly or indirectly any ownership interest in, or subjecting such SP Contributed Company to any obligation or requirement to provide for or to make any investment in, any Person; and

(xiii) any agreement, other than those set forth in the foregoing clauses (i) through (xii), which expressly provides for future payment to or from, or Liabilities of, any SP Contributed Company of at least $1,000,000 over the term of such Contract.

 

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(b) Except as set forth on Schedule 5.13(b) of the SP Disclosure Schedule and for such other defaults as would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect, there is no default (i) on the part of any SP Contributed Company or (ii) to SunPower’s Knowledge, on the part of any other Person, in each case, under any SP Material Contract. Each SP Contributed Company and, to the Knowledge of SunPower, each other Person, in each case, has complied with and is in compliance with the provisions of each SP Material Contract to which it is a party, except for such noncompliance as would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect.

(c) Each SP Material Contract constitutes a legal, valid and binding obligation of the SP Contributed Company party thereto (and, to SunPower’s Knowledge, each other Person party thereto), and is in full force and effect and enforceable against the SP Contributed Company party thereto (and, to SunPower’s Knowledge, each other Person party thereto) in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity), in each case, unless the failure to be so would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect.

(d) Except as set forth on Schedule 5.13(a) of the SP Disclosure Schedule, SunPower has made available to First Solar true, complete and correct copies of all SP Material Contracts (including all written amendments, modifications, extensions and renewals thereof and related notices and agreements thereto), other than the SP Residential Leases.

(e) Other than the SP Reorganization Agreements, there are no Contracts to which the Operating Company is a party or by which the Operating Company or its properties or other assets (other than the SP Contributed Companies and the SP Contributed Assets) are otherwise bound.

5.14 Compliance With Laws. Each SP Contributed Company and the Operating Company is in compliance, in all material respects, with all material Laws. Except as set forth on Schedule 5.14 of the SP Disclosure Schedule, there are no material investigations by any Governmental Entity pending or, to SunPower’s Knowledge, threatened against the Operating Company, any SP Contributed Company or any SP Contributed Assets and, to SunPower’s Knowledge, there are no facts or circumstances that will give rise to a material investigation by a Governmental Entity. Neither SunPower, the Operating Company nor any SP Contributed Company has received any written communication from any Governmental Entity that alleges that the Operating Company or any SP Contributed Company is not in compliance, in any material respect, with any material Law which has not been resolved.

 

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5.15 Permits.

(a) Except as noted on Schedule 5.15 of the SP Disclosure Schedule, (i) the applicable SP Contributed Companies own or otherwise hold all the material Permits (including Environmental Permits) necessary to enable each such SP Contributed Company to own, lease or otherwise hold and operate its properties and to carry on its business as currently conducted and as contemplated pursuant to the SP Material Contracts, including all Permits required to be obtained under Law, including Environmental Law, relating to the development, construction, operation, ownership and maintenance of each SP Project (the “SP Project Permits”), except where the failure to own or hold such SP Project Permit would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect, (ii) each such SP Project Permit is valid and in full force and effect, except where the failure of such SP Project Permit to be valid and effective would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect and (iii) the applicable SP Contributed Company is not in material violation of, and, to the Knowledge of SunPower, no condition exists that with notice or lapse of time or both would constitute a material violation of, any SP Project Permit.

(b) None of the SP Contributed Companies or SunPower has received any written communication that any Governmental Entity intends to revoke, cancel or terminate, or to amend in a manner materially adverse to the interests of an SP Contributed Company, any such SP Project Permit. True and correct copies of each such SP Project Permit (including all written amendments, modifications, extensions and renewals thereof and related notices and agreements thereof) that has been obtained or made by or for the benefit of the SP Contributed Companies has been made available to First Solar.

5.16 Taxes. Except as noted on Schedule 5.16 of the SP Disclosure Schedule:

(a) each SP Contributed Company and the Operating Company is treated and has always been treated, for U.S. federal income Tax purposes as either (i) a partnership, and is not treated and has not been treated, as a corporation or a “publicly traded partnership” (within the meaning of Section 7704 of the Code) taxable as a corporation, or (ii) an entity disregarded as separate from its owner;

(b) each of the SP Contributed Companies and the Operating Company has timely filed or, in the event not so timely filed, filed without material tax consequences for being untimely, all Tax Returns (other than immaterial Tax Returns for Taxes other than income Taxes) required to be filed by or with respect to it, and all such filed Tax Returns are true, complete and correct in all material respects;

(c) each of the SP Contributed Companies and the Operating Company has (i) paid all Taxes shown as due on any Tax Return, and (ii) withheld or collected and deposited with, or paid over to, the appropriate Governmental Entities all Taxes required by applicable law to be withheld or collected by it;

(d) the Operating Company and the SP Contributed Companies have not received from any Governmental Entity any written notice of a proposed adjustment, deficiency or underpayment of any Taxes, which notice has not been satisfied by payment or withdrawn, and there are no claims that have been asserted or threatened relating to any Taxes against the Operating Company or any SP Contributed Company;

 

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(e) there is no present, pending or threatened Action by any Governmental Entity for the assessment or collection of any Tax payable by or with respect to the assets or Business of any of the SP Contributed Companies or the Operating Company;

(f) neither SunPower nor any of its Affiliates have waived or agreed to any extension of any statute of limitations for any Taxes of or with respect to the assets or Business of any of the SP Contributed Companies or the Operating Company that is currently in effect;

(g) no Governmental Entity in a jurisdiction where any SP Contributed Company or the Operating Company does not file a Tax Return has made a claim or assertion or threatened that any SP Contributed Company or the Operating Company is or may be subject to Tax in such jurisdiction;

(h) there are no Tax rulings, requests for rulings, or closing agreements for or on behalf of an SP Contributed Company or the Operating Company which could affect the liability for Taxes of any SP Contributed Company or the Operating Company;

(i) none of the SP Contributed Companies or the Operating Company is or has been a party to any “listed transaction” as defined in Treasury Regulations Section 1.6011-4(b)(2);

(j) none of the assets held by any of the SP Contributed Companies or the Operating Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code or subject to the alternative depreciation system under Section 168(g) of the Code;

(k) there are no Liens (other than Permitted Liens) or encumbrances for Taxes on any of the assets of any of the SP Contributed Companies or the Operating Company;

(l) neither SunPower nor any of its Affiliates nor any of the SP Contributed Companies has received any written notification, and does not otherwise have Knowledge, of any fact, event, condition or circumstance that could be expected to result in a recapture or denial of a Cash Grant;

(m) to SunPower’s Knowledge, in the event that it or its Affiliate was not the applicant for such Cash Grant, all Cash Grant applications (and any related or supplemental written correspondence, documentation or other information provided to any Government Entity in connection with Cash Grant applications) and Annual Performance Reports required to be filed with respect to SP Projects have been timely filed in accordance with the Cash Grant Guidance and all such filings are true, correct and complete in all material respects;

(n) in the event that SunPower or its Affiliate was the applicant for such Cash Grant, all Cash Grant applications (and any related or supplemental written correspondence, documentation or other information provided to any Government Entity in connection with Cash Grant applications) and Annual Performance Reports required to be filed with respect to SP Projects have been timely filed in accordance with the Cash Grant Guidance and all such filings are true, correct and complete in all material respects;

 

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(o) to SunPower’s Knowledge, in the event that it or its Affiliate was not the applicant for such Cash Grant, no Person has claimed a Project Tax Credit with respect to any SP Project for which a Cash Grant was paid;

(p) in the event that SunPower or its Affiliate was the applicant for such Cash Grant, no Person has claimed a Project Tax Credit with respect to any SP Project for which a Cash Grant was paid;

(q) to SunPower’s Knowledge, neither SunPower nor any of its Affiliates nor any of the SP Contributed Companies has received any written notification, and does not otherwise have Knowledge, of any fact, event, condition or circumstance that could be expected to result in a reallocation, recapture or denial of any Project Tax Credit with respect to any SP Project or SP Contributed Company;

(r) to SunPower’s Knowledge, all Tax Returns for which any Project Tax Credit has been claimed have been timely filed in accordance with applicable law and all such filings are true, correct and complete in all material respects;

(s) SunPower is not a Disqualified Person; and

(t) none of the SP Contributed Companies is a party to any Tax sharing, Tax indemnification or similar agreement, other than customary Tax indemnification provisions contained in the SP Material Contracts.

5.17 Litigation. Except as disclosed on Schedule 5.17 of the SP Disclosure Schedule, there are no material Actions pending or, to SunPower’s Knowledge, threatened (and to SunPower’s Knowledge, as of the Execution Date, there are no facts or circumstances that will give rise to a material Action) against the Operating Company, any SP Contributed Company or SP Project, or any current or former member, director or officer of the Operating Company, any SP Contributed Company acting in such capacity. Except as set forth on Schedule 5.17 of the SP Disclosure Schedule, there are no outstanding Orders to which the Operating Company or any SP Contributed Company is a party, or by which the Operating Company or any SP Contributed Company (or any of the assets of any SP Contributed Company) is bound by or with any Governmental Entity, except any such Order that is not material and that does not challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated in this Agreement and in the other Transaction Documents.

5.18 Absence of Material Adverse Effect. From and after December 31, 2013, there has not been any event, circumstance, condition or change that, individually or in the aggregate, has had an SP Material Adverse Effect.

5.19 Insurance. The SP Contributed Companies carry or are entitled to the benefits of insurance, with financially sound and reputable insurers, in such amounts and covering such risks as is available on commercially reasonable terms and generally maintained by companies engaged in the same or similar business and owning similar properties in the same general areas

 

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and in similar stages of development or operation, as applicable. Except as set forth on Schedule 5.19 of the SP Disclosure Schedule, all such insurance policies carried by or maintained for the benefit of the SP Contributed Companies (the “SP Insurance Policies”) are in full force and effect, all premiums in respect of such insurance have been paid in full when and as due and there is no material claim by or on behalf of any SP Contributed Company pending under any such policies as to which coverage has been denied or disputed by the underwriters of such policies. No notice of cancellation or non-renewal of any SP Insurance Policy, or any material changes that are required in the conduct of the SP Contributed Companies as a condition to the continuation of coverage under or renewal of any such SP Insurance Policy, has been received by an SP Contributed Company.

5.20 Employees; Employee Benefits.

(a) Neither the Operating Company nor any SP Contributed Company has nor, to the Knowledge of SunPower, since their respective inceptions has ever had, any employees. The SP Contributed Companies and the Operating Company are neither party to, nor bound by, any collective bargaining agreements or any other labor-related agreements with any labor union or labor organization. There are no strikes, lockouts, work stoppages, slowdowns or other material labor disputes against or affecting, in any material respect, the Operating Company, any SP Contributed Company or SP Project.

(b) Neither the Operating Company nor any SP Contributed Company maintains, sponsors or contributes or is required to contribute to any Plan. There does not exist now, nor do any circumstances exist that reasonably could be expected to result in any Liability of the Operating Company or any SP Contributed Company with respect to any Plan now maintained or previously maintained by the Operating Company or any SP Contributed Company or any ERISA Affiliate of the Operating Company or any such SP Contributed Company (or to which such an entity ever contributed or was required to contribute).

5.21 Environmental Matters.

(a) Except as set forth on Schedule 5.21(a) of the SP Disclosure Schedule and for such matters that would not, individually or in the aggregate, reasonably be expected to have an SP Material Adverse Effect:

(i) none of the SP Contributed Companies has received written notice of any Environmental Claim or Action under Environmental Law against any such SP Contributed Company, and (B) to the Knowledge of SunPower, no Environmental Claim is threatened in writing against any SP Contributed Company and there are no actions, activities, circumstances, facts, conditions, events or incidents that would be reasonably likely to form the basis of any such Environmental Claim against any SP Contributed Company; and

(ii) there is no contamination of, and there have been no Releases or threatened Releases of Hazardous Substances at any SP Real Property Interest or, to SunPower’s Knowledge, on any real property formerly owned, leased or operated by any SP Contributed Company (or any of their predecessors).

 

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(b) SunPower has delivered to, or has otherwise made available for inspection by First Solar, all written reports of environmental investigations, studies, audits and tests in the possession, control or custody of SunPower or any SP Contributed Company relating to the Release or threatened Release of Hazardous Substances at, in, on, under or from any SP Real Property Interests. True, correct and complete copies of all of the foregoing reports have been made available to First Solar.

5.22 No Brokers. Except as set forth on Schedule 5.22 of the SP Disclosure Schedule, neither SunPower nor any of its Affiliates has authorized any Person to act as broker, finder or in any other similar capacity in connection with the transactions contemplated by this Agreement and the negotiations leading to it which will have a right of payment or claim against First Solar or any of its Affiliates, or against the Operating Company or any SP Contributed Company.

5.23 [Reserved].

5.24 Regulation.

(a) Neither SunPower nor any of the SP Contributed Companies is, nor following the consummation of the transactions contemplated by this Agreement will SunPower or any of the SP Contributed Company be, an “investment company” or a company “controlled by” an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(b) Except as set forth on Schedule 5.24(b) of the SP Disclosure Schedules, each SP Project is either:

(i) a QF, and has been a QF since, or will be a QF upon, the first delivery or sale of Electricity from such SP Project, and each SP Contributed Company that directly owns such SP Project is eligible for the exemptions, as set forth in Sections 292.601 and 292.602 of FERC’s regulations, from the FPA (including exemption from FPA Sections 205 and 206), PUHCA and state laws and regulations respecting the rates of electric utilities and the financial and organizational regulation of electric utilities; or

(ii) is directly owned by an SP Contributed Company that either (i) has received MBR Authority and status as an EWG, or (ii) if such SP Contributed Company has not received MBR Authority and status as an EWG, (A) to SunPower’s Knowledge, there is no reason why such SP Contributed Company would not receive MBR Authority or be eligible for status as an EWG, in each case, prior to the first delivery or sale of Electricity from such SP Project, and (B) is not, and prior to the earlier of (I) the date of FERC’s order granting it MBR Authority or (II) the effective date of its MBR Authority, will not be, subject to regulation as a “public utility” under the FPA or subject to regulation under PUHCA, and each such SP Contributed Company is either not subject to or is exempt from regulation as a “public utility,” “electric utility,” “electric corporation,” or similar term under the public utility laws and regulations of any state.

 

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5.25 Related Party Transactions. Except for SP Material Contracts or as set forth on Schedule 5.25 of the SP Disclosure Schedule:

(a) neither SunPower nor any Affiliate thereof (other than any SP Contributed Company) is a party to, or is subject to, any Contract entered into by any SP Contributed Company; and

(b) no SP Contributed Asset is owned or controlled by SunPower or any Affiliate thereof (other than any SP Contributed Company), other than indirectly by virtue of its ownership interest in any SP Contributed Company.

5.26 Credit Support. Schedule 5.26 of the SP Disclosure Schedule sets forth a list of all currently effective letters of credit, guarantees, deposits and other credit support provided by or on behalf of SunPower or its Affiliates to or on behalf of any SP Contributed Company relating to the ownership and operation of the SP Projects or as required pursuant to any SP Material Contract or SP Project Permit (the “SP Support Obligations”).

5.27 Accuracy of Partnership IPO Information. As of the Launch Date, the information regarding SunPower and the SP Transaction Parties contained in certain sections of the then most recent Registration Statement or Prospectus filed with the SEC in connection with a Qualified Public Offering, which sections shall be mutually agreed by the Parties and set forth on a Schedule to this Agreement prior to the Launch Date, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading.

5.28 Knowledge Persons. The individuals listed on Schedule 1.1(a) of the SP Disclosure Schedule with respect to each SP Project include the individuals responsible for leading the development or operation of such SP Project and the identified individuals are the most knowledgeable persons employed by SunPower or its Affiliates (excluding legal personnel) with respect to the applicable SP Project.

5.29 Residential Solar Portfolio.

(a) Part I of Schedule 5.29 of the SP Disclosure Schedule sets forth a list of all the lease agreements in respect of Residential Systems to which any SP Contributed Company is a party (the “SP Residential Leases”), each of which (i) is substantially in the form of agreement attached at Part II of Schedule 5.29 of the SP Disclosure Schedule, and (ii) has been entered into by a customer lessee (the “Host Customer”) in respect of a Residential Project located in Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania, or Vermont.

(b) No Host Customer that is party to a SP Residential Lease has failed to pay any amount due under such SP Residential Lease, where such payment default has remained uncured for a period in excess of ninety (90) days.

(c) Based on the FICO Scores upon initial contract, (i) the average FICO Score for all Host Customers party to SP Residential Leases is equal to or greater than 700, (ii) no more than twenty percent (20%) of the Host Customers party to SP Residential Leases have FICO Scores less than 680 and (iii) no more than half of one percent (0.5%) of the Host Customers party to SP Residential Leases have FICO Scores less than 650.

 

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5.30 8point3 Entities. Except as set forth on Schedule 5.30 of the SP Disclosure Schedules or with the consent of First Solar, SunPower and its Affiliates have not (a) caused any 8point3 Entity to take any action, or to incur any Liability, (b) issued, delivered or sold or authorized or proposed the issuance, delivery or sale of, any Equity Interests of any 8point3 Entity or securities convertible into such Equity Interests, (c) caused any 8point3 Entity to incur, assume or guarantee any Indebtedness, or (d) granted any security interest with respect to, pledged or otherwise encumbered, or caused any 8point3 Entity to grant any security interest, pledge or otherwise encumber, any Equity Interests or other assets of any 8point3 Entity (other than Permitted Equity Liens).

5.31 Limitation of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE V, SUNPOWER IS NOT MAKING ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING THE SP CONTRIBUTED COMPANIES, THE SP CONTRIBUTED INTERESTS, THE SP PROJECTS, OR THE BUSINESS, ASSETS OR LIABILITIES OF ANY SP CONTRIBUTED COMPANY, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.

ARTICLE VI

COVENANTS

6.01 Conduct of Business Prior to the Closing.

(a) Between the date of this Agreement and the earlier of the termination of this Agreement in accordance with its terms and the Closing Date (such period, the “Interim Period”), except (i) as otherwise expressly contemplated by this Agreement, (ii) as required by Law, (iii) as set forth on Schedule 6.01(a) of the FS Disclosure Schedule or Schedule 6.01(a) of the SP Disclosure Schedule (such scheduled matters, the “Permitted Interim Actions”), (iv) as set forth on Schedule 6.01(c) of the FS Disclosure Schedule or Schedule 6.01(c) of the SP Disclosure Schedule, (v) as required by or pursuant to any Material Contract or Project Permit, (vi) with respect to any Tax Equity Financing, or (vii) with the prior written consent of the other Party (which consent shall not be unreasonably withheld, delayed, or conditioned), each Party shall in good faith, subject to any applicable requirements set forth in the Charter Documents of any Contributed Company, (A) cause its Subsidiaries to vote their respective Contributed Company Interests in the applicable Contributed Companies and (B) otherwise exercise all rights and powers available to it to cause its respective Contributed Companies:

(i) to use commercially reasonable efforts to (A) maintain all of its Contributed Assets, Real Property Interests and Project Permits in accordance with Prudent Solar Industry Practices and (B) to the extent applicable, pursue the continued construction and development of any Project in accordance with all applicable Project Permits and Material Contracts;

 

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(ii) not to make any material change in the conduct of its Business;

(iii) not to amend the Charter Documents of any Contributed Company;

(iv) not to issue, deliver or sell or authorize or propose the issuance, delivery or sale of, any of its Equity Interests or securities convertible into its Equity Interests, or subscriptions, rights, warrants or options to acquire or other agreements or commitments of any character obligating it to issue any such securities;

(v) not to merge into or with any other Person (other than (A) mergers among wholly owned Subsidiaries of the same Person, (B) mergers between any FS Contributed Company and its wholly-owned Subsidiaries, (C) mergers between any SP Contributed Company and its wholly-owned Subsidiaries or (D) as permitted by clause (vi));

(vi) not to acquire all or substantially all of the business or assets of any Person, or acquire any interest in or contribute any assets to any partnership or joint venture or enter into any similar arrangement;

(vii) except as permitted by exclusions under other clauses of this Section 6.01(a):

(A) other than in the ordinary course of business, not to enter into any Material Contract or terminate, amend or breach in any material respect any Material Contract to which it is a party or waive any material rights under any Material Contract to which it is a party, except for amendments to the SP Residential Leases that (I) do not modify the form of agreement attached as Part II of Schedule 5.29 of the SP Disclosure Schedule and (II) are not, individually or in the aggregate, material to any SP Contributed Company;

(B) with respect to First Solar and the FS Contributed Companies, not to enter into any Contract between First Solar or its Subsidiaries (excluding the FS Contributed Companies), on the one hand, and the FS Contributed Companies, on the other hand, or terminate, amend or waive any existing material right or claim by the FS Contributed Companies against First Solar or its Subsidiaries (excluding the FS Contributed Companies); or

(C) with respect to SunPower and the SP Contributed Companies, not to enter into any Contract between SunPower or its Subsidiaries (excluding the SP Contributed Companies), on the

 

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one hand, and the SP Contributed Companies, on the other hand, or terminate, amend or waive any existing material right or claim by the SP Contributed Companies against SunPower or its Subsidiaries (excluding the SP Contributed Companies);

(viii) not to purchase any securities of or make any investment in any Person (other than (A) ordinary-course overnight investments consistent with cash management practices of such Party and (B) investments in wholly-owned Subsidiaries);

(ix) not to incur, assume or guarantee any Indebtedness;

(x) not to sell, assign, transfer, abandon, lease or otherwise dispose of assets having a fair market value in excess of $1,000,000 in the aggregate, except for (1) capacity, energy, ancillary services or related attributes in the ordinary course of business and documented by a Material Contract or (2) dispositions of inventory or worn-out or obsolete equipment for fair value in the ordinary course of business;

(xi) other than Permitted Liens, not to grant any security interest with respect to, pledge or otherwise encumber any assets;

(xii) to use commercially reasonable efforts to continue in full force and effect, in the case of First Solar, the FS Insurance Policies and, in the case of SunPower, the SP Insurance Policies, or comparable replacement coverage (which shall include appropriate changes of coverage upon the completion of construction and commencement of commercial operations at any Project);

(xiii) not to settle any claims, demands, lawsuits or state or federal regulatory proceedings for damages to the extent such settlements in the aggregate assess damages in excess of $1,000,000 (other than any claims, demands, lawsuits or proceedings to the extent insured (net of deductibles), to the extent reserved against in the FS Financial Statements or the SP Financial Statements, as applicable, or to the extent covered by an indemnity obligation not subject to dispute or adjustment from a solvent indemnitor);

(xiv) except as (A) required on an emergency basis or for the safety of persons or the environment or (B) in accordance with the Material Contracts, not to make any capital expenditure in excess of $1,000,000 in the aggregate;

(xv) not to make, amend or revoke any Tax elections, change or consent to any change in any method of accounting for any Tax purpose, enter into any closing agreement affecting any Tax liability or refund or file any request for rulings or special Tax incentives with any Governmental Entity, settle or compromise any Tax liability or refund, or extend or waive the application of any statute of limitations regarding the assessment or collection of any Tax;

 

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(xvi) not to make any change to its financial reporting and accounting methods other than as required by a change in GAAP or applicable Law;

(xvii) fail to file on a timely basis all applications and other documents necessary to maintain, renew or extend any Project Permit or any other material Permit required by any Governmental Entity for the continuing operation of its Business;

(xviii) not to liquidate, dissolve, reorganize, recapitalize or otherwise wind up any Contributed Company or any substantial portion of its business or not maintain any Contributed Company’s existence in the jurisdiction in which its organized; or

(xix) agree or commit to do any of the foregoing.

Notwithstanding any provision in this Section 6.01 to the contrary, to the extent that they relate to First Solar, on the one hand, or SunPower, on the other hand, the restrictions set forth in this Section 6.01 shall apply only to the business, operations, agreements, indebtedness and securities of the FS Contributed Companies or the SP Contributed Companies, respectively, and shall not apply to the business, operations, agreements, indebtedness and securities of, or otherwise restrict the activities of, First Solar or any of its Affiliates (other than the FS Contributed Companies) or SunPower or any of its Affiliates (other than the SP Contributed Companies).

(b) During the Interim Period, each Party shall promptly notify the other Party in writing of:

(i) any event, condition or circumstance that could reasonably be expected to result in any of the conditions set forth in Article VII or Article VIII not being satisfied on or prior to the Closing Date;

(ii) any change, event or occurrence that has had or could reasonably be expected to have an FS Material Adverse Effect or an SP Material Adverse Effect, as applicable;

(iii) any material breach by the notifying Party of any covenant, obligation or agreement contained in this Agreement;

(iv) any Material Contract entered into or amended, in each case, by such Party during the Interim Period, and such Party shall make available a true, correct and complete copy of such Contract or amendment thereto (as applicable); and

(v) any material change, event or effect with respect to any Contributed Company or Project prior to the Adjustment Date, that such Party reasonably expects (A) will be reflected in such Party’s Revised Model or (B) will be the subject of Updated Disclosure Schedules delivered by such Party;

 

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provided that the delivery of any notice pursuant to this Section 6.01(b) shall not limit or otherwise affect the remedies available hereunder to the notified Party or the conditions set forth in Article VII or Article VIII.

(c) During the Interim Period, (i) First Solar shall cause its Affiliates and the other Persons party thereto to (A) enter into the Contracts set forth on Part I of Schedule 6.01(c) of the FS Disclosure Schedule, and (B) effect the amendments or modifications to the Contracts set forth on Part II of Schedule 6.01(c) of the FS Disclosure Schedule, in each case, in the manner described in Schedule 6.01(c) of the FS Disclosure Schedule, and (ii) SunPower shall cause its Affiliates and the other Persons party thereto to (A) enter into the Contracts set forth on Part I of Schedule 6.01(c) of the SP Disclosure Schedule, and (B) effect the amendments or modifications to the Contracts set forth on Part II of Schedule 6.01(c) of the SP Disclosure Schedule, in each case, in the manner described in Schedule 6.01(c) of the SP Disclosure Schedule.

(d) Except with the consent of the other Party or as otherwise set forth on Schedule 4.28 of the FS Disclosure Schedule (with respect to First Solar) or Schedule 5.30 of the SP Disclosure Schedule (with respect to SunPower), a Party shall not, and shall cause its Affiliates not to, (a) cause any 8point3 Entity to take any action, or to incur any Liability, during the Interim Period, (b) issue, deliver or sell or authorize or propose the issuance, delivery or sale of, any Equity Interests of any 8point3 Entity or securities convertible into such Equity Interests, (c) cause any 8point3 Entity to incur, assume or guarantee any Indebtedness, or (d) grant any security interest with respect to, pledge or otherwise encumber, or cause any 8point3 Entity to grant any security interest, pledge or otherwise encumber, any Equity Interests or other assets of any 8point3 Entity (other than Permitted Equity Liens).

6.02 Consummation of Transactions; Required Consents.

(a) Each Party shall (i) as promptly as is reasonably practicable, diligently and in good faith, use commercially reasonable efforts to cause the Closing conditions in this Agreement to be satisfied as soon as possible, and (ii) coordinate and cooperate with the other Party in providing such information and supplying such assistance as may be reasonably requested by such other Party in connection with the foregoing, to the extent not protected by a legal privilege or prohibited by Law. Without limiting the generality of the foregoing or any other provision of this Agreement regarding approvals, each Party agrees to take, or cause to be taken, all commercially reasonable actions and to do, or cause to be done, all commercially reasonable things required, necessary, proper or advisable to obtain such authorizations, consents, orders and approvals from any Governmental Entity or other Person as are required, necessary, proper or advisable in connection with the consummation of the transactions contemplated hereby. Each Party will promptly inform the other Party of any material communication received by such Party from, or given by such party to, any Governmental Entity from which any such Consent is required and of any material communication received or given in connection with any claim by a private party, in each case regarding any of the transactions contemplated hereby, and will permit the other Party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any such Governmental Entity or, in connection with any such claim by a private party, with such other Person, and to the extent permitted by such Governmental Entity or other Person, give the other Party the opportunity to attend and to participate in such meetings and conferences.

 

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(b) Notwithstanding anything else to the contrary herein, neither Party shall be required to offer or grant any accommodation (financial or otherwise) to any other Person or Governmental Entity as condition to obtaining any such Consent other than any customary and usual accommodations granted or offered by parties in transactions similar to those contemplated hereunder.

(c) As promptly as is reasonably practicable, and in any case within fifteen (15) Business Days after the Execution Date, First Solar and SunPower, as applicable, shall file or cause to be filed with FERC an application under Section 203 of the FPA as is necessary to obtain required FERC approval for the various transactions contemplated hereby. The Parties shall consult with each other regarding such filings and shall consider and incorporate in such filings all reasonable comments, if any, submitted by the other Party with respect thereto. The Parties shall respond promptly to any requests for additional information made by FERC and use their respective commercially reasonable efforts to cause regulatory approval to be obtained at the earliest possible date after the date of filing. Each Party shall bear its own costs of the preparation and prosecution of any such filing.

(d) To the extent necessary, as promptly as reasonably practicable, First Solar and SunPower, as applicable, shall file or cause to be filed with the Bundeskartellamt (German Federal Cartel Office (BKartA)) an application under the Act against Restraints of Competition, of 1958 (Gesetz gegen Wettbewerbsbeschränkungen, or “GWB”), as is necessary to obtain required BKartA approval for the various transactions contemplated hereby. The Parties shall consult with each other regarding such filings and shall consider and incorporate in such filings all reasonable comments, if any, submitted by the other Party with respect thereto. The Parties shall respond promptly to any requests for additional information made by BKartA and use their respective commercially reasonable efforts to cause regulatory approval to be obtained at the earliest possible date after the date of filing. Each Party shall bear its own costs of the preparation and prosecution of any such filing.

6.03 Access to Information; Confidentiality.

(a) Subject to Section 6.03(b) and applicable Laws, upon reasonable notice, each of First Solar and SunPower shall (and shall cause the FS Contributed Companies and the SP Contributed Companies, respectively) afford the Representatives of the requesting Party reasonable access, during normal business hours during the Interim Period, to the properties, books, contracts and records of its Contributed Companies (and, in the case of SunPower, the Operating Company); provided that such access shall be provided on a basis that minimizes the disruption to the operations of the disclosing Party, its Contributed Companies and its other Subsidiaries; and provided, further, that the requesting Party shall not (i) contact clients, customers or suppliers of the disclosing Party (or its Contributed Companies or other Subsidiaries) with respect to the transactions contemplated hereby without the prior written consent of the disclosing Party (which consent may be withheld at such Party’s sole discretion) or (ii) perform invasive or subsurface investigations of the real property owned or leased by the disclosing Party, its Contributed Companies or its other Subsidiaries. The disclosing Party shall

 

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have a right to have a representative present at all times at any inspections, interviews and examinations conducted at or in the offices or other facilities or properties of the disclosing Party, its Contributed Companies or its other Subsidiaries. To the fullest extent permitted by Law, the disclosing Party shall not be responsible or liable to the requesting Party for injuries sustained by the requesting Party’s Representatives in connection with the access provided pursuant to this Section 6.03(a), and shall be indemnified and held harmless by the requesting Party for any Damages suffered by the disclosing Party or its officers, employees, counsel, accountants or representatives in connection with any such injuries, including personal injury, death or physical property damage. THIS INDEMNIFICATION IS EXPRESSLY INTENDED TO APPLY NOTWITHSTANDING ANY NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY ON THE PART OF THE DISCLOSING PARTY, EXCEPTING ONLY INJURIES ACTUALLY RESULTING ON THE ACCOUNT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE DISCLOSING PARTY.

(b) Each of First Solar and SunPower acknowledge that certain information received pursuant to Section 6.03(a) will be proprietary in nature and as such will be deemed to be “Confidential Information” for purposes of the Confidentiality Agreement. Each of First Solar and SunPower further agrees to be bound by the terms and conditions of the Confidentiality Agreement (except that the term of the Confidentiality Agreement shall be three (3) years from the Execution Date) and to maintain the confidentiality of such Confidential Information in accordance with the Confidentiality Agreement.

6.04 Partnership IPO.

(a) As soon as practicable following the date of this Agreement, but in any event prior to the Partnership IPO Filing Deadline, the Parties shall cause the Partnership to prepare and file with the SEC a Registration Statement, in a form reasonably acceptable to each of First Solar and SunPower, on Form S-1 (or any appropriate registration form under the Securities Act selected by the Parties, on behalf of the Partnership) for a Qualified Public Offering (the “Partnership IPO Registration”).

(b) Each Party agrees that it shall use commercially reasonable efforts to effect the closing of a Qualified Public Offering on or prior to December 31, 2015, including acting in good faith and causing its Representatives to provide reasonable cooperation to the other Party in connection with such Qualified Public Offering, which cooperation shall include providing any financial or other information reasonably necessary to have the Registration Statement for the Qualified Public Offering declared effective by the SEC. Each Party will promptly inform the other Party of any communication received by such Party from, or given by such party to, the SEC regarding the Partnership IPO Registration, and will permit the other Party to review any communication given by it to, and consult with each other in advance of any meeting or conference with the SEC regarding the Partnership IPO Registration, and give the other Party the opportunity to attend and to participate in such meetings and conferences.

(c) In connection with the Qualified Public Offering, each Party shall cause its senior executives, to the extent reasonably required, to (i) participate in a reasonable number of meetings, telephone calls, presentations, road shows, due diligence sessions with prospective

 

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investors and analysts and sessions with rating agencies, (ii) assist with the preparation of customary materials for rating agency presentations, offering documents, business projections and similar marketing documents in connection with the Qualified Public Offering and (iii) assist in the preparation of the Registration Statement for the Qualified Public Offering, including reviewing and commenting on the registration statement and participating in drafting and negotiating sessions with the representatives of each of the parties.

(d) Each Party agrees that it will use commercially reasonable efforts to obtain customary officers’ certificates, legal opinions, accountants’ comfort letters and consents to the use of audit reports and make available such financial and other information and books and records of itself and its Affiliates as would be customary for the underwriters and their counsel to conduct a reasonable investigation of such Persons, in each case, in connection with the Qualified Public Offering.

(e) As of, or as promptly as practicable following the consummation of, the closing of the Qualified Public Offering, the Parties will cause the Partnership to use 100% of the net proceeds from the Qualified Public Offering to acquire Operating Company Common Units from the Operating Company, in a number equal to the number of Class A Shares sold in the Qualified Public Offering (including pursuant to the exercise of any “over-allotment” option therein) as provided for in the Purchase Agreement.

6.05 Credit Facility.

(a) Each Party shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and consummate a revolving credit facility and a term loan facility for the benefit of the Operating Company (collectively, the “Credit Facility”) with terms and conditions reasonably acceptable to each of First Solar and SunPower.

(b) Each Party shall use commercially reasonable efforts to cooperate, and shall use commercially reasonable efforts to cause its respective Representatives to cooperate, with such other Party and its Representatives and with prospective lenders, financial advisors and underwriters as reasonably requested by such other Party in connection with the arrangement of the Credit Facility, including (i) using commercially reasonable efforts to participate in meetings, presentations, road shows, due diligence sessions, drafting sessions and sessions with rating agencies; (ii) using commercially reasonable efforts to assist with the preparation of materials for rating agency presentations, offering documents, bank information memoranda and similar documents required in connection with the Credit Facility; (iii) executing and delivering any commitment letters, agreements to pay fees and expenses, customary certificates, legal opinions or documents as may be reasonably requested by the prospective lenders involved in the Credit Facility; (iv) using commercially reasonable efforts to furnish prospective lenders, as promptly as practicable, with financial and other pertinent information regarding the FS Contributed Companies or the SP Contributed Companies, as applicable, as may be reasonably requested by such prospective lenders, including quarterly and annual consolidated and consolidating financial statements of the FS Contributed Companies or the SP Contributed Companies, as applicable, prepared in accordance with GAAP (except, in the case of quarterly financial statements, for the absence of footnotes and subject to normal year-end adjustments), and all other financial

 

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statements and financial data of the type reasonably required by such prospective lenders; (v) taking all actions reasonably necessary to facilitate the due diligence conducted by prospective lenders; and (vi) causing the Operating Company to enter into one or more customary and reasonable credit agreements. Any information provided by First Solar or SunPower in connection with seeking the Credit Facility shall be prepared in good faith and shall be free of any material misstatements or omissions.

(c) Notwithstanding anything to the contrary in this Agreement, the Operating Company shall be responsible for (i) all upfront, arrangement and commitment fees associated with obtaining the Credit Facility, (ii) all legal fees and (iii) all out-of-pocket expenses of the initial lenders and lead arrangers under the Credit Facility incurred in connection therewith (provided that, if the Closing does not occur and the Credit Facility is not obtained, each of First Solar and SunPower shall be responsible, severally and not jointly, for 50% of all of the foregoing fees and expenses). Except as set forth in the immediately preceding sentence, none of First Solar or SunPower or any of their Affiliates will be obligated to pay or reimburse the Operating Company for any fees or expenses with respect to the Credit Facility.

6.06 Further Assurances. In the event that at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties shall take such further action (including the execution and delivery of such further documents and instruments) as the other Party may reasonably request, all at the sole expense of the requesting Party (unless the action requested should have been taken prior to the Closing, in which case the Party that would have borne the expense of taking such action had it been taken prior to the Closing shall bear such expense).

6.07 Public Announcements. No press release or announcement concerning the transactions contemplated hereby, any 8point3 Entity or any Contributed Company will be issued by any Party without the prior consent of the other Party (which consent shall not be unreasonably withheld, delayed or conditioned), except as such release or announcement may be required by Law or the applicable rules of any securities exchange, in which case the Party required to make the release or announcement will give notice to and consult with the other Party a reasonable time in advance of such issuance.

6.08 Brokerage Agreements. Except as expressly contemplated by this Agreement, no Party shall enter into any brokerage agreement or other arrangement, whether orally or in writing, regarding any debt or equity financing of any 8point3 Entity, including any public offering of any of the securities of the Partnership or any of its Subsidiaries, without the express written consent of the other Party.

6.09 Expenses. Except as otherwise provided in this Agreement (including pursuant to Section 11.02), regardless of whether the transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such expenses; provided, that each of First Solar and SunPower shall pay 50% of all Qualified Expenses with respect to the transactions contemplated by this Agreement.

6.10 Insurance. Each Party shall use commercially reasonable efforts to agree upon a program of insurance for Holdings, its Subsidiaries and the other Contributed Companies and to

 

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take or cause to be taken all actions and to do, or cause to be done, all things necessary, proper or advisable to cause Holdings, its Subsidiaries or the other Contributed Companies, as applicable, to obtain such program of insurance, effective as of the Closing.

6.11 Independent Directors; Officers.

(a) On or before the pricing of a Qualified Public Offering, the Parties shall designate at least one (1) individual who qualifies as an “Independent Director” (as defined in the YieldCo General Partner Limited Liability Company Agreement) to serve on the Board of Directors in such capacity. During the Interim Period, the Parties shall use commercially reasonable efforts to identify two (2) additional individuals who (i) qualify as “Independent Directors” (as defined in the YieldCo General Partner Limited Liability Company Agreement) and (ii) may be designated to serve on the Board of Directors in such capacity in accordance with the procedures set forth in the YieldCo General Partner Limited Liability Company Agreement.

(b) The Parties agree that (i) SunPower shall nominate the initial Chief Executive Officer of the YieldCo General Partner, (ii) First Solar shall nominate the initial Chief Financial Officer and General Counsel/Secretary of the YieldCo General Partner and (iii) the initial Chief Accounting Officer of the YieldCo General Partner shall be selected by mutual agreement of the Parties. In each case, such person shall be appointed to his or her respective office pursuant to the YieldCo General Partner Closing Board Resolutions.

ARTICLE VII

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FIRST SOLAR

The obligations of First Solar to consummate the transactions contemplated hereby will be subject to the satisfaction or waiver at or prior to the Closing of each of the following conditions, any of which may be waived by First Solar in its sole discretion:

7.01 Representations and Warranties of SunPower.

(a) The SP Specified Representations and the representations contained in Section 5.27 shall be true and correct in all respects, in each case as of the Closing Date (except to the extent made as of a particular date, in which case such SP Specified Representation shall have been true and correct as of such date), except as otherwise affected by any action of First Solar not in accordance with this Agreement or any breach by First Solar of its representations and warranties or undertakings hereunder.

(b) The representations and warranties of SunPower set forth in this Agreement (other than the SP Specified Representations and the representations contained in Section 5.27) shall be true and correct as of the Closing Date (except to the extent any such representation and warranty is made as of a particular date, in which case such representation and warranty shall have been true and correct as of such date), disregarding all Materiality Requirements contained therein, except where the failure of any such representation and warranty to be true and correct has not had, and is not reasonably likely to have, an SP Material Adverse Effect.

(c) SunPower shall have delivered to First Solar a certificate signed by an authorized officer of SunPower, confirming the matters set forth in clauses (a) and (b) of this Section 7.01 as of the Closing Date.

 

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7.02 Covenants and Agreements. The covenants and agreements of SunPower to be performed or complied with pursuant to this Agreement, at or prior to the Closing, shall have been duly performed and complied with in all material respects. SunPower shall have delivered to First Solar a certificate signed by an authorized officer of SunPower, confirming the foregoing as of the Closing Date.

7.03 No Adverse Order. No Order shall be in effect, and no Law shall have been enacted or adopted, that enjoins, prohibits or makes illegal the consummation of any of the transactions contemplated by this Agreement, and no Action by any Governmental Entity with respect to the transactions contemplated by this Agreement shall be pending that seeks to restrain, enjoin, prohibit or delay consummation of the transactions contemplated by this Agreement or to impose any material restrictions or requirements thereon or on the Parties with respect thereto.

7.04 Required Consents. The Parties shall have received all Consents required to be obtained from FERC in connection with the transactions contemplated by this Agreement or any other Transaction Document. All other SP Required Consents and FS Required Consents shall have been obtained and shall be in full force and effect, and SunPower shall have delivered copies of each such SP Required Consent to First Solar.

7.05 Qualified Public Offering. The pricing of the first sale of Class A Shares pursuant to the Qualified Public Offering shall have occurred and the closing of the Qualified Public Offering shall occur substantially simultaneously with the Closing, in each case, on terms reasonably acceptable to First Solar.

7.06 Reorganization; Related Matters.

(a) The SP Reorganization shall have been consummated in accordance with the SP Reorganization Agreements.

(b) Simultaneously with the FS Contribution, the Operating Company shall have issued to FS Holdings Member the Operating Company Common Units and Operating Company Subordinated Units and paid to the FS Contributors the cash consideration, in each case, pursuant to Section 2.03(b)(i) and the Partnership shall have issued to FS Holdings Member the Class B Shares pursuant to Section 2.03(b)(ii).

(c) The Operating Company shall have recapitalized the interests held by SP Holdings Member in the Operating Company prior to the Closing into Operating Company Common Units and Operating Company Subordinated Units and paid to SP Holdings Member the cash consideration, in each case, pursuant to Section 2.03(b)(iii), and the Partnership shall have issued to SP Holdings Member the Class B Shares pursuant to Section 2.03(b)(iv).

 

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7.07 Closing Deliverables.

(a) SunPower shall have executed and delivered (or caused to be executed and delivered), as applicable, all agreements and other documents required to be executed and delivered to First Solar pursuant to Section 3.03.

(b) Holdings shall have delivered to the Parties executed counterparts to (i) the YieldCo General Partner Limited Liability Company Agreement, (ii) the YieldCo General Partner Closing Member Consent, (iii) the Operating Company Limited Liability Company Agreement, (iv) the Omnibus Agreement and (v) the Management Services Agreements.

(c) The YieldCo General Partner shall have delivered to the Parties executed counterparts to (i) the Partnership Agreement, (ii) the Management Services Agreements, (iii) the Exchange Agreement and (iv) the Omnibus Agreement.

(d) The Partnership shall have delivered to the Parties executed counterparts to (i) the Operating Company Limited Liability Company Agreement, (ii) the Management Services Agreements, (iii) the Exchange Agreement, (iv) the Registration Rights Agreement, (v) the Purchase Agreement and (vi) the Omnibus Agreement.

(e) The Operating Company shall have delivered to the Parties executed counterparts to (i) the Management Services Agreements, (ii) the FS ROFO Agreement, (iii) the SP ROFO Agreement, (iv) the Exchange Agreement, (v) the FS Contribution Agreement, (vi) the SP Reorganization Agreements, (vii) the Purchase Agreement and (viii) the Omnibus Agreement.

(f) The Board of Directors shall have delivered to the Parties executed counterparts to the YieldCo General Partner Closing Board Resolutions.

7.08 Credit Facility; Credit Support.

(a) Each of the Operating Company, the applicable Subsidiaries of the Operating Company required pursuant thereto and the respective lenders party thereto shall have executed and delivered the Credit Facility, the terms and conditions set forth in the Credit Facility shall be reasonably acceptable to First Solar, and the closing under the Credit Facility shall occur substantially simultaneously with the Closing.

(b) First Solar and its Affiliates shall have been fully released from their obligations (if any) to provide the FS Support Obligations marked with an asterisk on Schedule 4.26 of the FS Disclosure Schedule (and from any Liens granted in connection with such underlying credit support obligations) and such FS Support Obligations shall have been returned to First Solar (or its designee).

(c) Each of First Solar and SunPower shall have entered into arrangements with the Operating Company in respect of any FS Support Obligations and SP Support Obligations, respectively, not released on or prior to the Closing, which arrangements shall be mutually acceptable to the Parties.

 

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7.09 No Material Adverse Effect. No event, development, circumstance or occurrence shall have occurred since the Execution Date that, individually or in the aggregate, has had an SP Material Adverse Effect.

7.10 Related First Solar Transactions. Each of the Lost Hills Sale Transaction, the MD Solar Lease Transaction and the North Star Sale Transaction shall have been consummated, or the closing thereof shall occur together with the Closing.

7.11 Real Property. The SP Contributed Companies shall have obtained the title insurance policies, and SunPower shall have delivered to First Solar copies of the real property surveys, in each case, described on Schedule 7.11 of the SP Disclosure Schedule.

7.12 Residential Project Matters. The SP Contributed Companies shall have been fully released from their obligations, and shall have no further liability, under (a) all lease agreements in respect of Residential Systems, other than the SP Residential Leases set forth on Part I of Schedule 5.29, (b) all tax equity financing agreements in respect of Residential Systems and (c) all maintenance service, lease services or similar arrangements with respect to Residential Systems required to have been entered into by any SP Contributed Company pursuant to such tax equity financing agreements, and, in the case of clause (a), SunPower shall have delivered evidence of such release to First Solar.

7.13 Interim Period Material Contracts. All Material Contracts entered into or amended in any material respect, in each case, by or on behalf of any SP Contributed Company during the Interim Period, shall be reasonably acceptable to First Solar.

7.14 Repayment of Quinto Debt. Prior to, or substantially simultaneously with the receipt of the proceeds from the Qualified Public Offering on, the Closing Date, (a) all Indebtedness outstanding under that certain Credit Agreement, dated as of October 17, 2014, among Solar Star California XIII, LLC, as Borrower, Santander Bank, N.A., as Coordinating Lead Arranger and Joint Lead Arranger, Mizuho Bank Ltd. and Crédit Agricole Corporate and Investment Bank, as Joint Lead Arrangers, Mizuho Bank Ltd., as Administrative Agent, and the other financial institutions party thereto (the “Quinto Credit Agreement”) shall have been repaid in full from the proceeds of the Qualified Public Offering, (b) the “Discharge Date” (as defined in the Quinto Credit Agreement) shall have occurred, (c) the Quinto Credit Agreement and all other “Loan Documents” (as defined in the Quinto Credit Agreement) shall have been terminated and (d) SunPower shall have delivered evidence of the foregoing to First Solar.

 

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ARTICLE VIII

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUNPOWER

The obligations of SunPower to consummate the transactions contemplated hereby will be subject to the satisfaction or waiver at or prior to the Closing of each of the following conditions, any of which may be waived by SunPower in its sole discretion:

8.01 Representations and Warranties of First Solar.

(a) The FS Specified Representations and the representations contained in Section 4.27 shall be true and correct in all respects, in each case as of the Closing Date (except to the extent made as of a particular date, in which case such FS Specified Representation shall have been true and correct as of such date), except as otherwise affected by any action of SunPower not in accordance with this Agreement or any breach by SunPower of its representations and warranties or undertakings hereunder.

(b) The representations and warranties of First Solar set forth in this Agreement (other than the FS Specified Representations and the representations contained in Section 4.27) shall be true and correct as of the Closing Date (except to the extent any such representation and warranty is made as of a particular date, in which case such representation and warranty shall have been true and correct as of such date), disregarding all Materiality Requirements contained therein, except where the failure of any such representation and warranty to be true and correct has not had, and is not reasonably likely to have, an FS Material Adverse Effect.

(c) First Solar shall have delivered to SunPower a certificate signed by an authorized officer of First Solar, confirming the matters set forth in clauses (a) and (b) of this Section 8.01 as of the Closing Date.

8.02 Covenants and Agreements. The covenants and agreements of First Solar to be performed or complied with pursuant to this Agreement, at or prior to the Closing, shall have been duly performed and complied with in all material respects. First Solar shall have delivered to SunPower a certificate signed by an authorized officer of First Solar, confirming the foregoing as of the Closing Date.

8.03 No Adverse Order. No Order shall be in effect, and no Law shall have been enacted or adopted, that enjoins, prohibits or makes illegal the consummation of any of the transactions contemplated by this Agreement, and no Action by any Governmental Entity with respect to the transactions contemplated by this Agreement shall be pending that seeks to restrain, enjoin, prohibit or delay consummation of the transactions contemplated by this Agreement or to impose any material restrictions or requirements thereon or on the Parties with respect thereto.

8.04 Required Consents. The Parties shall have received all Consents required to be obtained from FERC in connection with the transactions contemplated by this Agreement or any other Transaction Document. All other FS Required Consents and all SP Required Consents shall have been obtained and shall be in full force and effect, and First Solar shall have delivered copies of each such FS Required Consent to SunPower.

8.05 Qualified Public Offering. The pricing of the first sale of Class A Shares pursuant to the Qualified Public Offering shall have occurred and the closing of the Qualified Public Offering shall occur substantially simultaneously with the Closing, in each case, on terms reasonably acceptable to SunPower.

 

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8.06 Contribution; Related Matters.

(a) The FS Contribution shall have been consummated in accordance with the FS Contribution Agreement.

(b) Simultaneously with the FS Contribution, the Operating Company shall have issued to FS Holdings Member the Operating Company Common Units and Operating Company Subordinated Units and paid to the FS Contributors the cash consideration, in each case, pursuant to Section 2.03(b)(i) and the Partnership shall have issued to FS Holdings Member the Class B Shares pursuant to Section 2.03(b)(ii).

(c) The Operating Company shall have recapitalized the interests held by SP Holdings Member in the Operating Company prior to the Closing into Operating Company Common Units and Operating Company Subordinated Units and paid to SP Holdings Member the cash consideration, in each case, pursuant to Section 2.03(b)(iii), and the Partnership shall have issued to SP Holdings Member the Class B Shares pursuant to Section 2.03(b)(iv).

8.07 Closing Deliverables.

(a) First Solar shall have executed and delivered (or caused to be executed and delivered), as applicable, all agreements and other documents required to be executed and delivered to SunPower pursuant to Section 3.02.

(b) Holdings shall have delivered to the Parties executed counterparts to (i) the YieldCo General Partner Limited Liability Company Agreement, (ii) the YieldCo General Partner Closing Member Consent, (iii) the Operating Company Limited Liability Company Agreement, (iv) the Omnibus Agreement and (v) the Management Services Agreements.

(c) The YieldCo General Partner shall have delivered to the Parties executed counterparts to (i) the Partnership Agreement, (ii) the Management Services Agreements, (iii) the Exchange Agreement and (iv) the Omnibus Agreement.

(d) The Partnership shall have delivered to the Parties executed counterparts to (i) the Operating Company Limited Liability Company Agreement, (ii) the Management Services Agreements, (iii) the Exchange Agreement, (iv) the Registration Rights Agreement, (v) the Purchase Agreement and (vi) the Omnibus Agreement.

(e) The Operating Company shall have delivered to the Parties executed counterparts to (i) the Management Services Agreements, (ii) the FS ROFO Agreement, (iii) the SP ROFO Agreement, (iv) the Exchange Agreement, (v) the FS Contribution Agreement, (vi) the SP Reorganization Agreements, (vii) the Purchase Agreement and (viii) the Omnibus Agreement.

(f) The Board of Directors shall have delivered to the Parties executed counterparts to the YieldCo General Partner Closing Board Resolutions.

 

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8.08 Credit Facility; Credit Support.

(a) Each of the Operating Company, the applicable Subsidiaries of the Operating Company required pursuant thereto and the respective lenders party thereto shall have executed and delivered the Credit Facility, the terms and conditions set forth in the Credit Facility shall be reasonably acceptable to SunPower, and the closing under the Credit Facility shall occur substantially simultaneously with the Closing.

(b) SunPower and its Affiliates shall have been fully released from their obligations (if any) to provide the SP Support Obligations marked with an asterisk on Schedule 5.26 of the SP Disclosure Schedule (and from any Liens granted in connection with such underlying credit support obligations) and such SP Support Obligations shall have been returned to SunPower (or its designee).

(c) Each of First Solar and SunPower shall have entered into arrangements with the Operating Company in respect of any FS Support Obligations and SP Support Obligations, respectively, not released on or prior to the Closing, which arrangements shall be mutually acceptable to the Parties.

8.09 No Material Adverse Effect. No event, development, circumstance or occurrence shall have occurred since the Execution Date that, individually or in the aggregate, has had an FS Material Adverse Effect.

8.10 Real Property. The FS Contributed Companies shall have obtained the title insurance policies, and First Solar shall have delivered to SunPower copies of the real property surveys, in each case, described on Schedule 8.10 of the FS Disclosure Schedule.

8.11 Interim Period Material Contracts. All Material Contracts entered into or amended in any material respect, in each case, by or on behalf of any FS Contributed Company during the Interim Period, shall be reasonably acceptable to SunPower.

ARTICLE IX

SURVIVAL AND INDEMNIFICATION

9.01 Survival of Representations, Warranties and Agreements. The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing Date; provided, however, an Indemnified Party may bring a claim for or with respect to inaccuracy or breach of any representation or warranty only if it has notified the Indemnifying Party of the breach on or before the date that is eighteen (18) months after the Closing Date, except that claims for or with respect to any inaccuracy or breach of (a) any Specified Representation shall survive indefinitely, (b) any representation or warranty contained in Sections 4.11, 4.21, 5.11 or 5.21 shall survive the Closing until the date that is three (3) years after the Closing Date, and (c) any representation or warranty contained in Sections 4.16, 5.16, 4.27 or 5.27 shall survive the Closing until the date that is sixty (60) days after the expiration of the applicable statute of limitations (including any valid extensions with respect thereto).

 

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9.02 Indemnification by First Solar. Subject to the other terms and limitations set forth in this Agreement, First Solar agrees to indemnify, defend and hold harmless SunPower, SunPower’s Affiliates and each of their respective Representatives (collectively, the “SP Group”) from and against any and all Damages incurred or sustained by any member of the SP Group to the extent arising out of, relating to or resulting from (a) any failure by First Solar to perform any covenant or agreement of First Solar contained in this Agreement, and (b) any inaccuracy or breach of any of First Solar’s representations and warranties contained in this Agreement.

9.03 Indemnification by SunPower. Subject to the other terms and limitations set forth in this Agreement, SunPower agrees to indemnify, defend and hold harmless First Solar, First Solar’s Affiliates and each of their respective Representatives (collectively, the “FS Group”) from and against any and all Damages incurred or sustained by any member of the FS Group to the extent arising out of, relating to or resulting from (a) any failure by SunPower to perform any covenant or agreement of SunPower contained in this Agreement, and (b) any inaccuracy or breach of any of SunPower’s representations and warranties contained in this Agreement.

9.04 Liability Limitations. Notwithstanding anything to the contrary contained in this Agreement:

(a) No monetary amount will be payable by any Indemnifying Party to any member of the FS Group or the SP Group, respectively, with respect to the indemnification of any claims pursuant to clauses (a) or (b) of Section 9.02 or Section 9.03, as the case may be (other than (1) any claim for or with respect to any inaccuracy or breach of a Specified Representation, (2) any claim for or with respect to any inaccuracy or breach of any representation or warranty contained in Sections 4.16 or 5.16 or (3) any claim under Section 9.03 for or with respect to any inaccuracy or breach of a representation, or any failure to perform any covenant or agreement, in each case, made as to the Operating Company), unless (i) the amount of Damages in respect of such claim exceeds $500,000 (each claim with Damages at or under $500,000, a “De Minimis Claim”) and (ii) the aggregate amount of Damages actually incurred by the FS Group or the SP Group, as the case may be, with respect to all such claims (excluding De Minimis Claims) exceeds on a cumulative basis an amount equal to $1,000,000 (the “Deductible Amount”), in which event the Indemnified Party may only recover Damages to the extent in excess of the Deductible Amount (and excluding any Damages with respect to De Minimis Claims); provided that, with respect to claims arising at any time following any termination of this Agreement pursuant to Article XI, (A) the threshold for De Minimis Claims set forth in clause (i) of this Section 9.04(a) shall not apply, and (B) the Deductible Amount shall be $250,000;

(b) The maximum Damages payable by each of First Solar and SunPower to members of the SP Group or the FS Group, respectively, with respect to the indemnification of claims pursuant to clauses (a) or (b) of Section 9.02 or Section 9.03, as the case may be (other than (1) any claim for or with respect to any inaccuracy or breach of any representation or warranty contained in Sections 4.16 or 5.16 or (2) any claim under Section 9.03 for or with respect to any inaccuracy or breach of a representation, or any failure to perform any covenant or agreement, in each case, made as to the Operating Company), shall be (i) with respect to claims arising at any time following any termination of this Agreement pursuant to Article XI, an amount equal to the aggregate amount of direct fees and expenses incurred by such claiming Party or its Affiliates in

 

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connection with the negotiation and execution of this Agreement and the preparation of a Qualified Public Offering, but in no event in excess of $10,000,000, and (ii) with respect to all other claims, an amount equal to $60,000,000; and

(c) For the avoidance of doubt, the limitations in this Section 9.04 shall not apply to any claims under Article X or any claim arising out of or resulting from fraud or willful misconduct.

9.05 Indemnification Procedures.

(a) If any claim or demand is made against an Indemnified Party with respect to any matter by any Person that is not a party to this Agreement (or an Affiliate thereof) (a “Third Party Claim”) that may give rise to a claim for indemnification against an Indemnifying Party under this Article IX, then the Indemnified Party will as promptly as practicable, but not later than ten (10) days after receipt of such claim or demand, notify the Indemnifying Party in writing and in reasonable detail of the Third Party Claim (including the factual basis for the Third Party Claim, and, to the extent known, the amount, or an estimate of the amount (which estimate shall not be binding on the Indemnified Party), of the Third Party Claim); provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party will relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is materially prejudiced as a result thereof.

(b) The Indemnifying Party will have the right, at its option, to participate in or to assume the defense, negotiation or settlement of the Third Party Claim (in either case at the expense of the Indemnifying Party) with counsel of its choice reasonably satisfactory to the Indemnified Party; provided, however, the Indemnifying Party shall not be entitled to assume, and the Indemnified Party shall be entitled to have control over, the defense or settlement of any Third Party Claim (with counsel reasonably satisfactory to the Indemnifying Party) to the extent that such Third Party Claim seeks an Order against the Indemnified Party that, if successful, would be reasonably likely to materially interfere with the business, operations, assets or financial condition of the Indemnified Party. In the event that the Indemnifying Party fails to respond to the defense of the Third Party Claim within ten (10) Business Days after receipt of notice pursuant to Section 9.05(a), the Indemnified Party has the right to assume the defense of the Third Party Claim (at the expense of the Indemnifying Party) until such time as the Indemnifying Party assumes the defense thereof. The Indemnifying Party will be liable for the reasonable fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has failed to assume the defense thereof, including fees and expenses incurred by the Indemnified Party in contesting and defending a Third Party Claim after delivery of the notice in accordance with Section 9.05(a) but prior to the Indemnifying Party assuming the defense of such Third Party Claim. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof; provided, however, that, if the Indemnified Party reasonably concludes that (i) the potential imposition of criminal liability against the Indemnified Party or (ii) a conflict of interest exists in respect of such claim, such Indemnified Party will have the right to employ separate counsel reasonably satisfactory to the Indemnifying Party to represent such Indemnified Party and in that event the reasonable fees and expenses of such separate counsel (but not more than one separate counsel for all Indemnified Parties) shall be paid by such Indemnifying Party.

 

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(c) No Indemnifying Party will consent to any settlement, compromise or discharge (including the consent to entry of any judgment) of any Third Party Claim without the Indemnified Party’s prior written consent (which consent will not be unreasonably withheld, conditioned or delayed); provided, however, if the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnified Party will agree to any settlement compromise or discharge of such Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay all monetary amounts in connection with such Third Party Claim and unconditionally releases the Indemnified Party completely from all Liability in connection with such Third Party Claim; provided, further, that the Indemnified Party may refuse to agree to any such settlement, compromise or discharge (i) that provides for injunctive or other non-monetary relief affecting the Indemnified Party or (ii) that, in the reasonable opinion of the Indemnified Party, would otherwise materially adversely affect the Indemnified Party. Whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnified Party will not admit any liability, consent to the entry of any judgment or enter into any settlement or compromise with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld, conditioned or delayed). If the Indemnifying Party elects not to assume the defense of a Third Party Claim, and the Indemnified Party defends, settles or otherwise deals with such Third Party Claim, the Indemnified Party shall provide thirty (30) days’ advance written notice of any settlement to the Indemnifying Party and shall consider the Indemnifying Party’s comments to such settlement or defense and shall act reasonably and in accordance with the Indemnified Party’s good faith business judgment.

(d) If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnifying Party will keep the Indemnified Party informed of all material developments relating to or arising in connection with such Third Party Claim. If the Indemnifying Party chooses to defend a Third Party Claim, the Parties will cooperate in the defense thereof (with the Indemnifying Party being responsible for all reasonable out-of-pocket expenses of the Indemnified Party in connection with such cooperation), which cooperation will include the provision to the Indemnifying Party of records and information relating to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided thereunder.

(e) Any claim on account of Damages for which indemnification is provided under this Agreement that does not involve a Third Party Claim will be asserted by prompt written notice given by the Indemnified Party to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnified Party to so notify the Indemnifying Party will not relieve the Indemnifying Party from any Liability which it may have to such Indemnified Party under this Agreement, unless (and then solely to the extent) the Indemnifying Party is materially prejudiced as a result thereof.

 

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9.06 Certain Indemnification Matters.

(a) Except in the case of fraud or willful misconduct, and without in any way limiting any Party’s indemnification obligations pursuant to Sections 10.05 and 10.06, the indemnification provided in this Article IX shall at all times be the sole and exclusive damages remedy for any inaccuracy or breach of any representation or warranty or any failure to perform any covenant or agreement contained herein.

(b) Any Liability for indemnification under this Agreement shall be determined without duplication by reason of the state of facts giving rise to such Liability constituting a breach of more than one representation, warranty, covenant or agreement.

(c) Each Indemnified Party shall take all commercially reasonable steps to mitigate all Damages relating to a claim, including availing itself of any defense, limitations, rights of contributions, claims against third Persons and other rights at law or equity (and the cost and expenses of such mitigation shall constitute Damages for all purposes hereunder); provided that any failure to comply with this Section 9.06(c) shall not limit any Indemnified Party’s remedies under this Article IX except to reduce the amount of Damages recovered or recoverable by such Indemnified Party in an amount equal to the Damages caused by such Party’s failure to comply with this Section 9.06(c).

(d) If the amount of any Indemnified Party’s Damages, at any time subsequent to an Indemnifying Party’s making of a payment under this Article IX, is reduced by actual recovery, settlement, or otherwise under or pursuant to any applicable insurance coverage, or pursuant to any applicable claim, recovery, settlement or payment by or against any other Person (collectively, “Recoveries”), the amount of such Recoveries shall be repaid by the Indemnified Party to the applicable Indemnifying Party within fifteen (15) days after receipt thereof by such Indemnified Party, up to the aggregate amount of (i) the payments made by the applicable Indemnifying Party to such Indemnified Party less (ii) any deductibles, co-payments or other costs and expenses (including reasonable legal fees and expenses and retrospective insurance premium adjustments, if any) actually and reasonably incurred by the Indemnified Party in seeking such Recoveries.

ARTICLE X

TAX MATTERS

10.01 FS Contributed Company Taxes. First Solar shall be responsible for (and entitled to retain any refunds with respect to) all FS Indemnified Taxes, and the Operating Company shall be responsible for (and entitled to retain any refunds with respect to) all other Taxes of or with respect to the assets or Businesses of the FS Contributed Companies. Regardless of which Party is responsible for a Tax hereunder, First Solar shall file, or exercise all rights and powers available to it to cause the appropriate FS Contributed Company to file (as applicable), any Tax Return required by applicable law to be filed by the FS Contributed Companies prior to the Closing, and pay, or exercise all rights and powers available to it to cause the appropriate FS Contributed Company to pay (as applicable), all Taxes of the FS Contributed Companies that are required to be paid prior to the Closing. First Solar shall promptly deliver to the Operating

 

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Company copies of all Tax Returns filed by First Solar with respect to the FS Contributed Companies and any supporting documentation, excluding Tax Returns, or portions of the Tax Returns, related to income, franchise or similar Taxes that are unrelated to the FS Contributed Companies. First Solar and the FS Contributed Companies shall not make any election or otherwise take any action with respect to Taxes attributable to the FS Contributed Companies that is inconsistent with the conventions, elections or other Tax attributes of the FS Contributed Companies (or their assets).

10.02 SP Contributed Company Taxes. SunPower shall be responsible for (and entitled to retain any refunds with respect to) all SP Indemnified Taxes, and the Operating Company shall be responsible for (and entitled to retain any refunds with respect to) all other Taxes of or with respect to the assets or Businesses of the SP Contributed Companies. Regardless of which Party is responsible for a Tax hereunder, SunPower shall file, or exercise all rights and powers available to it to cause the appropriate SP Contributed Company to file (as applicable), any Tax Return required by applicable law to be filed by the SP Contributed Companies prior to the Closing, and pay, or exercise all rights and powers available to it to cause the appropriate SP Contributed Company to pay (as applicable), all Taxes of the SP Contributed Companies that are required to be paid prior to the Closing. First Solar shall promptly deliver to the Operating Company copies of all Tax Returns filed by SunPower with respect to the SP Contributed Companies and any supporting documentation, excluding Tax Returns, or portions of the Tax Returns, related to income, franchise or similar Taxes that are unrelated to the SP Contributed Companies. SunPower and the SP Contributed Companies shall not make any election or otherwise take any action with respect to Taxes attributable to the SP Contributed Companies that is inconsistent with the conventions, elections or other Tax attributes of the SP Contributed Companies (or their assets).

10.03 Tax Allocation. For purposes of allocating Taxes under this Agreement between the period prior to, and on or after, the Closing Date, (a) Taxes that are based upon or related to income or receipts or imposed on a transactional basis shall be allocated to the taxable period (or portion thereof) in which the transaction giving rise to such Taxes occurred, and (b) ad valorem, property and other Taxes imposed on a periodic basis shall be allocated between the period (or portion thereof) ending immediately prior to the Closing Date and the period (or portion thereof) beginning on the Closing Date by prorating each such Tax based on the number of days in the applicable taxable period that occur before the date on which the Closing Date occurs, on the one hand, and the number of days in such taxable period that occur on or after the date on which the Closing Date occurs, on the other hand. For purposes of clause (b) of the preceding sentence, the period for such Taxes shall begin on the date on which ownership of the applicable assets gives rise to liability for the particular Tax and shall end on the day before the next such date.

10.04 Tax Cooperation. First Solar and SunPower shall reasonably cooperate, and shall cause their respective Affiliates, employees and agents reasonably to cooperate, in preparing and filing all Tax Returns, including maintaining and making available to each other all records that are necessary for the preparation of any Tax Returns that the Party is required to file under this Article X, in resolving, defending or prosecuting all disputes and audits with respect to such Tax Returns.

 

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10.05 Tax Indemnification. Notwithstanding anything to the contrary in this Agreement, from and after the Closing, (a) SunPower will indemnify, defend and hold harmless the FS Group from and against any and all Damages actually incurred or sustained by any member of the FS Group to the extent arising out of, relating to, or resulting from, any SP Indemnified Taxes, and (b) First Solar will indemnify, defend and hold harmless the SP Group from and against any and all Damages actually incurred or sustained by any member of the SP Group to the extent arising out of, relating to, or resulting from, any FS Indemnified Taxes. Upon the determination of the amount of any Taxes for which any Party is liable under this Agreement, timely payments will be made from one Party to the other to the extent necessary to cause each Party to bear the amount of such Tax that is allocable to such Party under this Article X.

10.06 Tax Equity Indemnification. From and after Closing, subject to the other terms and limitations set forth in this Agreement, (a) SunPower will indemnify, defend and hold harmless the FS Group from and against any and all Damages actually incurred or sustained by any member of the FS Group to the extent arising out of, relating to, or resulting from a Tax Equity Breach with respect to the SP Contributed Companies, and (b) First Solar will indemnify, defend and hold harmless the SP Group from and against any and all Damages actually incurred or sustained by any member of the SP Group to the extent arising out of, relating to, or resulting from a Tax Equity Breach with respect to the FS Contributed Companies. Notwithstanding anything to the contrary set forth in this Agreement, no member of the SP Group or the FS Group, as applicable, shall have any claim under this Section 10.06 for any Tax Equity Breach to the extent the Operating Company also has a claim for such Tax Equity Breach pursuant to Section 3.1(a)(ii) or Section 3.2(a)(ii) of the Omnibus Agreement (except if the Operating Company elects not to bring such claim under the Omnibus Agreement).

10.07 Transfer Taxes. All sales, use, transfer, real property transfer, recording, gains, stock transfer and other similar Taxes and fees (including any filing and recording fees) (“Transfer Taxes”), if any, arising out of or in connection with (a) the FS Contribution shall be borne entirely by First Solar, and (b) the SP Reorganization shall be borne entirely by SunPower. Any other Transfer Taxes arising out of or in connection with the transactions contemplated by this Agreement (other than the FS Contribution and the SP Reorganization) shall be borne equally by the Parties. First Solar and SunPower shall cooperate and, if applicable, jointly file, all necessary documentation and Tax Returns with respect to all such Transfer Taxes.

10.08 Survival. The obligations of First Solar and SunPower pursuant to this Article X shall terminate sixty (60) days after the expiration of the applicable statute of limitations (including any valid extensions with respect thereto).

ARTICLE XI

TERMINATION; EFFECT OF TERMINATION

11.01 Termination. This Agreement may be terminated at any time prior to the Closing:

(a) by mutual written consent of First Solar and SunPower;

 

79


(b) by either First Solar or SunPower if (i) the Registration Statement is not filed with the SEC on or prior to the Partnership IPO Filing Deadline, or (ii) the Closing does not occur on or prior to December 31, 2015; provided that the Party seeking termination pursuant to this clause (b) is not in breach in any material respect of any representation, warranty, covenant or agreement of such Party contained in this Agreement;

(c) by written notice by SunPower to First Solar or by First Solar to SunPower, if any court of competent jurisdiction or other Governmental Entity shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement, and such Order or other action shall not be subject to appeal or shall have become final and unappealable; provided that the Party seeking termination pursuant to this clause (c) has not proximately contributed to the issuance of such Order by a breach of any of its obligations under this Agreement; or

(d) by either First Solar or SunPower, if there shall have been a material breach by SunPower or First Solar, as the case may be, of any of its representations, warranties, covenants or agreements contained herein and such breach would, if not cured, cause any of the conditions contained in Article VII or Article VIII, as applicable, not to be satisfied and such breach has not been cured to the reasonable satisfaction of the other Party within thirty (30) days after the breaching Party receives written notice thereof.

11.02 Termination Fee. If this Agreement is terminated by either Party at any time and, prior to such termination, (a) each Party approved the pricing of the Qualified Public Offering and (b) SunPower did not obtain the “Specified Consent” (as defined in Schedule 5.05 of the SP Disclosure Schedules) on or prior to the first (1st) Business Day following such pricing, SunPower agrees to pay to First Solar, within five (5) Business Days of such termination, an amount equal to the aggregate amount of direct fees and expenses incurred by First Solar or its Affiliates in connection with the negotiation and execution of this Agreement and the preparation of a Qualified Public Offering, but in no event in excess of $10,000,000.

11.03 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 11.01, all rights and obligations of the Parties under this Agreement will terminate without any Liability on the part of any Party, except that (a) Section 6.03(b), Section 6.05(c), Section 6.07, Section 6.08, Section 6.09, Article IX, Article XI and Article XII will continue in effect and (b) nothing in this Section 11.03 will relieve the defaulting or breaching Party from Liability to the other Party for any breach of this Agreement.

ARTICLE XII

MISCELLANEOUS

12.01 Parties in Interest. This Agreement is binding upon and is for the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement is not made for the benefit of any Person not a party hereto (including the 8point3 Entities), and no Person other than (a) the Parties hereto and their respective successors and permitted assigns and (b) the Indemnified Parties, to the extent such Indemnified Parties are expressly granted certain rights of indemnification in this Agreement, will acquire or have any benefit, right, remedy or claim under or by virtue of this Agreement.

 

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12.02 Assignment. No Party will convey, assign or otherwise transfer either this Agreement or any of the rights, interests or obligations hereunder without the prior written consent of the other Party hereto (in each of such Party’s sole and absolute discretion). Any such prohibited conveyance, assignment or transfer without the prior written consent of the other Party will be void ab initio.

12.03 Notices. Unless otherwise specified herein, any notice, statement, demand, claim, offer or other written instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the Party giving such notice and shall be sent by facsimile, email, hand messenger delivery, overnight courier service or certified mail (receipt requested) to each other Party at the address set forth below; provided that to be effective any such notice sent originally by facsimile or email must be followed within two (2) Business Days by a copy of such notice sent by overnight courier service (other than (1) any notice delivered by email for which the intended recipient thereof, by reply email, waives delivery of such copy and (2) notices delivered by email pursuant to Section 2.02(b), Section 2.02(c)(i), Section 2.02(c)(ii), Section 3.04(a) or Section 3.04(b)):

If to First Solar:

First Solar, Inc.

350 West Washington Street, Suite 600

Tempe, Arizona 85281

Tel: (602) 414-9300

Email: mark.widmar@firstsolar.com

Attention:        Mark Widmar, Chief Financial Officer

with copies to:

First Solar, Inc.

350 West Washington Street, Suite 600

Tempe, Arizona 85281

Tel: (602) 427-2925

Email: generalcounsel@firstsolar.com

Attention:        Paul Kaleta, General Counsel

Skadden, Arps, Slate, Meagher & Flom LLP

1440 New York Avenue NW

Washington, D.C. 20005

Tel: (202) 371-7402

Email: lance.brasher@skadden.com

            andrea.nicolas@skadden.com

Attention:        Lance Brasher; Andrea Nicolas

 

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If to SunPower:

SunPower Corporation

77 Rio Robles

San Jose, California 95134

Tel: (408) 240-5500

Email: chuck.boynton@sunpower.com

Attention:        Charles Boyton, Chief Financial Officer

with copies to:

SunPower Corporation

77 Rio Robles

San Jose, California 95134

Tel: (408) 240-5500

Email: lisa.bodensteiner@sunpower.com

Attention:        Lisa Bodensteiner, General Counsel

Baker Botts L.L.P.

910 Louisiana Street

Houston, Texas 77002

Tel: (713) 229-1527

Email: joshua.davidson@bakerbotts.com;

            gerald.spedale@bakerbotts.com

Attention:        Joshua Davidson; Gerald Spedale

Each Party shall have the right to change the place to which notices shall be 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. Without limiting any other means by which a Party may be able to prove that a notice has been received by another Party, all notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) five (5) Business Days after being deposited in the mail, postage prepaid, if mailed by first class certified mail, receipt requested; (iii) when received, if sent by facsimile or email, if received prior to 5 p.m., recipient’s time, on a Business Day, or on the next Business Day, if received later than 5 p.m., recipient’s time; and (iv) on the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. In any case hereunder in which a Party is required or permitted to respond to a notice from another Party within a specified period, such period shall run from the date on which the notice was deemed duly given as above provided, and the response shall be considered to be timely given if given as above provided by the last day of the period provided for such response.

12.04 Waiver; Remedies. No delay on the part of First Solar or SunPower in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of First Solar or SunPower of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

 

82


12.05 Captions. All Section titles or captions contained in this Agreement or in any Exhibit or Schedule referred to herein and the table of contents of this Agreement are for convenience only and shall not be deemed to be a part of this Agreement or affect the meaning or interpretation of this Agreement.

12.06 Severability. Whenever possible each provision and term of this agreement will be interpreted in a manner to be effective and valid. If any term or provision of this Agreement or the application of any such term or provision to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remaining provisions hereof, or the application of such term or provision to Persons or circumstances other than those as to which it has been held invalid, illegal or unenforceable, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby. If any term or provision of this Agreement is held to be prohibited or invalid, then such term or provision will be ineffective only to the extent of such prohibition or invalidity without invalidating or affecting in any manner whatsoever the remainder of such term or provision or the other terms and provisions of this Agreement. Upon determination that any other term or provision of this Agreement is invalid, void, illegal, or unenforceable, a court of competent jurisdiction will modify such term or provision so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible under the law.

12.07 Governing Law. THIS AGREEMENT, INCLUDING THE FORMATION, BREACH, TERMINATION, VALIDITY, INTERPRETATION AND ENFORCEMENT THEREOF, AND ALL TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OR RULES OF CONFLICT OF LAWS, TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD PERMIT OR REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. FOR THE AVOIDANCE OF DOUBT, IT IS INTENDED THAT 6 DEL. C. § 2708, WHICH PROVIDES FOR ENFORCEMENT OF DELAWARE CHOICE OF LAW WHETHER OR NOT THERE ARE OTHER RELATIONSHIPS WITH DELAWARE, SHALL APPLY.

12.08 Consent to Jurisdiction. Each of the Parties hereto irrevocably and unconditionally confirms and agrees (a) that it is and shall continue to be subject to the jurisdiction of the courts of the State of Delaware and of the federal courts sitting in the State of Delaware and (b)(i) to the extent that such Party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such Party’s agent for acceptance of legal process and notify the other Parties hereto of the name and address of such agent and (ii) to the fullest extent permitted by Law, that service of process may also be made on such Party by prepaid certified mail with a proof of mailing receipt validated by the U.S. Postal Service constituting evidence of valid service, and that, to the fullest extent permitted by Law, service made pursuant to (b)(i) or (ii) above shall have the same legal force and effect as if served upon such Party personally within the State of Delaware. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT LOCATED IN THE

 

83


STATE OF DELAWARE, INCLUDING THE DELAWARE COURT OF CHANCERY IN AND FOR NEW CASTLE COUNTY (THE “DELAWARE COURTS”) FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS), (B) WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH LITIGATION IN THE DELAWARE COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY DELAWARE COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM AND (C) ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

12.09 Entire Agreement. Except for the Confidentiality Agreement, this Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and this Agreement supersedes all prior negotiations, agreements or understandings of the Parties of any nature, whether oral or written, relating thereto.

12.10 Amendment. This Agreement may be modified, amended or supplemented only by written agreement executed by First Solar and SunPower.

12.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute a single instrument.

 

84


IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first above written.

 

FIRST SOLAR, INC.
By:

/s/ Mark R. Widmar

Name: Mark R. Widmar
Title: Chief Financial Officer
SUNPOWER CORPORATION
By:

/s/ Charles D. Boynton

Name: Charles D. Boynton
Title: Executive Vice President, Chief Financial Officer and Assistant Secretary

[Master Formation Agreement]


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

EXHIBIT A-1

Form of Holdings Amended and Restated Limited Liability Company Agreement

 

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

8POINT3 HOLDING COMPANY, LLC

A Delaware Limited Liability Company

Dated as of

[            ], 2015

 

 

 


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

  1   

Section 1.1

Definitions

  1   

Section 1.2

Construction

  22   

ARTICLE II ORGANIZATION

  22   

Section 2.1

Formation

  22   

Section 2.2

Name

  22   

Section 2.3

Registered Office; Registered Agent; Principal Office; Other Offices

  22   

Section 2.4

Purpose and Business

  23   

Section 2.5

Powers

  23   

Section 2.6

Term

  23   

Section 2.7

Title to Company Assets

  23   

ARTICLE III MEMBERSHIP INTERESTS; UNITS

  23   

Section 3.1

Membership Interests; Additional Members

  23   

Section 3.2

Adjustment to Economic Units

  25   

Section 3.3

Adjustment to Management Units

  26   

Section 3.4

Limitation of Liability

  27   

Section 3.5

Withdrawal of Members

  27   

Section 3.6

Record Holders

  27   

Section 3.7

No Appraisal Rights

  28   

ARTICLE IV TRANSFERS AND PLEDGES OF UNITS

  28   

Section 4.1

Membership Interests Generally

  28   

Section 4.2

Membership Interest Right of First Offer

  30   

Section 4.3

OpCo Transfer Generally

  31   

ARTICLE V CAPITAL CONTRIBUTIONS

  34   

Section 5.1

Initial Capital Contributions

  34   

Section 5.2

Additional Contributions

  34   

Section 5.3

Return of Contributions

  34   

Section 5.4

Capital Accounts

  34   

ARTICLE VI PROJECT OFFERS TO THE OPERATING COMPANY

  35   

Section 6.1

General

  35   

Section 6.2

Offer Schedule

  35   

Section 6.3

Increased Offer Rights

  36   

Section 6.4

Conflicts Committee Approval

  37   

Section 6.5

Future Target Distributed Cash Increase Schedule

  37   

Section 6.6

Delivery of Final Project Model

  38   

ARTICLE VII DISTRIBUTIONS AND ALLOCATIONS

  38   

Section 7.1

Distributions

  38   

Section 7.2

Allocations

  39   

Section 7.3

Special Allocations

  39   

 

i


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 7.4

Section 704(c)

  42   

Section 7.5

Varying Interests

  42   

Section 7.6

Withheld Taxes

  42   

Section 7.7

Limitations on Distributions

  42   

ARTICLE VIII MANAGEMENT MEMBERS

  43   

Section 8.1

Management by Management Members

  43   

Section 8.2

Meetings

  43   

Section 8.3

Notice of Meeting

  43   

Section 8.4

Quorum; Voting Requirement

  43   

Section 8.5

Management Member Deadlock

  44   

Section 8.6

Conference Telephone Meetings

  48   

Section 8.7

Action by Consent of Members

  48   

Section 8.8

Representatives

  49   

Section 8.9

Affiliate Contracts

  49   

Section 8.10

Notices

  49   

ARTICLE IX MANAGEMENT OF THE YIELDCO GENERAL PARTNER

  50   

Section 9.1

Right to Appoint Members of the Board of Directors

  50   

Section 9.2

Right to Appoint Officers of the YieldCo General Partner

  53   

Section 9.3

Right to Appoint Officers and Directors of Contributed Companies

  56   

ARTICLE X DUTIES; EXCULPATION AND INDEMNIFICATION

  56   

Section 10.1

Duties

  56   

Section 10.2

Indemnification

  57   

Section 10.3

Liability of Indemnitees

  59   

Section 10.4

Corporate Opportunities

  59   

ARTICLE XI TAXES

  60   

Section 11.1

Tax Returns

  60   

Section 11.2

Tax Elections

  60   

Section 11.3

Tax Matters Member

  61   

ARTICLE XII BOOKS, RECORDS, REPORTS, BANK ACCOUNTS, AND BUDGETS

  62   

Section 12.1

Records and Accounting

  62   

Section 12.2

Fiscal Year

  62   

Section 12.3

Reports

  62   

Section 12.4

Bank Accounts

  62   

ARTICLE XIII DISSOLUTION AND LIQUIDATION

  62   

Section 13.1

Dissolution

  62   

Section 13.2

Liquidator

  63   

Section 13.3

Liquidation

  63   

Section 13.4

Certificate of Cancellation

  64   

Section 13.5

Return of Contributions

  64   

Section 13.6

Waiver of Partition

  64   

Section 13.7

Capital Account Restoration

  64   

 

ii


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

ARTICLE XIV GENERAL PROVISIONS

  64   

Section 14.1

Offset

  64   

Section 14.2

Specific Performance

  64   

Section 14.3

Amendment

  65   

Section 14.4

Addresses and Notices; Written Communication

  65   

Section 14.5

Further Action

  65   

Section 14.6

Confidential Information

  66   

Section 14.7

Binding Effect

  66   

Section 14.8

Integration

  66   

Section 14.9

Creditors

  66   

Section 14.10

Waiver

  66   

Section 14.11

Third-Party Beneficiaries

  67   

Section 14.12

Counterparts

  67   

Section 14.13

Applicable Law; Forum and Venue

  67   

Section 14.14

Invalidity of Provisions

  67   

Section 14.15

Facsimile and Email Signatures

  67   

 

iii


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

8POINT3 HOLDING COMPANY, LLC

A Delaware Limited Liability Company

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF 8POINT3 HOLDING COMPANY, LLC dated as of [            ], 2015, is adopted, executed and agreed to, for good and valuable consideration, by SunPower YC Holdings, LLC, a Delaware limited liability company, and First Solar 8point3 Holdings, LLC, a Delaware limited liability company. In consideration of the covenants, conditions and agreements contained herein, the Parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred to below:

AAA” means the American Arbitration Association and any successor organization.

Acceptable Project” means a Project, or an interest in a Project, that:

(a) is photovoltaic,

(b) is located in Australia, Canada, Chile, France, Germany, Japan, Mexico, South Africa, the United Kingdom or the United States,

(c) is (i) with respect to Utility Scale Projects, contracted at a fixed price for at least 80% of the output of such Project with a minimum of ten years remaining on the term of such contract at the time of sale or contribution of such Project to the Operating Company and with counterparties that have Investment Grade Credit Ratings, (ii) with respect to C&I Projects, contracted at a fixed price for at least 80% of the output or the modeled revenue of such Project with a minimum of ten years remaining on the term of such contract at the time of sale or contribution of such Project to the Operating Company and with counterparties that (A) have Investment Grade Credit Ratings, or (B) so long as at least 70% of the C&I Projects sold or contributed to the Operating Company by the offering Sponsor have Investment Grade Credit Ratings at such time, meet the Minimum Commercial Requirements, or (iii) with respect to Residential Projects, composed of Residential Systems each of which is contracted with a homeowner at a fixed price for at least 80% of the output or the modeled revenue of such Residential System with a minimum of ten years remaining on the term of such contract at the time

 

1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

of sale or contribution of the Residential Project to the Operating Company; provided, however, that the average FICO Score of the homeowners party to such contracts shall be at least 700, no more than 20% of such homeowners shall have FICO Scores less than 680 and no more than 0.5% of such homeowners shall have FICO Scores less than 650 (the FICO Score of each homeowner being measured at the time such contract was executed),

(d) is at or past its Commercial Operation Date, unless such Project is a Tax Beneficial Project, in which case the Project may be contributed no more than three months prior to the Tax Beneficial Date, and

(e) to the extent such Project has operating and maintenance agreements or asset management agreements entered into directly or indirectly with a Sponsor or an Affiliate of a Sponsor, such operating and maintenance agreements or asset management agreements are directly or indirectly terminable for convenience or otherwise without penalty or premium.

Notwithstanding the foregoing, (i) each of the El Pelicano Project, the La Huella Project and Luz Del Norte Project shall each be deemed to be an Acceptable Project as long as each Project is contracted for a minimum of 65% of its output and otherwise meets the requirements of an Acceptable Project and (ii) a Project that is a Utility Project Site on which a Utility Scale Project is situated which qualifies as an Acceptable Project or is otherwise approved by a Majority Interest shall be an Acceptable Project.

Accounting Member” means that Member whose Affiliate provides accounting services to the Company pursuant to a Management Services Agreement.

Adjusted Capital Account Deficit” means, with respect to any Economic Member, the deficit balance, if any, in such Economic Member’s Capital Account as of the end of the relevant tax year, after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts which such Economic Member is obligated to restore pursuant to any provision of this Agreement or pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

Adjustment Amount” means, with respect to any Member, the sum of (i) to the extent the Distribution Adjustment Amount for such Fiscal Year is negative, 50% of such Distribution Adjustment Amount plus (ii) a negative amount equal to any Shortfall owed by such Member from the prior Fiscal Year plus (iii) a positive amount equal to any Shortfall owed to such Member.

 

2


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Adjustment Percentage” means, with respect to any Member, the percentage calculated by dividing (i) the aggregate of (x) all Distributed Cash generated during the Adjustment Period by the Projects that were contributed or sold to the Operating Company by such Member and its Affiliates plus (y) 50% of the Distributed Cash generated during the Adjustment Period by the Projects acquired by the Operating Company from any Person other than a Member or its Affiliates by (ii) the Aggregate Distributed Cash generated during the Adjustment Period.

Adjustment Period” means, as of any date, the period beginning on the Closing Date and ending on the last day of the most recent Quarter ending on or prior to such date.

Affected Member” has the meaning set forth in Section 6.3(a).

Affected Project” has the meaning set forth in Section 6.3(a).

Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. Notwithstanding anything in the foregoing to the contrary, SP Member and its Affiliates (other than the Company, the YieldCo General Partner or any Group Member), on the one hand, and FS Member and its Affiliates (other than the Company, the YieldCo General Partner or any Group Member), on the other hand, will not be deemed to be Affiliates of one another hereunder unless there is a basis for such Affiliation independent of their respective Affiliation with any Group Member, the YieldCo General Partner or any Affiliate of any Group Member or the YieldCo General Partner.

Aggregate Distributed Cash” means the cumulative amount of Distributed Cash for all Projects owned directly or indirectly by the Operating Company in a given period.

Agreement” means this Amended and Restated Limited Liability Company Agreement of 8point3 Holding Company, LLC, as it may be amended, modified, supplemented or restated from time to time.

Allocation Year” means (a) the Company’s taxable year for United States federal income tax purposes, or (b) any portion of the period described in clause (a) for which the Company is required to allocate Profits, Losses, and other items of Company income, gain, loss or deduction for United States federal income tax purposes.

Annual Calculations” has the meaning set forth in Section 3.2(b).

Annual Minimum Offer” has the meaning set forth in Section 6.2.

Annual Offer Schedule” has the meaning set forth in Section 6.2.

Appraiser” has the meaning set forth in Section 8.5(c)(ix).

 

3


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Auction Buyer” has the meaning set forth in Section 8.5(c)(iii).

Auction Initiator” has the meaning set forth in Section 8.5(c)(v).

Auction Period” has the meaning set forth in Section 8.5(c)(v).

Auction Price” has the meaning set forth in Section 8.5(c)(v).

Auction Price Allocation Opinion” has the meaning set forth in Section 8.5(c)(ix).

Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:

(a) the sum of:

(i) all cash and cash equivalents of the Company on hand at the end of such Quarter; and

(ii) all cash and cash equivalents of the Company actually received by the date of determination of Available Cash with respect to such Quarter by the Company from distributions by the Operating Company made with respect to such Quarter subsequent to the end of such Quarter, less;

(b) the amount of any cash reserves established by a Majority Interest to:

(i) provide for the proper conduct of the business of the Company subsequent to such Quarter; and

(ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which the Company is a party or by which it is bound or its assets are subject;

provided, that disbursements made by the Company or cash reserves established, increased or reduced after the end of such Quarter, but on or before the date of determination of Available Cash with respect to such Quarter, shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash, within such Quarter if a Majority Interest so determines.

Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

Binding Agreement” has the meaning set forth in Section 8.5(c)(v).

Board Member Option” has the meaning set forth in Section 9.1(d)(iii).

Board of Directors” means the Board of Directors of the YieldCo General Partner.

 

4


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

Buyout Option” means a purchase option provided to a counterparty in a power purchase agreement or lease for a Project or Group Member Agreement.

C&I Project” means any ground-mounted or roof-top distributed solar generation system or systems designed and installed for commercial or industrial applications, which is either leased by, or subject to one or more power purchase agreements with, one or more commercial businesses, industrial companies, academic institutions, government entities, hospitals, non-profits, public entities or other entities that are neither electric utilities nor residential customers who purchase solar power directly from a generation company or a solar power plant.

Capital Account” means the capital account determined and maintained for each Economic Member in accordance with Section 5.4, Section 7.2 and Section 7.3.

Capital Contribution” means (a) any cash, cash equivalents or the fair market value of Contributed Property that a Member contributes to the Company or that is contributed or deemed contributed to the Company on behalf of a Member, net of any Liabilities either assumed by the Company upon such contribution or to which such property or other consideration is subject when contributed or (b) current distributions that a Member is entitled to receive but otherwise waives.

Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware as referenced in Section 2.6, as such Certificate of Formation may be amended, supplemented or restated from time to time.

Class A Share” has the meaning set forth in the Partnership Agreement.

Class B Share” has the meaning set forth in the Partnership Agreement.

Closing Date” means the date on which the transactions contemplated by the Master Formation Agreement are consummated.

Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

Commercial Operation Date” means, with respect to a Project, the date on which such Project has (or in the case of (i) a Residential Project, the first date all of the Residential Systems within such Residential Project, or (ii) a C&I Project, the first date all of the solar generation systems within such C&I Project, in each case have) achieved substantial completion or similar milestone (including, for example, block or phase completion for each block or phase of such Project) under each construction contract for the construction of such Project or Residential System and has achieved commercial operation or similar milestone under each interconnection agreement and each power purchase agreement, lease or hedging agreement pursuant to which such Project delivers or transmits Electricity from such Project or Residential System.

 

5


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Commission” means the United States Securities and Exchange Commission.

Common Unit” has the meaning set forth in the Operating Company Limited Liability Company Agreement.

Company” means 8point3 Holding Company, LLC, a Delaware limited liability company.

Company Minimum Gain” means the amount of “partnership minimum gain” determined in accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

Confidential Information” means all documents, materials, data or other information with respect to the Parties, their Affiliates, the Company, the YieldCo General Partner, any Group Member or any Joint Venture which are not generally known to the public; provided that Confidential Information shall not include information that becomes available to a Receiving Party on a non-confidential basis.

Conflicts Committee” has the meaning set forth in the Partnership Agreement.

Contributed Companies” means the Project Companies contributed or sold to the Operating Company by FS Member or its Affiliates or SP Member or its Affiliates, respectively.

Contributed Property” means each property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Company.

Deadlock” has the meaning set forth in Section 8.5(a).

Deadlock Notice” has the meaning set forth in Section 8.5(a).

Deadlock Response” has the meaning set forth in Section 8.5(a).

Deficit Economic Member” has the meaning set forth in Section 7.1(c)(i).

Delaware Act” means the Delaware Limited Liability Company Act, 6 Del C. Section 18-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute.

Depreciation” means, for each Allocation Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Allocation Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Allocation Year, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Allocation Year bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such Allocation Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by a Majority Interest.

 

6


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Director” or “Directors” means a member or members of the Board of Directors.

Dispute Accountant” has the meaning set forth in Section 3.2(c)(ii).

Disclosing Party” has the meaning set forth in Section 14.6.

Disputing Member” has the meaning set forth in Section 3.2(c)(i).

Distributed Cash” means, with respect to any Project Company whose interests are owned directly or indirectly by the Operating Company, the aggregate amount of cash distributed to the Operating Company from such Project Company during a given period; provided that in calculating such Project Company’s Distributed Cash, any expenses incurred by the Operating Company, the YieldCo General Partner, the Partnership or any of their Affiliates directly on behalf of such Project Company during such period, and not reimbursed by the Project Company during such period, shall be deducted from the amount of cash actually distributed by such Project Company. Notwithstanding the foregoing, Extraordinary Proceeds distributed to the Operating Company shall not be treated as Distributed Cash unless agreed by a Majority Interest.

Distributed Cash Calculation” has the meaning set forth in Section 3.2(b).

Distribution Adjustment Amount” means, with respect to any Member, the amount calculated at the end of each Fiscal Year by subtracting (i) the Modeled Distributed Cash projected to be generated during the Adjustment Period by the Projects that were contributed or sold to the Operating Company by such Member and its Affiliates from (ii) the aggregate of all Distributed Cash generated during the Adjustment Period by the Projects that were contributed or sold to the Operating Company by such Member and its Affiliates; provided that if the Distribution Adjustment Amount for any Fiscal Year is less than 1% of the Modeled Distributed Cash for such Fiscal Year, the Distribution Adjustment Amount for such Fiscal Year shall equal zero.

EBITDA” means earnings before interest, tax, depreciation and amortization, each as determined in accordance with U.S. GAAP.

Economic Member” has the meaning set forth in Section 3.1(a).

Economic Units” has the meaning set forth in Section 3.1(a).

El Pelicano Project” means the 100 Megawatt (AC) solar power project located in Chile to be developed and built by an Affiliate of SP Member.

Electricity” means electric energy, measured in kWh.

Encumbrances” means pledges, restrictions on transfer, proxies and voting or other agreements, liens, claims, charges, mortgages, security interests or other legal or equitable encumbrances, limitations or restrictions of any nature whatsoever.

 

7


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Equity Interests” means all shares, participations, capital stock, partnership or limited liability company interests, units, participations or similar equity interests issued by any Person, however designated.

Event of Eminent Domain” means any compulsory transfer or taking or transfer under threat of compulsory transfer or taking of any material property or asset owned by the Operating Company or any Project Company, by any governmental authority.

Event of Loss” means an event which causes any material property or asset owned by the Operating Company or any Project Company to be damaged, destroyed or rendered unfit for normal use, other than an Event of Eminent Domain.

Exchange Act” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

Extraordinary Event” means, with regard to any Project, any cause or event which results in the reduction of the remaining Forecasted Distributed Cash from such Project, including the following causes and events:

(a) any sale (including due to the exercise of a Buyout Option) or incurrence of Indebtedness;

(b) acts of God, strikes, lockouts, or other industrial disputes or disturbances, acts of the public enemy, wars, blockades, insurrections, civil disturbances and riots, epidemics, landslides, lightning, earthquakes, fires, tornadoes, hurricanes, storms, floods and washouts;

(c) arrests, orders, requests, directives, restraints and requirements of governments and government agencies and people, either federal or state, civil and military;

(d) any application of government conservation or curtailment rules and regulations;

(e) any property or other tax increase;

(f) explosions, sabotage, breakage, malfunction, degradation, accidents, casualty or condemnation to or underperformance for any reason of equipment, machinery, transmission systems, plants or facilities;

(g) loss or nonperformance of contractual rights or permits; and

(h) compliance with any court order, or any law, statute, ordinance, regulation or order promulgated by a governmental authority having or asserting jurisdiction.

 

8


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Extraordinary Proceeds” means:

(a) the aggregate cash proceeds received by the Operating Company or any Project Company in respect of any sale of an interest in a Project or Joint Venture;

(b) any cash proceeds received by the Operating Company or any Project Company with respect to the incurrence or issuance of any Indebtedness by the Operating Company or such Project Company; and

(c) the cash proceeds (other than proceeds from business interruption insurance) received by the Operating Company or any Project Company from any complete or partial Event of Loss or Event of Eminent Domain.

Fair Value” means the fair market value of a subject asset at the time of determination.

FERC” means the Federal Energy Regulatory Commission.

FICO Score” means a credit score created by Fair Isaac Corporation.

Final Calculation” has the meaning set forth in Section 3.2(d).

Fiscal Year” has the meaning set forth in Section 12.2.

Forecasted Distributed Cash” means, with respect to any Project, the average Distributed Cash projected to be generated by such Project per year for the ensuing 10 year period.

Forecasted Project Value” means, with respect to any Project, the net present value of all Distributed Cash projected to be generated by such Project through its remaining useful life including any residual value of the Project, which amount shall be determined based on the Valuation Criteria (as defined in the Master Formation Agreement).

FS Contributed Company” means any Project Company contributed or sold to the Operating Company by FS Member or its Affiliates.

FS Director” has the meaning set forth in Section 9.1(a)(ii).

FS Member” means First Solar 8point3 Holdings, LLC, a Delaware limited liability company.

FS Parent” means First Solar, Inc., a Delaware corporation.

Gaining Management Member” has the meaning set forth in Section 9.1(d)(iii).

Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by an Economic Member to the Company shall be the gross fair market value of the asset;

 

9


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, in a manner that is consistent with Section 7701(g) of the Code, as of the following times: (i) the acquisition of additional Economic Units by any new or existing Economic Member in exchange for more than a de minimis Capital Contribution or for the provision of services; (ii) the distribution by the Company to an Economic Member of more than a de minimis amount of property other than money as consideration for Economic Units; and (iii) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g);

(c) The Gross Asset Value of any Company asset distributed to any Economic Member shall be the gross fair market value of such asset on the date of distribution; and

(d) The Gross Asset Values of any Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) of the Code or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) and the definition of Capital Account hereof.

If the Gross Asset Value of an asset has been determined or adjusted pursuant to the foregoing subparagraphs (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

Group Member” means a member of the Partnership Group.

Group Member Agreement” means the partnership agreement of any Group Member or Joint Venture, including the Partnership Agreement, that is a limited or general partnership, the limited liability company agreement of any Group Member or Joint Venture that is a limited liability company, the certificate of incorporation and bylaws or similar organizational documents of any Group Member or Joint Venture that is a corporation, the joint venture agreement or similar governing document of any Group Member or Joint Venture that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture, as such may be amended, supplemented or restated from time to time.

Indebtedness” means, with respect to any Person, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or similar instruments, or other debt securities or warrants or other rights to acquire any debt securities of such Person, (c) all capitalized lease or leveraged lease obligations of such Person or obligations of such Person to pay the deferred and unpaid purchase price of property and equipment, (d) all “keep well” and other obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the obligations or property of others, (e) all obligations of such Person to pay the deferred purchase price of assets or services, (f) all indebtedness of a second Person secured by any lien on any property owned by such Person, whether or not such indebtedness has been assumed, (g) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the

 

10


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

seller or lender under such agreement may be limited to repossession or sale of such property), (h) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments and/or (i) all indebtedness of others guaranteed directly or indirectly by such Person; provided that the definition of “Indebtedness” shall not include trade payables arising in the ordinary course of business so long as such trade payables are payable within 90 days of the date the respective goods are delivered or the respective services are rendered and are not overdue.

Indemnitee” means (a) any Member, (b) any Person who is or was a manager, managing member, general partner, director, officer, fiduciary or trustee of the Company or any Member, (c) any Person who is or was serving at the request of a Member as a manager, managing member, general partner, director, officer, fiduciary or trustee of another Person owing a fiduciary duty to the Company or any Group Member or any Joint Venture; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, (d) any Person who controls a Member, (e) any Person who is or was providing services at the request of the Company pursuant to a Management Services Agreement and (f) any Person a Majority Interest designates as an “Indemnitee” for purposes of this Agreement.

Independent Director” means a natural person who meets the independence, qualification and experience requirements of the NASDAQ Stock Market LLC or any other national securities exchange upon which the limited partner or other Equity Interests of the Partnership are listed or are to be listed and the independence, qualification and experience requirements of Section 10A-(3) of the Exchange Act (or any successor law) and the rules and regulations of the Commission and any other applicable law.

Investment Grade Credit Rating” means, with respect to any Person, having a rating equal to or higher than Baa3 (or the equivalent) by Moody’s or BBB- (or the equivalent) by S&P.

Joint Venture” means a joint venture that is not a Subsidiary and through which a Group Member conducts its business and operations and in which such Group Member owns an equity interest.

La Huella Project” means the 60 to 88 Megawatt (AC) solar power project located in Chile to be developed and built by an Affiliate of SP Member.

Liability” means any liability or obligation of any nature, whether accrued, contingent or otherwise.

Liquidation Date” means the date of dissolution of the Company pursuant to Section 13.1.

Liquidation Percentage” means, with respect to any Economic Member, the percentage arrived at by dividing (i) the aggregate of (x) all Forecasted Project Values for the Projects contributed or sold to the Operating Company by such Economic Member and its Affiliates plus (y) 50% of the Forecasted Project Values for the Projects acquired by the Operating Company from any Person other than an Economic Member or its Affiliates by (ii) the Forecasted Project Values for all Projects. At all times, the Liquidation Percentage of all Economic Members shall aggregate to 100%.

 

11


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Liquidator” means one or more Persons selected by the Members to perform the functions described in Section 13.2 as liquidating trustee of the Company within the meaning of the Delaware Act.

Losing Management Member” has the meaning set forth in Section 9.1(d)(i).

Luz Del Norte Project” means the approximately 141 Megawatt (AC) solar power project located near Copiapó, Chile to being built by an Affiliate of FS Member.

Majority Interest” means Management Members holding greater than 50% of the outstanding Management Units.

Majority Management Member” means a Majority Option Management Member that has exercised the Management Unit Transfer in accordance with Section 3.3.

Majority Option Management Member” has the meaning set forth in Section 3.3(a).

Management Member” has the meaning set forth in Section 3.1(a).

Management Unit Transfer” has the meaning set forth in Section 3.3(a).

Management Units” has the meaning set forth in Section 3.1(a).

Management Services Agreement” means either (a) the Management Services Agreement, dated as of [            ], 2015, among First Solar 8point3 Management Services, LLC, the Company, the YieldCo General Partner, the Partnership and the Operating Company, or (b) the Management Services Agreement, dated as of [            ], 2015, among SunPower Capital Services, LLC, the Company, the YieldCo General Partner, the Partnership and the Operating Company.

Master Formation Agreement” means that certain Master Formation Agreement dated as of [            ], 2015 among SP Parent and FS Parent, as it may be further amended, supplemented or restated from time to time.

Member” means any Person executing this Agreement as of the Closing Date as a member of the Company or hereafter admitted to the Company as a member as provided in this Agreement, but such term does not include any Person who has ceased to be a member of the Company. A Member may be an Economic Member, a Management Member or both an Economic Member and a Management Member.

Member Nonrecourse Debt” has the meaning of “partner nonrecourse debt” set forth in Treasury Regulation Section 1.704-2(b)(4).

Member Nonrecourse Debt Minimum Gain” has the meaning of “partner nonrecourse debt minimum gain” set forth in Treasury Regulation Section 1.704-2(i)(2).

 

12


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Member Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Member Nonrecourse Debt.

Membership Interest” means the ownership interest of a Member in the Company, which may be evidenced by an Economic Unit, Management Unit or other Equity Interest or a combination thereof or interest therein, and includes any and all benefits to which such Member is entitled as provided in this Agreement, together with all obligations of such Member to comply with the terms and provisions of this Agreement.

Minimum Commercial Requirements” means (a) with respect to for-profit counterparties, a Person that has been in business for a minimum of five years with current annual revenue of at least $5 million per 1 MW of capacity of the applicable C&I Project, a maximum EBITDA to debt service ratio of 1.2x and a maximum debt to equity ratio of 4x and, (b) with respect to not-for-profit counterparties, a Person that has been operating for a minimum of five years and has, in its audited financial statements or unaudited financial statements prepared by an independent accounting firm covering the current fiscal year-to-date and the previous two complete fiscal years, recorded ratios of change in net unrestricted assets before interest, depreciation and amortization to debt service and change in net total assets before interest, depreciation, and amortization to debt service of at least 1.2x during each complete or year-to-date fiscal period.

Minority Option Management Member” has the meaning set forth in Section 3.3(a).

Minority Management Member” means a Minority Option Management Member after exercise of the Management Unit Transfer in accordance with Section 3.3.

Modeled Distributed Cash” means (i) with respect to any Project located in the United States that is held directly or indirectly by the Operating Company, the amount set forth, by Fiscal Year, under the heading “[Pre-Tax] Cash Available for Distribution” on the Master Project Model (as defined in the Master Formation Agreement) or on the project model related to such Project approved by the Conflicts Committee, as applicable, and (ii) with respect to any Project located outside the United States that is acquired directly or indirectly by the Operating Company, the amount set forth, by Fiscal Year, under the heading “Cash Available for Distribution” on the project model related to such Project approved by the Conflicts Committee; provided, however, that the “Modeled Distributed Cash” for any Project contributed to the Operating Company pursuant to Section 6.3(a) shall be deemed to equal zero.

Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

MU Exercise Period” has the meaning set forth in Section 3.3(a).

“MW” means megawatts.

Net Adjustment Amount” has the meaning set forth in Section 7.1(c)(ii).

Net Surplus Economic Member” has the meaning set forth in Section 7.1(c)(ii).

 

13


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Net Transferred Distribution Shortfall” has the meaning set forth in Section 7.1(c)(ii).

Non-Offering Member” has the meaning set forth in Section 6.3(b)(i).

Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.

Nonrecourse Liability” has the meaning set forth in Treasury Regulation Section 1.752-1(a)(2).

Offered OpCo Units” has the meaning set forth in Section 4.3(c)(i).

Offering OpCo Member” has the meaning set forth in Section 4.3(c)(i).

Offering OpCo Member Notice” has the meaning set forth in Section 4.3(c)(ii).

Omnibus Agreement” means that certain Omnibus Agreement dated the date hereof among SP Parent, FS Parent and the Operating Company, as it may be amended, supplemented or restated from time to time.

OpCo Derivative Membership Interests” means “Derivative Membership Interests” as defined in the Operating Company Limited Liability Company Agreement.

OpCo Managing Member” means 8point3 Energy Partners LP, a Delaware limited partnership, and its successors and permitted assigns that are admitted to the Operating Company as the managing member of the Operating Company, in its capacity as the managing member of the Operating Company. The OpCo Managing Member is the sole managing member of the Operating Company and the holder of the OpCo Managing Member Interest. For the avoidance of doubt, such Person shall be the OpCo Managing Member solely with respect to the OpCo Managing Member Interest and shall be an OpCo Non-Managing Member with respect to any OpCo Non-Managing Member Interests of such Person.

OpCo Managing Member Interest” means a “Managing Member Interest” as defined in the Operating Company Limited Liability Company Agreement.

OpCo Member” means an OpCo Managing Member or OpCo Non-Managing Member, as the context may require.

OpCo Member ROFR Exercise Notice” has the meaning set forth in Section 4.3(c)(v)(A).

OpCo Membership Interest” means the OpCo Managing Member Interest and any class or series of equity interest in the Operating Company, which shall include any OpCo Non-Managing Member Interests but shall exclude any OpCo Derivative Membership Interests.

 

14


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

OpCo Non-Managing Member” means a “Non-Managing Member” as defined in the Operating Company Limited Liability Company Agreement.

OpCo Non-Managing Member Interest” means a “Non-Managing Member Interest” as defined in the Operating Company Limited Liability Company Agreement.

OpCo ROFO Agreements” means the certain Right of First Offer Agreements dated the date hereof between (a) SP Parent and the Operating Company and (b) FS Parent and the Operating Company, respectively, as they may be amended, supplemented or restated from time to time.

OpCo ROFR Rightholder” means, in the case of a proposed transfer of Common Units and OpCo Subordinated Units and related Class B Shares, the Sponsor other than the Offering OpCo Member.

OpCo ROFR Rightholder Option Period” has the meaning set forth in Section 4.3(c)(v)(A).

OpCo Subordinated Unit” means a “Subordinated Unit” as defined in the Operating Company Limited Liability Company Agreement.

Operating Company” means 8point3 Operating Company, LLC, a Delaware limited liability company.

Operating Company Limited Liability Company Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 Operating Company, LLC, to be dated as of [            ], 2015, as it may be further amended, supplemented or restated from time to time.

Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to, or the General Counsel or other inside counsel of, the Company or any of its Affiliates) acceptable to a Majority Interest.

Option Exercise Period” has the meaning set forth in Section 9.1(d)(iii).

Option Member” has the meaning set forth in Section 6.3(b)(i).

Ownership Percentage” means, at the date of any determination, with respect to an Economic Member, the percentage obtained by dividing (a) the number of Economic Units owned by such Economic Member by (b) the total number of outstanding Economic Units owned by all Economic Members.

Parent” means FS Parent or SP Parent, as applicable.

Partnership” means 8point3 Energy Partners LP, a Delaware limited partnership.

 

15


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of 8point3 Energy Partners LP, to be dated as of [            ], 2015, as it may be further amended, supplemented or restated from time to time.

Partnership Group” means, collectively, the Partnership and the Operating Company and each of their Subsidiaries.

Party” or “Parties” means FS Member and SP Member, and any Person who shall be admitted to the Company as a Member effective immediately prior to the Transfer of a Membership Interest.

Party Representatives” has the meaning set forth in Section 14.6.

Permitted OpCo Transfer” means:

(a) with respect to the SP Parent, a transfer by such OpCo Member of an OpCo Membership Interest to a wholly owned Subsidiary of the SP Parent; and

(b) with respect to the FS Parent, a transfer by such OpCo Member of an OpCo Membership Interest to a wholly owned Subsidiary of the FS Parent

provided that, in the case of (a) or (b) above, (i) with respect to Permitted OpCo Transfers by the SP Parent, the Subsidiary transferee remains a wholly owned Subsidiary of the SP Parent (or any successor Person), at all times following such transfer and (ii) with respect to Permitted OpCo Transfers by the FS Parent, the Subsidiary transferee remains a wholly owned Subsidiary of the FS Parent (or any successor Person), at all times following such transfer, it being acknowledged that any transfer resulting in the Subsidiary transferee no longer being wholly owned shall be deemed a transfer that is subject to the restrictions set forth in Article IV.

Permitted Transfer” means:

(a) with respect to SP Member, a Transfer by such Member of a Membership Interest or a Transfer of a direct or indirect interest in such Member to a wholly owned Subsidiary of SP Parent;

(b) with respect to FS Member, a Transfer by such Member of a Membership Interest or a Transfer of a direct or indirect interest in such Member to a wholly owned Subsidiary of FS Parent; and

(c) with respect to either Party, a Transfer by such Member of a Membership Interest or a Transfer of a direct or indirect interest in such Member upon (i) the other Member’s failure to offer, in good faith, Acceptable Projects for three consecutive Fiscal Years which are sufficient to meet such Member’s (A) obligations under the Annual Offer Schedules in effect for such Fiscal Years or (B) in the absence of an Annual Offer Schedule for any such Fiscal Year, Annual Minimum Offer for such Fiscal Year, (ii) the other Member, its Parent or any Subsidiary of such Parent which owns an interest, directly or indirectly, in such other Member becoming unable, admitting in writing its

 

16


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

inability or failing generally to pay its debts as they become due, (iii) the commencement of an involuntary proceeding or the filing of an involuntary petition seeking (A) the liquidation, reorganization or other relief in respect of the other Member, its Parent or any Subsidiary of such Parent which owns an interest, directly or indirectly, in such other Member or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the other Member, its Parent or any Subsidiary of such Parent which owns an interest, directly or indirectly, in such other Member or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered, or (iv) the other Member, its Parent or any Subsidiary of such Parent which owns an interest, directly or indirectly, in such other Member (A) voluntarily commencing any proceeding or filing any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (B) applying for or consenting to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Member, its Parent or any Subsidiary of such Parent which owns an interest, directly or indirectly, in such Member or any guarantor or for a substantial part of its assets, (C) filing an answer admitting the material allegations of a petition filed against it in any such proceeding, (D) making a general assignment for the benefit of creditors or (E) taking any action for the purpose of effecting any of the foregoing.

Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association, government agency or political subdivision thereof or other entity.

Pledge” has the meaning set forth in Section 4.1(a).

Profits” and “Losses” means, for each tax year or other period, an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code, and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b), (c) or (d) of the definition of Gross Asset Value hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(d) Gain or loss resulting from any disposition of property (other than money) with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such tax year or other period, computed in accordance with the definition of Depreciation hereof; and

(f) Notwithstanding any other provision of this definition of “Profits” and “Losses,” any items which are specially allocated pursuant to Section 7.3 shall not be taken into account in computing Profits or Losses.

Project” means a Utility Scale Project, C&I Project, Residential Project, Utility Project Site or any other asset or project that a Majority Interest designates as a “Project.”

Project Company” means a corporation, limited liability company, partnership, joint venture, trust or other entity which is a Subsidiary or Joint Venture of the Operating Company and the direct or indirect owner of a Project.

Quarter” means, unless the context requires otherwise, a fiscal quarter of the Company or, with respect to the fiscal quarter of the Company that includes the Closing Date, the portion of such fiscal quarter after the Closing Date.

Receiving Party” has the meaning set forth in Section 14.6.

Regain Board Member Option” has the meaning set forth in Section 9.1(e)(iii).

Regain Option Exercise Period” has the meaning set forth in Section 9.1(e)(iii).

Representative” has the meaning set forth in Section 8.8(a).

Required Allocations” has the meaning set forth in Section 7.3(i).

Residential Project” means a portfolio of Residential Systems owned directly or indirectly by a Contributed Company.

Residential System” means a ground-mounted or roof-top distributed solar generation system designed and installed for residential applications, which is leased by, or subject to a power purchase agreement with, the owner of a residence for the purpose of generating Electricity for that residence.

Retained Chief Executive Officer” has the meaning set forth in Section 9.2(a)(i)(B).

Retained Chief Financial Officer” has the meaning set forth in Section 9.2(a)(ii)(B).

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Retaining Management Member” has the meaning set forth in Section 9.2(a)(i)(B).

ROFO Acceptance Notice” has the meaning set forth in Section 4.2(b).

ROFO Non-Selling Member” has the meaning set forth in Section 4.2(a).

ROFO Notice” has the meaning set forth in Section 4.2(a).

ROFO Parties” has the meaning set forth in Section 4.2(a).

ROFO Price” has the meaning set forth in Section 4.2(a).

ROFO Seller” has the meaning set forth in Section 4.2(a).

ROFO Units” has the meaning set forth in Section 4.2(a).

ROFO Units Purchase Agreement” has the meaning set forth in Section 4.2(a).

S&P” means Standard & Poor’s Ratings Group, or any successor thereto.

Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from time to time, and any successor to such statute.

Service Provider” means the Service Provider under and as defined in the applicable Management Services Agreement.

Shortfall” has the meaning set forth in Section 7.1(c)(ii).

Shotgun Election” has the meaning set forth in Section 8.5(c)(iii).

Shotgun Initiator” has the meaning set forth in Section 8.5(c)(i).

Shotgun Notice” has the meaning set forth in Section 8.5(c)(i).

Shotgun Price” has the meaning set forth in Section 8.5(c)(ii).

Shotgun Recipient” has the meaning set forth in Section 8.5(c)(i).

SP Contributed Company” means any Project Company contributed or sold to the Operating Company by SP Member or its Affiliates.

SP Director” has the meaning set forth in Section 9.1(a)(i).

SP Member” means SunPower YC Holdings, LLC, a Delaware limited liability company.

SP Parent” means SunPower Corporation, a Delaware corporation.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Sponsor” or “Sponsors” means SP Parent and FS Parent, individually or collectively, as applicable.

Sponsor Director” has the meaning set forth in Section 9.1(a)(ii).

Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if such Person, one or more Subsidiaries of such Person, or a combination thereof, controls such partnership on the date hereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, directly or by one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has the power to elect or direct the election of a majority of the directors or other governing body of such Person.

Surplus Economic Member” has the meaning set forth in Section 7.1(c)(i).

Target Distributed Cash Increase” means the targeted increase in Aggregate Distributed Cash for a Fiscal Year over the previous year.

Target Distributed Cash Increase Range” means the range of Target Distributed Cash Increase for a Fiscal Year. The Target Distributed Cash Increase Range for each Fiscal Year shall be as set forth on the current Target Distributed Cash Increase Schedule unless modified pursuant to Section 6.2.

Target Distributed Cash Increase Schedule” means a schedule approved by a Majority Interest which sets forth the Target Distributed Cash Increase Range for a period of ten Fiscal Years. The initial Target Distributed Cash Increase Schedule for Fiscal Years 2016 through 2025 is set forth on Exhibit D.

Tax Beneficial Date” means, with respect to any Project, (i) in general, the last date upon which such Project may be transferred to the Operating Company without materially reducing the amount, or affecting the availability, of a material solar energy tax benefit to the Project or its direct or indirect owners on account of their interests in the Project, including (A) if such Project is eligible for the active solar energy system new construction exclusion from assessment for California property tax purposes, the day immediately preceding the date on which new construction is deemed completed with respect to the Project (or (I) in the case of a Residential Project, the first Residential System to be deemed complete within such Residential Project or (II) in the case of a C&I Project, the first solar generation system to be deemed complete within such C&I Project), within the meaning of California Revenue and Tax Code Section 75.12 and regulations adopted thereunder, and (B) if such Project is eligible for the energy credit determined under Section 48 of the Code, the day immediately preceding the date upon which the Project (or in the case of a Residential Project, the first Residential System within such Residential Project) is placed in service within the meaning of Section 48 of the

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Code, and (ii) if such Project is eligible for more than one material solar energy tax benefit, the date determined by calculating a tentative Tax Beneficial Date for each such material solar energy tax benefit with respect to such Project and selecting the earliest such date.

Tax Beneficial Project” means a Project with a Tax Beneficial Date.

Tax Matters Member” has the meaning set forth in Section 11.3(a).

Tax Member” means that Member whose Affiliate provides tax services to the Company pursuant to a Management Services Agreement.

Transfer” has the meaning set forth in Section 4.1(a).

Transferee” means a Person who has received Units by means of a Transfer.

Transferred Distribution” has the meaning set forth in Section 7.1(c)(i).

Transferred Distribution Shortfall” has the meaning set forth in Section 7.1(c)(i).

Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

Units” has the meaning set forth in Section 3.1(a).

U.S. GAAP” means United States generally accepted accounting principles, as amended from time to time.

Utility Project Site” means the real property on which a Utility Scale Project is situated, provided that such real property and the Utility Scale Project are separately owned.

Utility Scale Project” means any wholesale solar energy production facility that is neither a C&I Project nor a Residential Project, including the rights to the site on which the facility is located, the other assets, tangible and intangible, that compose such facility and the transmission and interconnection facilities connecting the Project to an electric utility or other wholesale power offtaker.

YieldCo General Partner” means 8point3 General Partner, LLC, a Delaware limited liability company.

YieldCo General Partner LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 General Partner, LLC, to be dated as of [            ], 2015, as it may be further amended, supplemented or restated from time to time.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 1.2 Construction.

(a) Unless the context requires otherwise: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) references to Articles and Sections refer to Articles and Sections of this Agreement; (iii) the terms “include,” “includes,” “including” or words of like import shall be deemed to be followed by the words “without limitation”; and (iv) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement. If any date on which any action is required to be taken hereunder by any of the Parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day.

(b) The Parties hereto have participated jointly in the negotiation and drafting of this Agreement. No provision of this Agreement will be interpreted in favor of, or against, any of the Parties to this Agreement by reason of the extent to which any such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of this Agreement, and no rule of strict construction will be applied against any Party hereto. This Agreement will not be interpreted or construed to require any Person to take any action, or fail to take any action, if to do so would violate any applicable law.

ARTICLE II

ORGANIZATION

Section 2.1 Formation. FS Member and SP Member have formed the Company as a limited liability company pursuant to the provisions of the Delaware Act and thereupon, each Member acquired 50% of all right, title and interest in the Company. The Members hereby amend and restate the original Limited Liability Company Agreement of 8point3 Holding Company, LLC in its entirety. This amendment and restatement shall become effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties, liabilities and obligations of the Members and the administration, dissolution and termination of the Company shall be governed by the Delaware Act. All Membership Interests shall constitute personal property of the record owner thereof for all purposes.

Section 2.2 Name. The name of the Company shall be “8point3 Holding Company, LLC.” Subject to applicable law, the Company’s business may be conducted under any other name or names as determined by a Majority Interest. The words “limited liability company,” “LLC” or similar words or letters shall be included in the Company’s name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. A Majority Interest may change the name of the Company at any time and from time to time and shall notify the Members of such change in the next regular communication to the Members.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices. Unless and until changed by a Majority Interest, the registered office of the Company in the State of Delaware shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the registered agent for service of process on the Company in the State of Delaware

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

at such registered office shall be The Corporation Trust Company. The principal office of the Company shall be located at such place as a Majority Interest may from time to time designate, which need not be in the State of Delaware, and the Company shall maintain records there. The Company may maintain offices at such other place or places within or outside the State of Delaware as a Majority Interest determines to be necessary or appropriate.

Section 2.4 Purpose and Business. The purpose and nature of the business to be conducted by the Company shall be to (a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by a Majority Interest and that lawfully may be conducted by a limited liability company organized pursuant to the Delaware Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member or a Joint Venture. To the fullest extent permitted by law, no Member has any duty or obligation to the Company or any Member to propose or approve the conduct by the Company of any business and may decline to do so in its sole and absolute discretion free of any duty or obligation whatsoever.

Section 2.5 Powers. The Company shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described in Section 2.4 and for the protection and benefit of the Company.

Section 2.6 Term. The term of the Company commenced upon the filing of the Certificate of Formation in accordance with the Delaware Act and shall continue in existence until the dissolution of the Company in accordance with the provisions of Article XIII. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware Act.

Section 2.7 Title to Company Assets. Title to the assets of the Company, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such assets of the Company or any portion thereof.

ARTICLE III

MEMBERSHIP INTERESTS; UNITS

Section 3.1 Membership Interests; Additional Members.

(a) The Members own Membership Interests in the Company that shall be represented by Economic Units (“Economic Units”) and Management Units (“Management Units”). Economic Units and Management Units are sometimes referred to collectively herein as “Units.” Holders of Economic Units and Management Units shall be referred to as “Economic Members” and “Management Members,” respectively. The Units shall be uncertificated, unless a Majority Interest determines to have the Company issue certificates for the Units. In exchange for each Economic Member’s

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Capital Contribution to the Company referred to in Section 5.1, the Company shall issue to each Economic Member the number of Economic Units set forth opposite such Economic Member’s name on Exhibit A. In addition, the Company shall issue to each Management Member the number of Management Units set forth opposite such Management Member’s name on Exhibit B.

(b) Economic Units shall represent an Economic Member’s interest in items of income, gain, loss and deduction of the Company and a right to receive distributions of the Company’s assets in accordance with the provisions of this Agreement. Economic Members shall have no voting or designation rights with respect to their Economic Units.

(c) Management Units shall represent a Management Member’s right to vote on Company matters in accordance with the provisions of the Agreement and, subject to Section 4.1(e) and Section 9.1, designate Directors. Management Members shall have no interest in items of income, gain, loss or deduction of the Company or any right to receive distributions of the Company’s assets in accordance with the provisions of this Agreement with respect to their Management Units.

(d) For the avoidance of doubt, the undersigned intend for the holders of Management Units to be considered managers and not members or partners for federal income tax purposes with respect to such Management Units. Therefore, if one hundred percent (100%) of the Economic Units are held by one tax owner, the Company will be treated, as of such time, as a disregarded entity for federal income tax purposes pursuant to Treasury Regulation Section 301.7701-3.

(e) The Company may issue additional Membership Interests and options, rights, warrants and appreciation rights relating to the Membership Interests for any Company purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as determined by a Majority Interest or, if required by Article VIII, the unanimous vote of the Management Members.

(f) Each additional Membership Interest authorized to be issued by the Company pursuant to Section 3.1(e) may be issued in one or more classes, or one or more series of any such classes, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of Membership Interests), as shall be fixed by a Majority Interest (or, if required by Article VIII, the unanimous vote of the Management Members), including (i) the right to share in Company profits and losses or items thereof; (ii) the right to share in Company distributions; (iii) the rights upon dissolution and liquidation of the Company; (iv) whether, and the terms and conditions upon which, the Company may or shall be required to redeem the Membership Interest; (v) whether such Membership Interest is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Membership Interest will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining the Ownership Percentage as to such Membership Interest; and (viii) the right, if any, of each such Membership Interest to vote on Company matters, including matters relating to the relative rights, preferences and privileges of such Membership Interest.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(g) Subject to Article VIII, a Majority Interest shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Membership Interests and options, rights, warrants and appreciation rights relating to Membership Interests pursuant to this Section 3.1, (ii) reflecting the admission of such additional Members in the books and records of the Company as the record holder of such Membership Interest and (iii) all additional issuances of Membership Interests and options, rights, warrants and appreciation rights relating to Membership Interests pursuant to this Section 3.1, in each case including amending this Agreement and Exhibit A and Exhibit B hereof as necessary to reflect any such issuance. Subject to Article VIII, a Majority Interest shall determine the relative rights, powers and duties of the holders of the Units or other Membership Interests being so issued. A Majority Interest shall do all things necessary to comply with the Delaware Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of Membership Interests pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency.

Section 3.2 Adjustment to Economic Units.

(a) From the Closing Date until November 30, 2019, the number of Economic Units held by each Economic Member shall be fixed at the number set forth opposite each Economic Member’s name on Exhibit A. Thereafter, the number of Economic Units held by each Economic Member will adjust annually according to the terms of this Section 3.2. Notwithstanding anything to the contrary set forth herein, the number of Economic Units shall at all times equal 1,000.

(b) No later than January 31 of each Fiscal Year commencing after November 30, 2019, the Members will cause the Accounting Member pursuant to its Management Services Agreement to deliver to the non-Accounting Member a calculation of the amount of Aggregate Distributed Cash for the current Adjustment Period (the “Distributed Cash Calculation”) and the calculation of each Economic Member’s Adjustment Percentage and Distribution Adjustment Amount for the current Fiscal Year based upon the Distributed Cash Calculation (collectively, the “Annual Calculations”).

(c) (i) Following receipt of the Annual Calculations, the non-Accounting Member will be afforded a period of 30 days to review the Annual Calculations, during which period the non-Accounting Member and its advisors shall have the right to inspect the work papers generated by the Accounting Member in preparation of the Annual Calculations and shall have reasonable access, during normal business hours, to the relevant personnel of the YieldCo General Partner and the Partnership Group and to information, books and records of the YieldCo General Partner, the Partnership Group and, to the extent permitted by the applicable Group Member Agreement, any Joint Venture. At or before the end of such 30-day review period, the non-Accounting Member will either (A) accept the Annual Calculations in their entirety, in which case, the Accounting Member’s calculations shall be final, conclusive and binding on such non-Accounting Member, or (B) deliver to the Accounting Member written notice and a written explanation of those items in the Annual Calculations which the non-Accounting

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Member (the “Disputing Member”) disputes and the proposed modification of such calculations, in which case only the items identified shall be deemed to be in dispute and the other items shall be deemed to be accepted with the effect set forth in (A) above. If a Member fails to accept or dispute the Annual Calculations before the end of the 30-day review period set forth above, such Annual Calculations shall be deemed to be final, conclusive and binding on such non-Accounting Member. Within a further period of ten days from the end of the aforementioned review period, the Members will attempt to resolve in good faith any disputed items.

(ii) Failing such resolution, either Member may refer the unresolved disputed items for final binding resolution to a nationally recognized firm of certified public accountants agreeable to both Members and having no significant preexisting relationship with either Member (the “Dispute Accountants”). In their review, the Dispute Accountants shall consider only those items or amounts in the Annual Calculations as to which the Disputing Member has disagreed and shall be instructed that they may not resolve any items in dispute such that the Disputing Member’s Adjustment Percentage or Distribution Adjustment Amount, as applicable, is greater than the greatest amount proposed by the Disputing Member or less than the least amount proposed by the Accounting Member. The Dispute Accountants shall deliver to the Members, within 30 days of reference of the matter to the Dispute Accountants, a report setting forth its calculations. The decision of such Dispute Accountants will be final, conclusive and binding on the Members. The cost of the Dispute Accountants’ review and report of any good faith dispute shall be paid entirely by the Company. The cost of the Dispute Accountants’ review and report of any dispute not made in good faith shall be paid entirely by the Disputing Member.

(iii) If the Members fail to mutually agree on the Dispute Accountants, the Members shall thereafter promptly cause the AAA to appoint the Dispute Accountants, and in making its determination with respect to such appointment, the AAA shall take into account, and attempt to avoid appointing an accounting firm with, any significant preexisting relationship with any Member or their respective Affiliates. The fees and expenses of the AAA and the Dispute Accountants shall be apportioned in the same manner as described in Section 3.2(c)(ii).

(d) Upon the final, conclusive and binding determination of the Distributed Cash Calculation and the calculations of the Adjustment Percentages for each Member (collectively, the “Final Calculation”) for such Fiscal Year, the number of Economic Units held by each Economic Member will adjust for such Fiscal Year so that each Economic Member’s Ownership Percentage equals its Adjustment Percentage and the Company shall amend Exhibit A to reflect such adjustment.

Section 3.3 Adjustment to Management Units.

(a) After the Final Calculation for a Fiscal Year, in the event that a Management Member holds, and has held for at least the prior two consecutive Fiscal

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Years, at least [70]% of the Economic Units, then such Management Member (the “Majority Option Management Member”) shall have the option, to be exercised prior to the earlier of 30 days after any Final Calculation and the end of the fiscal quarter of the Majority Option Management Member in which the Final Calculation is made (the “MU Exercise Period”), to require the other Management Member (the “Minority Option Management Member”) to Transfer to it, at no cost, a percentage of the aggregate outstanding Management Units owned by the Minority Option Management Member so that after giving effect to such Transfer the percentage of Management Units held by the Minority Option Management Member equals the percentage of Economic Units then held by the Minority Option Management Member (the “Management Unit Transfer”). To exercise the right to the Management Unit Transfer, the Majority Option Management Member shall deliver to the Company and the Minority Option Management Member written notice of its election to exercise such right before the expiration of the MU Exercise Period. Upon the Company’s receipt of such notice, the Majority Option Management Member shall succeed to all rights, title and interest in and to such Management Units and the Company shall amend Exhibit B to reflect such Transfer. Notwithstanding the foregoing, in the event that a Management Member waives for a given Fiscal Year its right to exercise the right to the Management Unit Transfer, or fails to exercise the right to the Management Unit Transfer during the MU Exercise Period, such waiver shall only apply to such Fiscal Year and shall not prevent a Management Member that subsequently qualifies as a Majority Option Management Member from exercising the right to the Management Unit Transfer in any subsequent Fiscal Year.

(b) Upon the completion of the Management Unit Transfer in accordance with Section 3.3(a), no Minority Management Member shall have the right, upon subsequently regaining a certain Economic Unit Ownership Percentage or becoming the Majority Option Management Member, to exercise the right to the Management Unit Transfer or otherwise reacquire the Management Units it Transferred pursuant to Section 3.3(a).

Section 3.4 Limitation of Liability. To the fullest extent permitted by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any of such debts, obligations or liabilities of the Company solely by reason of being a Member.

Section 3.5 Withdrawal of Members. No Member shall have any right to withdraw from the Company; provided, however, that when a Transferee becomes registered on the books and records of the Company as the Member with respect to the Membership Interest so Transferred, the Transferring Member shall cease to be a Member with respect to the Membership Interest so Transferred.

Section 3.6 Record Holders. The Company shall be entitled to recognize the Person in whose name any Membership Interest is registered on the books and records of the Company as the Member with respect to any Membership Interest and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such Membership Interest on the part of any other Person, regardless of whether the Company shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation or guideline of any governmental agency.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 3.7 No Appraisal Rights. No Member shall be entitled to any valuation, appraisal or similar rights with respect to such Member’s Units, whether individually or as part of any class or group of Members, in the event of a merger, consolidation, sale of the Company or other transaction involving the Company or its securities unless such rights are expressly provided by the agreement of merger, agreement of consolidation or other document effectuating such transaction.

ARTICLE IV

TRANSFERS

Section 4.1 Membership Interests Generally.

(a) The term “Transfer,” means any direct or indirect sale, assignment, gift, exchange or any other disposition by law or otherwise of such Membership Interest, excluding any direct or indirect pledge, grant of a security interest, encumbrance, hypothecation or mortgage of a Membership Interest (each, a “Pledge”) but including any Transfer upon foreclosure of any Pledge; provided, however, that any direct or indirect Transfer of ownership interests in SP Parent or FS Parent or, except with respect to Section 4.1(h), any consolidation, merger or direct or indirect sale, assignment, gift, exchange or any other disposition by law or otherwise of all or substantially all of the assets of SP Parent or FS Parent shall not be a Transfer for purposes of this Section 4.1 and Section 4.2.

(b) No Member shall Transfer, Pledge or permit an indirect Transfer or Pledge by its direct or indirect owners of its Membership Interest, in whole or in part, except for (i) a Permitted Transfer, (ii) Transfers or Pledges in accordance with the applicable provisions of this Article IV or (iii) Transfers or Pledges by a Majority Management Member or by its direct or indirect owners.

(c) Except for a Permitted Transfer or a Transfer by a Majority Management Member or a direct or indirect Transfer in a Majority Management Member, no Member may Transfer or permit the indirect Transfer by its direct or indirect owners of less than all of the Membership Interests held by such Member and its Affiliates.

(d) No direct or indirect Transfer or Pledge of any Membership Interests shall be made if such Transfer or Pledge would (i) not be in compliance with all applicable laws and regulations in all respects, including the then-applicable federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such Transfer or Pledge, (ii) terminate the existence or qualification of the Company under the laws of the jurisdiction of its formation, (iii) cause the Company to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed), unless the Member making such Transfer or Pledge is the Majority Management Member and unanimous approval is not

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

required pursuant to Section 8.4(b), (iv) constitute a breach or violation of, or a prohibited change of control or event of default under, any credit agreement, loan agreement, indenture, mortgage, deed of trust or other similar instrument or document governing Indebtedness of the Company, the YieldCo General Partner, any Group Member or any Joint Venture, unless a consent is received waiving such breach, violation, change of control or default, (v) cause the Company or any Group Member to be in violation in any material respect of or default under the Certificate of Formation, this Agreement, any governmental approval to which any Group Member is subject or any other agreement or instrument to which it is a party or by which it or its property is bound or subject, (vi) subject the Company to registration under the Investment Company Act of 1940 or require that the Company register as an investment advisor under the Investment Advisors Act of 1940, (vii) be consummated without obtaining any required approval of any public authority or regulatory body, the failure of which could reasonably be expected to have a material adverse effect on the Company, the YieldCo General Partner or any Group Member, or (viii) to the extent applicable, impair the ability of a Project Company to sell electricity at market-based rates regulated by FERC. Any direct or indirect Transfer, Pledge or purported Transfer or Pledge of a Membership Interest not made in accordance with this Article IV shall be, to the fullest extent permitted by law, null and void, and the Company shall have no obligation to recognize any such Transfer, Pledge or purported Transfer or Pledge.

(e) Notwithstanding any other provision of this Agreement, a Management Member’s right to designate Directors, as provided in Section 9.1, shall not be Transferred (including in a Permitted Transfer) except as part of a Transfer permitted under the terms of this Agreement to one Transferee of all of the Member’s Units.

(f) No Member shall Transfer its Membership Interest (including a Permitted Transfer) unless and until the following have occurred: (i) the proposed Transferee shall have agreed in writing to be bound by the terms of this Agreement and provided to the Company its name, address, taxpayer identification number and any other information reasonably necessary to permit the Company to file all required federal and state tax returns or reasonably requested by a Majority Interest, (ii) the Member proposing to make such Transfer shall have delivered to the Company an Opinion of Counsel (reasonably acceptable to the Company as to form, substance and identity of counsel) that no registration under the Securities Act is required in connection with such Transfer (unless the requirement of an opinion is waived by a Majority Interest) and (iii) the Company shall have been furnished with the documents effecting such Transfer executed and acknowledged by both the Transferring Member and Transferee, together with a written agreement of the Transferee (if not already a Member at the time of such Transfer) to become a party to and be bound by the provisions of this Agreement as a Member, which shall be in form and substance reasonably satisfactory to the Company.

(g) By acceptance of the Transfer of any Membership Interest in accordance with this Article IV, the Transferee of a Membership Interest shall be admitted as a Member with respect to the Membership Interests so Transferred to such Transferee when any such Transfer or admission is reflected in the books and records of the Company.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(h) Each Member making a Transfer or Pledge or which is the subject of a direct or indirect Transfer or Pledge by its direct or indirect owners shall be obligated to pay all expenses incurred in connection with such Transfer or Pledge, and the Company shall not have any obligation with respect thereto. Each Member making a Transfer or Pledge or which is the subject of a direct or indirect Transfer or Pledge by its direct or indirect owners shall pay, or reimburse the Company for, all reasonable costs and expenses incurred by the Company in connection with such Transfer or Pledge and the admission of the Transferee as a Member, if applicable, including the legal fees incurred in connection with the legal opinions referred to in Section 4.1(f).

Section 4.2 Membership Interest Right of First Offer.

(a) Except for a Permitted Transfer or a Transfer by a Majority Management Member or by its direct or indirect owners, no Member shall Transfer or permit an indirect Transfer by its direct or indirect owners of its Membership Interest except in compliance with the provisions of this Section 4.2. If such Member (the “ROFO Seller”) or any of its direct or indirect owners wishes to solicit proposals from third parties to acquire the ROFO Seller’s Units or the direct or indirect interests in such ROFO Seller, the ROFO Seller shall first provide a notice (the “ROFO Notice”) to the other Member (the “ROFO Non-Selling Member” and, together with the ROFO Seller, the “ROFO Parties”), with a copy to the Company, containing a request for the ROFO Non-Selling Member to provide an agreement (the “ROFO Units Purchase Agreement”) specifying the purchase price (the “ROFO Price”) and other terms and conditions on which the ROFO Non-Selling Member is willing to purchase all but not less than all of the ROFO Seller’s Units (the “ROFO Units”).

(b) The ROFO Non-Selling Member may deliver the ROFO Units Purchase Agreement up to 30 days after receiving the ROFO Notice. If the ROFO Non-Selling Member submits a ROFO Units Purchase Agreement within the time period specified herein, the ROFO Seller shall have 15 days from the date the ROFO Seller received the ROFO Units Purchase Agreement to accept the ROFO Units Purchase Agreement by notice to the ROFO Non-Selling Member and the Company (the “ROFO Acceptance Notice”). Promptly after the delivery of the ROFO Acceptance Notice, the ROFO Parties shall execute the ROFO Units Purchase Agreement and deliver a copy to the Company. If the ROFO Seller does not deliver a ROFO Acceptance Notice within such 15 day period, the ROFO Parties shall, for a period of 60 days from the date the ROFO Seller received the ROFO Units Purchase Agreement (or such shorter period as they agree), negotiate in good faith the terms of the ROFO Units Purchase Agreement. Upon agreement by the ROFO Parties, the ROFO Parties shall execute the ROFO Units Purchase Agreement and deliver a copy to the Company. If the ROFO Non-Selling Member fails to deliver the ROFO Units Purchase Agreement within the time period set forth above, the ROFO Seller may, during the next 120 days, Transfer the ROFO Units to a third party Transferee or permit the indirect Transfer of the ROFO Units by the direct or indirect owners of the ROFO Seller (i) subject to the applicable terms and restrictions of this Agreement, including this Article IV and (ii) subject to the ROFO Non-Selling Member’s approval of the Transferee or the transferee of such indirect interest, such approval not to be unreasonably withheld.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(c) If a ROFO Units Purchase Agreement is executed, the ROFO Seller shall sell and the ROFO Non-Selling Member must purchase the ROFO Units in the manner, and subject to the terms and conditions, described in such ROFO Units Purchase Agreement. If the Members do not execute a ROFO Units Purchase Agreement within 60 days from the date the ROFO Seller received the ROFO Units Purchase Agreement, the ROFO Seller may, during the next 120 days, Transfer the ROFO Units to a third party Transferee or permit the indirect Transfer of the ROFO Units by the direct or indirect owners of the ROFO Seller (i) at a purchase price not less than 105% of the ROFO Price and upon terms no more favorable, taken as a whole, to the proposed Transferee or transferee of such indirect interest than those specified in the ROFO Units Purchase Agreement, (ii) subject to the applicable terms and restrictions of this Agreement, including this Article IV and (iii) subject to the ROFO Non-Selling Member’s approval of the Transferee or the transferee of such indirect interest, such approval not to be unreasonably withheld.

(d) Sales of the ROFO Units to the ROFO Non-Selling Member pursuant to this Section 4.2 shall be made at the offices of the Company within 60 days of the execution of the ROFO Units Purchase Agreement or on such other date as the Members may agree. Such sales shall be effected by the ROFO Seller’s delivery of the ROFO Units, free and clear of all Encumbrances (other than restrictions imposed by the governing documents of the Company and securities laws), to the ROFO Non-Selling Member, against payment to the ROFO Seller of the ROFO Price by the ROFO Non-Selling Member and on the terms and conditions specified in the ROFO Units Purchase Agreement.

Section 4.3 OpCo Transfer Generally.

(a) The term “transfer,” when used in this Section 4.3 shall mean a transaction by which the holder of an OpCo Membership Interest assigns all or any part of such OpCo Membership Interest to another Person who is or becomes an OpCo Member as a result thereof, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise (but not the pledge, grant of security interest, encumbrance, hypothecation or mortgage), including any transfer upon foreclosure or other exercise of remedies of any pledge, security interest, encumbrance, hypothecation or mortgage.

(b) Except as provided in Section 4.3(c), nothing contained in this Agreement shall be construed to prevent or limit a disposition by any stockholder, member, partner or other owner of the OpCo Managing Member or any OpCo Non-Managing Member of any or all of such Person’s shares of stock, membership interests, partnership interests or other ownership interests in the OpCo Managing Member or such OpCo Non-Managing Member and the term “transfer” in this Section 4.3 shall not include any such disposition.

(c) Right of First Refusal.

(i) Notwithstanding anything to the contrary set forth in this Agreement, except with respect to Permitted OpCo Transfers, if a Sponsor (the “Offering OpCo Member”) receives a bona fide offer that the Offering OpCo

 

31


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Member has decided to accept to transfer all or any portion of its Common Units and OpCo Subordinated Units and the number of Class B Shares equal thereto (collectively, the “Offered OpCo Units”), the OpCo ROFR Rightholder will have a right of first refusal to acquire the Offered OpCo Units in accordance with the following provisions of this Section 4.3(c).

(ii) The Offering OpCo Member will, within five Business Days of receipt of any transfer offer that the Offering OpCo Member has decided to accept, give written notice (the “Offering OpCo Member Notice”) to the Company and the OpCo ROFR Rightholder stating that it has received a bona fide offer for a transfer of the Offered OpCo Units and specifying:

(A) the number of Offered OpCo Units proposed to be transferred by the Offering OpCo Member;

(B) the proposed date, time and location of the closing of the transfer, which will not be less than 60 days from the date of the Offering OpCo Member Notice;

(C) the purchase price per Offered OpCo Unit (which will be payable solely in cash) and the other material terms and conditions of the transfer; and

(D) the name of the Person who has offered to purchase such Offered OpCo Units.

(iii) The Offering OpCo Member Notice will constitute the Offering OpCo Member’s offer to transfer the Offered OpCo Units to the OpCo ROFR Rightholder, which offer will be irrevocable until the end of the OpCo ROFR Rightholder Option Period described in Section 4.3(c)(v)(A).

(iv) By delivering the Offering OpCo Member Notice, the Offering OpCo Member will be deemed, without the necessity of further action, to represent and warrant to the OpCo ROFR Rightholder that:

(A) the Offering OpCo Member has full right, title and interest in and to the Offered OpCo Units;

(B) the Offering OpCo Member has all the necessary power and authority and has taken all necessary action to transfer such Offered OpCo Units as contemplated by this Section 4.3(c); and

(C) the Offered OpCo Units are free and clear of any and all liens other than those arising as a result of or under the terms of this Agreement.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(v) Exercise of the Right of First Refusal.

(A) The OpCo ROFR Rightholder will have the right to elect irrevocably to purchase all and not less than all of the Offered OpCo Units for a period of 15 Business Days following the receipt of the applicable Offering OpCo Member Notice (such period, the “OpCo ROFR Rightholder Option Period”), by delivering a written notice to the Offering OpCo Member (an “OpCo Member ROFR Exercise Notice”) specifying its desire to purchase all of the Offered OpCo Units, on the terms and for the purchase price set forth in the Offering OpCo Member Notice. Any OpCo Member ROFR Exercise Notice will be binding upon delivery and irrevocable by the OpCo ROFR Rightholder.

(B) The failure of the OpCo ROFR Rightholder to deliver an OpCo Member ROFR Exercise Notice by the end of the OpCo ROFR Rightholder Option Period, will constitute both a waiver of its rights of first refusal under this Section 4.3(c) with respect to the transfer of Offered OpCo Units and an election to purchase none of the Offered OpCo Units, but will not affect its respective rights with respect to any future transfers.

(vi) In the event that the OpCo ROFR Rightholder has exercised its right to purchase all and not less than all of the Offered OpCo Units, then the Offering OpCo Member will sell such Offered OpCo Units to the OpCo ROFR Rightholder, and the OpCo ROFR Rightholder will purchase such Offered OpCo Units, on the terms set forth in the Offering OpCo Member Notice within 60 days following the expiration of the OpCo ROFR Rightholder Option Period (which period may be extended for a reasonable time not to exceed 90 days to the extent reasonably necessary to obtain required approvals or consents from any governmental authority). Each OpCo Member will take all actions as may be reasonably necessary to consummate the sale contemplated by this Section 4.3(c)(vi), including, without limitation, entering into agreements and delivering certificates and instruments and consents as may be deemed necessary or appropriate. At the closing of any sale and purchase pursuant to this Section 4.3(c)(vi), the Offering OpCo Member will deliver to the OpCo ROFR Rightholder certificates (if any) representing the Offered OpCo Units to be sold, free and clear of any Encumbrances (other than those contained in this Agreement and the Operating Agreement), accompanied by evidence of transfer and all necessary transfer taxes paid and stamps affixed, if necessary, against receipt of the purchase price therefor from the OpCo ROFR Rightholder by certified or official bank check or by wire transfer of immediately available funds.

(vii) In the event that the OpCo ROFR Rightholder does not elect to purchase all of the Offered OpCo Units, then, provided the Offering OpCo Member has also complied with the provisions of this Section 4.3(c), to the extent applicable, the Offering OpCo Member may transfer all of such Offered OpCo Units, at a price per Offered OpCo Unit not less than the amount specified in the Offering OpCo Member Notice and on other terms and conditions which are not materially more favorable in the aggregate to the proposed purchaser than those

 

33


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

specified in the Offering OpCo Member Notice, but only to the extent that such transfer occurs within 90 days after expiration of the OpCo ROFR Rightholder Option Period. Any Offered OpCo Units not transferred within such 90-day period will be subject to the provisions of this Section 4.3(c) upon subsequent transfer.

(d) Notwithstanding anything to the contrary set forth in this Agreement, neither Sponsor may, without the prior written consent of the other Sponsor, transfer (which, for purposes of this Section 4.3(d), includes any indirect transfer of such OpCo Membership Interest) or exchange all or any portion of its Common Units and OpCo Subordinated Units or any related Class B Shares if, as a result of such transfer or exchange, such Sponsor will own, on a fully diluted basis, less than 17% of the “Percentage Interest” (as defined in the Partnership Agreement) of the OpCo Managing Member; provided, that this Section 4.3(d) shall not apply to a transfer or exchange of Common Units, OpCo Subordinated Units or any related Class B Shares (i) which occurs after the fifth anniversary of the date hereof if such Sponsor also transfers all, but not less than all, of its ownership interest in the Company in such transaction or (ii) if such Sponsor also makes a Permitted Transfer of all, but not less than all, of its ownership interest in the Company in such transaction.

ARTICLE V

CAPITAL CONTRIBUTIONS

Section 5.1 Initial Capital Contributions. Prior to the date hereof, capital contributions totaling $1,000 were made to the Company and 1,000 Economic Units were issued in consideration therefor as set forth in Exhibit A. As of the date hereof, the Economic Members agree that the respective Capital Contributions of the Economic Members and Economic Units of the Economic Members are as set forth on Exhibit A.

Section 5.2 Additional Contributions. No Member shall be obligated to make any additional Capital Contributions to the Company; provided, however, that each Member shall pay or cause to be paid 50% of any amount owed by the Company to any Service Provider under any Management Service Agreement.

Section 5.3 Return of Contributions. Except as expressly provided herein, no Economic Member is entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions. An unreturned Capital Contribution is not a liability of the Company or of any Economic Member. An Economic Member is not required to contribute or to lend any cash or property to the Company to enable the Company to return any Economic Member’s Capital Contributions.

Section 5.4 Capital Accounts. A separate capital account (“Capital Account”) shall be established, determined and maintained for each Economic Member in accordance with the substantial economic effect test set forth in Treasury Regulation § 1.704-l(b)(2), which provides, in part, that a Capital Account shall be:

(a) increased by (i) the amount of money contributed by the Economic Member to the Company; (ii) the fair market value of any property contributed by the Economic Member to the Company (net of liabilities secured by such contributed property); and (iii) allocations to the Economic Member of the Company income and gain (or items thereof), including income and gain exempt from tax; and

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(b) decreased by (i) the amount of money distributed to the Economic Member by the Company; (ii) the fair market value of any property distributed to the Economic Member by the Company (net of liabilities secured by such distributed property); (iii) allocations to the Economic Member of expenditures of the Company not deductible in computing its taxable income and not properly capitalized for federal income tax purposes; and (iv) allocations to the Economic Member of Company loss and deduction (or items thereof).

In the case of a termination of an Economic Unit or an additional Capital Contribution by an existing or newly admitted Economic Member, the Capital Accounts of the Economic Members shall be adjusted as of the date of such termination or the date of the Capital Contribution, as the case may be.

ARTICLE VI

PROJECT OFFERS TO THE OPERATING COMPANY

Section 6.1 General. Each Member and its Affiliates shall have the right to offer to sell Projects to the Operating Company in accordance with this Article VI; provided, however, that no Member shall be obligated to make any offers or sales to the Operating Company. Notwithstanding anything to the contrary set forth herein, each Project offered by a Member or its Affiliates to the Operating Company must, absent approval of a Majority Interest, qualify as an Acceptable Project.

Section 6.2 Offer Schedule. At least three months prior to the beginning of each Fiscal Year, a Majority Interest shall determine (i) whether the Target Distributed Cash Increase Range for the upcoming Fiscal Year should be altered from the amount provided on the Target Distributed Cash Increase Schedule and (ii) a schedule of expected Project offers by each Member to meet the Target Distributed Cash Increase Range for such Fiscal Year (each, an “Annual Offer Schedule”). The Annual Offer Schedule shall control each Member’s right to offer Projects to the Operating Company and shall set forth, at a minimum, the maximum amount of Target Distributed Cash Increase that each Member shall be permitted to offer to the Operating Company, the Projects that each Member contemplates offering to achieve such Target Distributed Cash Increase, any restrictions on the timing of such offers and agreements of the Management Members with respect to the Annual Offer Schedule. The Annual Offer Schedule may set forth alternative Projects proposed to be offered by a Member to the Operating Company. Subject to Section 6.3, in the absence of an Annual Offer Schedule, each Fiscal Year, each Member will have the right to offer to the Operating Company, at a minimum, Projects with Forecasted Distributed Cash of 50% of the bottom of the Target Distributed Cash Increase Range for such Fiscal Year set forth on the Target Cash Distribution Increase Schedule (each, an “Annual Minimum Offer”). Subject to the Annual Offer Schedule, Section 6.3 or approval of a Majority Interest, no Member or its Affiliates may offer Projects to the Operating Company with

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Forecasted Distributed Cash which exceeds 50% of the uppermost point of the Target Distributed Cash Increase Range for such Fiscal Year set forth on the Target Cash Distribution Increase Schedule. The Members acknowledge that the OpCo ROFO Agreements do not impose an obligation on the parties thereto to sell any Project to the Operating Company but instead require the parties thereto to allow the Operating Company to make a first offer to purchase the Projects specified therein as provided therein.

Section 6.3 Increased Offer Rights.

(a) Extraordinary Events. (i) Subject to Section 6.3(a)(ii), in the event that a Project (the “Affected Project”) contributed or sold to the Operating Company by a Member (the “Affected Member”) experiences an Extraordinary Event, whether or not it results in the receipt of Extraordinary Proceeds by the applicable Project Company, (A) the Annual Offer Schedule for the following year shall provide for the offer of one or more additional Projects by the Affected Member or (B) in the absence of Annual Offer Schedules for such year, the Annual Minimum Offer of the Affected Member for such year will be increased to allow for the offer of one or more additional Projects by the Affected Member, in each case that in the aggregate have Forecasted Distributed Cash that, together with the remaining Forecasted Distributed Cash of the Affected Project, if any, is not greater than 105% of the Forecasted Distributed Cash of the Affected Project immediately prior to the Extraordinary Event.

(ii) If the Operating Company or applicable Project Company receives Extraordinary Proceeds, the Affected Member shall have the right to cause the repair of the Affected Project with the Extraordinary Proceeds or offer to the Operating Company additional Projects pursuant to Section 6.3(a)(i) with a purchase price less than or equal to the amount of such Extraordinary Proceeds. If the Affected Project is not so repaired and the Affected Member and the Operating Company are unable to consummate such sale, the Members shall cause the Operating Company or applicable Project Company, as the case may be, to use such proceeds to acquire Common Units or, if a Majority Interest determines, the Members shall cause the Operating Company to distribute such proceeds. If the Operating Company or the applicable Project Company does not receive proceeds from an Extraordinary Event or the proceeds of the Extraordinary Event are insufficient to acquire additional Projects to replace the Distributed Cash lost in the Extraordinary Event or repair the Affected Project, the Affected Member may contribute additional Projects to the Operating Company without charge to the Operating Company or applicable Project Company or, at the election of the Affected Member, the Members shall cause the applicable Project Company to allow the Affected Member to repair the Affected Project without charge to any Group Member or the Project Company.

(b) Failure to Offer. (i) In the event that a Member (the “Non-Offering Member”) (1) notifies the other Member (the “Option Member”) that it will not make an offer as set forth the Annual Offer Schedule or an offer for an alternative Project of equivalent or less Forecasted Distributed Cash, or (2) fails to offer a Project within six months of the date set forth in the Annual Offer Schedule for such offer and fails during

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

such period to make an offer for an alternative Project of equivalent or less Forecasted Distributed Cash, the Option Member shall have the right to offer additional Projects within three months of such notification or failure (but not prior to the beginning of Fiscal Year to which such Annual Offer Schedule applies) which have Forecasted Distributed Cash that is not greater than 105% of the Forecasted Distributed Cash that is not being satisfied by the Non-Offering Member.

(ii) If there is no Annual Offer Schedule for a Fiscal Year and a Non-Offering Member (1) notifies the Option Member that it will not offer Projects projected to meet its Annual Minimum Offer for such Fiscal Year or (2) fails to offer Projects before the end of a Fiscal Year that in the aggregate meet its Annual Minimum Offer for such Fiscal Year, the Option Member shall have the right to offer additional Projects within three months of such notification or, if no notification, during the first quarter of the next Fiscal Year which, when the Forecasted Distributed Cash of such Projects are aggregated with the Forecasted Distributed Cash of the other Projects contributed to the Operating Company during the year in which the Non-Offering Member failed to offer Projects, are sufficient to meet the Target Distributed Cash Increase Range for the year in which the Non-Offering Member failed to offer Projects.

(iii) Upon occurrence of a failure of the Non-Offering Member described in Section 6.3(b)(i) or (ii) and the corresponding contribution or sale of additional Projects by the Option Member, the Management Members shall modify the Annual Offer Schedule for the next Fiscal Year to (A) provide that the Non-Offering Member may offer Projects in addition to those permitted under Section 6.2 which produce the amount of additional Forecasted Distributed Cash that the Option Member contributed or sold in the prior year pursuant to Section 6.3(b)(i) or (ii) and (B) correspondingly reduce the amount of Forecasted Distributed Cash the Option Member may offer. If there is no Annual Offer Schedule for the next Fiscal Year, the Non-Offering Member shall have the opportunity to offer a larger percentage of the Projects required to meet the Annual Minimum Offer of both Members, so that the aggregate Forecasted Distributed Cash produced by the Projects contributed by (A) the Non-Offering Member is increased above that permitted under Section 6.2 to produce the amount of additional Forecasted Distributed Cash that the Option Member contributed or sold in the prior year pursuant to Section 6.3(b)(i) or (ii) and (B) the Option Member is correspondingly reduced. If the Non-Offering Member cannot offer the additional Projects in such subsequent year, it will lose the right to cure such failed offer.

Section 6.4 Conflicts Committee Approval. The terms and conditions of the agreement pursuant to which the Operating Company would acquire a Project from a Member must be approved by the Conflicts Committee prior to consummation of such acquisition.

Section 6.5 Future Target Distributed Cash Increase Schedule. At least three months prior to the beginning of each Fiscal Year, a Majority Interest shall determine the Target Distributed Cash Increase Schedule for the subsequent 10 Fiscal Years. To the extent a Majority

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Interest cannot agree on such modified Target Distributed Cash Increase Schedule, the existing Target Distributed Cash Increase Schedule shall remain in effect pending such determination, provided that the Target Distributed Cash Increase for the 10th Fiscal Year of the schedule shall remain the same as the preceding Fiscal Year.

Section 6.6 Delivery of Final Project Model. Any Member that sells or contributes a Project to the Operating Company pursuant to this Article VI shall deliver the final project model for such Project to the Company for consideration 30 days prior to the acquisition of such Project by the Operating Company.

ARTICLE VII

DISTRIBUTIONS AND ALLOCATIONS

Section 7.1 Distributions.

(a) Except as otherwise provided in Section 13.3 or as otherwise set forth herein, within 50 days following the end of each Quarter commencing with the Quarter ending on [            ], 2015, an amount equal to 100% of Available Cash with respect to such Quarter shall be distributed in accordance with this Article VII to all Economic Members simultaneously, pro rata in accordance with each Economic Member’s Ownership Percentage; provided that no distributions for any Fiscal Year beginning after November 30, 2019 will be made until after the Final Calculation for such Fiscal Year. Notwithstanding the foregoing, in the event that any Adjustment Percentages of the Members are in dispute in accordance with Section 3.2 at the time that a distribution is due, the Company shall distribute to each Economic Member only the amount of such distribution that is not being contested and the Company shall not distribute the remainder of such distribution until the Adjustment Percentages are determined to be final, binding and conclusive in accordance with Section 3.2.

(b) Each distribution in respect of an Economic Unit shall be paid by the Company only to the holder of record of such Economic Unit as of the record date set for such distribution. Such payment shall constitute full payment and satisfaction of the Company’s liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.

(c) Annual Adjustment to Distributions.

(i) In the event that there is a negative Adjustment Amount with respect to one Economic Member (a “Deficit Economic Member”) and the Adjustment Amount with respect to the other Economic Member is greater than or equal to zero (a “Surplus Economic Member”), all distributions due on the Deficit Economic Member’s Economic Units (the “Transferred Distribution”) shall be paid to the Surplus Economic Member, until such time as the Surplus Economic Member has received Transferred Distributions for such Fiscal Year equal to the Adjustment Amount. Thereafter, any remaining Available Cash shall be distributed in accordance with Section 7.1(a). In the event the Transferred Distributions paid in a Fiscal Year are insufficient to satisfy the Adjustment

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Amount, the difference between the Adjustment Amount and the Transferred Distributions (the “Transferred Distribution Shortfall”) shall accrue for the next Fiscal Year.

(ii) In the event that both Economic Members are Deficit Economic Members, the Adjustment Amounts for both Members shall be netted (the “Net Adjustment Amount”) and a Transferred Distribution shall be made from the Deficit Economic Member with the larger Adjustment Amount to the Deficit Economic Member with the smaller Adjustment Amount (the “Net Surplus Economic Member”) until such time as the Net Surplus Economic Member has received Transferred Distributions in such Fiscal Year equal to the Net Adjustment Amount. Thereafter, any remaining Available Cash shall be distributed in accordance with Section 7.1(a). In the event the Transferred Distributions received in such Fiscal Year are insufficient satisfy the Net Adjustment Amount, the difference between the Net Adjustment Amount and the Transferred Distribution (the “Net Transferred Distribution Shortfall” and, together with the Transferred Distribution Shortfall, the “Shortfall”) shall accrue for the next Fiscal Year.

(iii) In the event that both Economic Members are Surplus Economic Members, no adjustment to the distributions of Available Cash shall be made pursuant to this Section 7.1(c) and Available Cash shall be distributed in accordance with Section 7.1(a).

Section 7.2 Allocations. After giving effect to the allocations set forth in Section 7.3, the Company shall allocate Profits and Losses for any Allocation Year among the Economic Members in the manner that causes the balance of the Capital Account of each Economic Member to be equal to the amount which would have been distributed to such Economic Member pursuant to Section 7.1 if all of the assets of the Company had been sold on the last day of the Allocation Year for their Gross Asset Values (except that any Company asset that is sold in such Allocation Year shall be treated as if sold for an amount of cash equal to the sum of (x) the amount of any net cash proceeds actually received by the Company in connection with such disposition and (y) the Gross Asset Values of any property actually received by the Company in connection with such disposition).

Section 7.3 Special Allocations.

(a) If there is a net decrease in Company Minimum Gain during any Allocation Year, each Economic Member shall be allocated items of Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. This Section 7.3(a) is intended to comply with the Company Minimum Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Allocation

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Year, any Economic Member with a share of Member Nonrecourse Debt Minimum Gain at the beginning of such Allocation Year shall be allocated items of Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. This Section 7.3(b) is intended to comply with the chargeback of items of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(c) In the event any Economic Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Company gross income and gain shall be specially allocated to such Economic Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations promulgated under Section 704(b) of the Code, the Adjusted Capital Account Deficit, if any, created by such adjustments, allocations or distributions as quickly as possible; provided, that an allocation pursuant to this Section 7.3(c) shall be made only if and to the extent that such Economic Member would have an Adjusted Capital Account Deficit as adjusted after all other allocations provided for in Section 7.2 and this Section 7.3 have been tentatively made as if this Section 7.3(c) and Section 7.3(d) were not in this Agreement.

(d) In the event any Economic Member has a deficit balance in its Capital Account at the end of any Allocation Year in excess of the sum of (A) the amount such Economic Member is required to restore pursuant to the provisions of this Agreement and (B) the amount such Economic Member is deemed obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Economic Member shall be specially allocated items of Company gross income and gain in the amount of such excess as quickly as possible; provided, that an allocation pursuant to this Section 7.3(d) shall be made only if and to the extent that such Economic Member would have a deficit balance in its Capital Account as adjusted after all other allocations provided for in this Article VII have been tentatively made as if Section 7.3(c) and this Section 7.3(d) were not in this Agreement.

(e) Nonrecourse Deductions for any Allocation Year shall be allocated to the Economic Members pro rata in accordance with each Economic Member’s Ownership Percentage.

(f) Member Nonrecourse Deductions for any Allocation Year shall be allocated 100% to the Economic Member that bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one Economic Member bears the economic risk of loss with respect to a Member Nonrecourse Debt, such Economic Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Economic Members in accordance with the ratios in which they share such economic risk of loss.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(g) For purposes of Treasury Regulation Section 1.752-3(a)(3), the Economic Members agree that Nonrecourse Liabilities of the Company shall be allocated to the Economic Members pro rata in accordance with each Economic Member’s Ownership Percentage.

(h) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated to the Economic Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

(i) Notwithstanding any other provision of this Section 7.3, the allocations set forth in Sections 7.3(a), (b), (c), (d), (e), (f) and (h) (the “Required Allocations”) shall be taken into account so that, to the extent possible, the net amount of items of gross income, gain, loss and deduction allocated to each Economic Member pursuant to Section 7.2 and Section 7.3, together, shall be equal to the net amount of such items that would have been allocated to each such Economic Member under Section 7.2 and Section 7.3 had the Required Allocations and this Section 7.3(i) not otherwise been provided in this Agreement. The Company may take into account future Required Allocations that, although not yet made, are likely to offset other Required Allocations previously made.

(j) Items of income, gain, loss and deduction realized in any taxable year that includes a dissolution event shall be allocated in a manner that will cause, to the extent possible, the ratio of each Economic Member’s Capital Account to the sum of all Economic Members’ Capital Accounts to be equal to such Economic Member’s Ownership Percentage. Upon a dissolution event, if any property is distributed in kind, any unrealized income, gain, loss, and deduction inherent in property that has not been reflected in the Capital Accounts previously shall be allocated among the Economic Members as if there were a taxable disposition of that property for the fair market value of that property on the date of distribution.

(k) The allocations in Section 7.2, this Section 7.3 and Section 7.5, and the provisions of this Agreement relating to the maintenance of Capital Accounts, are included to ensure compliance with requirements of the federal income tax law (and any applicable state income tax laws). Such provisions are intended to comply with Treasury Regulation Sections 1.704-1 and 1.704-2 and shall be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto. The Management Members shall cause appropriate modifications to be made if unanticipated events might otherwise cause this Agreement not to comply with such Treasury Regulations, so long as such modifications do not cause a material change in the relative economic benefit of the Economic Members under this Agreement.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 7.4 Section 704(c). In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Economic Members to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of same under this Agreement). In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value hereof, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by a Majority Interest in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 7.4 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Economic Member’s Capital Account or share of Profits, Losses, other items, or distributions pursuant to any provision of this Agreement.

Section 7.5 Varying Interests. All items of income, gain, loss, deduction or credit shall be allocated, and all distributions shall be made, to the Persons shown on the records of the Company to have been Economic Members as of the last calendar day of the period for which the allocation or distribution is to be made. Notwithstanding the foregoing, if during any taxable year there is a change in any Economic Member’s Ownership Percentage, the Economic Members agree that their allocable shares of such items for the taxable year shall be determined on any method determined by a Majority Interest to be permissible under Code Section 706 and the related Treasury Regulations to take account of the Economic Members’ varying Ownership Percentages.

Section 7.6 Withheld Taxes. All amounts withheld pursuant to the Code or any provision of any state, local or non-U.S. tax law with respect to any payment, distribution or allocation to the Company or the Economic Members shall be treated as amounts distributed to the Economic Members pursuant to this Article VII for all purposes of this Agreement. The Company is authorized to withhold from distributions, or with respect to allocations, to the Economic Members and to pay over to any federal, state, local or non-U.S. government any amounts required to be so withheld pursuant to the Code or any provision of any other federal, state, local or non-U.S. law and shall allocate such amounts to those Economic Members with respect to which such amounts were withheld.

Section 7.7 Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Delaware Act or other applicable law. All distributions required to be made under this Agreement shall be made subject to Sections 18-607 and 18-804 of the Delaware Act.

 

42


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

ARTICLE VIII

MANAGEMENT MEMBERS

Section 8.1 Management by Management Members.

(a) The Management Members, by a Majority Interest, shall conduct, direct and manage all activities of the Company. Except as otherwise expressly provided in this Agreement, but without limitation on the ability of each Member to delegate its rights and powers to other Persons, all management powers over the business and affairs of the Company shall be exclusively vested in the Management Members and no other Member shall have any management power over the business and affairs of the Company.

(b) No Economic Member, in its capacity as such, shall participate in the operation, management or control of the Company’s business, transact any business in the Company’s name or have the power to sign documents for or otherwise bind the Company.

Section 8.2 Meetings. Subject to the provisions of this Agreement, including Section 8.1, any actions to be taken hereunder shall be taken in the manner provided in this Article VIII. Meetings of the Management Members shall be called by any Management Member. Such Management Member may designate any place as the place of meeting for any meeting of the Management Members.

Section 8.3 Notice of Meeting. Written notice of meetings of the Management Members shall be given to all Management Members at least ten days prior to the meeting. All notices and other communications to be given to Management Members shall be given in accordance with Section 14.4. Neither the business to be transacted at, nor the purpose of, any meeting of the Management Members need be specified in the notice of such meeting. A meeting may be held at any time without notice if all the Management Members are present or if those not present waive notice of the meeting either before or after such meeting. Attendance of a Management Member at a meeting shall constitute a waiver of notice of such meeting, except where a Management Member attends the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 8.4 Quorum; Voting Requirement.

(a) The presence, in person or by proxy or participating in accordance with Section 8.6, of a Majority Interest shall constitute a quorum for the transaction of business by the Management Members. Unless otherwise provided in Section 8.4(b) or by the Delaware Act, the affirmative vote of a Majority Interest present at a meeting at which a quorum is present shall constitute a valid decision of the Management Members.

(b) At all times when there is a Minority Management Member, without first receiving the unanimous vote of the Management Members, the Company shall not, and shall cause the YieldCo General Partner, the Group Members and, to the extent it has rights to do so under the applicable Group Member Agreements, the Joint Ventures not to, and shall not authorize or permit any officer or agent of the Company on behalf of the Company or of the YieldCo General Partner, any Group Member or, to the extent it has rights to do so under the applicable Group Member Agreement, any Joint Venture to, effect any of the following actions:

(i) alter, repeal, amend or adopt any provision of its certificate of limited partnership, certificate of formation or certificate of incorporation or any agreement of limited partnership, limited liability company agreement or bylaws or any similar organizational or governing document if any such alteration, repeal, amendment or adoption would have an adverse effect on the rights or preferences of the Minority Management Member;

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(ii) merge, consolidate or convert with or into any other Person (other than a wholly owned Subsidiary of the Partnership into another wholly owned Subsidiary of the Partnership) if any such merger consolidation or conversion would have a disproportionate adverse effect on the Minority Management Member;

(iii) voluntarily liquidate, wind-up or dissolve the Company, the YieldCo General Partner or the Partnership if any such liquidation, wind-up or dissolution would have a disproportionate adverse effect on the Minority Management Member; or

(iv) change the classification of the Company or any Group Member or any Joint Venture for United States federal income tax purposes or take any action that would otherwise change the tax status of the Company or any Group Member or any Joint Venture if any such change would have an adverse effect on the Minority Management Member.

(c) Without first receiving the prior written consent of the affected Management Member, the Company shall not, and shall cause the YieldCo General Partner, the Group Members and, to the extent it has rights to do so under the applicable Group Member Agreements, the Joint Ventures not to, and shall not authorize or permit any officer or agent of the Company on behalf of the Company or of the YieldCo General Partner, any Group Member or, to the extent it has rights to do so under the applicable Group Member Agreement, any Joint Venture to, enter into or approve any transaction containing any restriction on direct or indirect Transfers of ownership interests in the Company, the Partnership or the Operating Company by such Management Member or its Affiliates or any consolidations, mergers or direct or indirect sales, assignments, gifts, exchanges or any other dispositions by law or otherwise of all or substantially all of the assets of its Affiliated Sponsor.

Section 8.5 Management Member Deadlock.

(a) In the event that a Management Member is unable to obtain the requisite vote under Section 8.4 for the approval of any matter (such event, a “Deadlock”), either Management Member may give the other Management Member notice (a “Deadlock Notice”) that such matter has not been so approved. Within five days after receipt of the Deadlock Notice, the receiving Management Member shall submit to the other Management Member a written response (a “Deadlock Response”). The Deadlock Notice and the Deadlock Response shall each include (i) a statement setting forth the position of the Management Member giving the Deadlock Notice or Deadlock Response,

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

as applicable, and a summary of arguments supporting such position and (ii) the name and title of a senior representative of such Management Member who has authority to settle the Deadlock. Within five days of the delivery of the Deadlock Response, the senior representatives of both Management Members named in the Deadlock Notice and Deadlock Response shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate to the resolve the Deadlock.

(b) If such Deadlock has not been resolved, for any reason, within 30 days following delivery of the Deadlock Response, then each Management Member agrees to have the Chief Executive Officer of the Sponsor to which it is Affiliated meet or communicate by telephone with the Chief Executive Officer of the Sponsor to which the other Management Member is Affiliated at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, and shall negotiate to resolve the Deadlock.

(c) (i) If such Deadlock has not been resolved, for any reason, within 90 days following delivery of the Deadlock Response, then either Management Member (the “Shotgun Initiator”) may deliver to the other Management Member (the “Shotgun Recipient”) a notice of its intention to purchase all, but not less than all, of the Membership Interests and OpCo Subordinated Units owned by the Shotgun Recipient (the “Shotgun Notice”).

(ii) To be effective, the Shotgun Notice must: (A) be signed by the Shotgun Initiator; (B) contain an irrevocable offer to purchase all, but not less than all, of the Membership Interests and OpCo Subordinated Units owned by the Shotgun Recipient for a cash price (the “Shotgun Price”); (C) contain a valuation by a nationally recognized investment banking firm attesting that the Shotgun Price represents the Fair Value of the applicable Membership Interests and OpCo Subordinated Units; and (D) constitute a valid, legally binding and enforceable offer for the sale and purchase of such Membership Interests and OpCo Subordinated Units containing no representations or warranties other than with respect to ownership of title to the Membership Interests and OpCo Subordinated Units free and clear of all Encumbrances (other than restrictions imposed by the governing documents of the Company and the Operating Company and securities laws). Upon the delivery of a Shotgun Notice, no additional Shotgun Notices may be delivered by either Member.

(iii) Within 30 days of the Shotgun Recipient receiving the Shotgun Notice, the Shotgun Recipient shall irrevocably elect one of the following options, by delivering to the Shotgun Initiator a written election notice (such notice, a “Shotgun Election”): (A) accept the Shotgun Initiator’s offer to purchase the Shotgun Recipient’s Membership Interests and OpCo Subordinated Units, (B) propose a counteroffer to purchase the Shotgun Initiator’s Membership Interests and OpCo Subordinated Units at a price it reasonably considers equal to the Fair Value of such Membership Interests and OpCo Subordinated Units, which election shall meet the requirements of an effective Shotgun Notice under Section 8.5(c)(ii)

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

above, or (C) the Shotgun Recipient may irrevocably elect to have a nationally recognized investment banking firm conduct an auction process pursuant to Section 8.5(c)(v) to solicit offers from Persons, including the Sponsors and their Affiliates (each such Person, an “Auction Buyer”), with the objective of obtaining the highest price for the purchase for cash of all, but not less than all, of the outstanding Membership Interests in the Company and OpCo Subordinated Units of the Shotgun Initiator and the Shotgun Recipient, such purchase to occur on terms no less favorable than the non-price terms set forth in the Shotgun Notice. If the Shotgun Recipient does not irrevocably elect any of the foregoing options within the time allotted, then the Shotgun Recipient shall be deemed to have irrevocably elected to accept the offer for the Shotgun Initiator to purchase all of the Shotgun Recipient’s Membership Interests and OpCo Subordinated Units.

(iv) In the event that the Shotgun Recipient proposes a counteroffer pursuant to Section 8.5(c)(iii)(B), the Shotgun Initiator shall, within 30 days of receiving the Shotgun Election, irrevocably elect to (A) accept the Shotgun Recipient’s counteroffer set forth in the Shotgun Election, or (B) have a nationally recognized investment banking firm conduct an auction process pursuant to Section 8.5(c)(v) to solicit offers from Auction Buyers with the objective of obtaining the highest price for the purchase for cash of all, but not less than all, of the outstanding Membership Interests and OpCo Subordinated Units of the Shotgun Initiator and the Shotgun Recipient, such purchase to occur on terms no less favorable than the non-price terms set forth in the Shotgun Election. If the Shotgun Initiator does not irrevocably elect any of the foregoing options within the time allotted, then the Shotgun Initiator shall be deemed to have irrevocably elected to accept the counteroffer for the Shotgun Recipient to purchase all of the Shotgun Initiator’s Membership Interests and OpCo Subordinated Units.

(v) In the event of the initiation of an auction process as provided above, the Management Member that has elected to initiate the auction process (the “Auction Initiator”) shall be entitled, within 180 days after the later of the date of the Shotgun Notice or Shotgun Election that resulted in the auction process (or any longer period to which the non-Auction Initiator consents in writing) (such period, the “Auction Period”), to execute and deliver a binding, definitive purchase and sale agreement with an Auction Buyer, pursuant to which such Auction Buyer shall purchase all, but not less than all, of the outstanding Membership Interests and OpCo Subordinated Units of the Shotgun Initiator and Shotgun Recipient for a price in cash (such price, the “Auction Price”) (such agreement, the “Binding Agreement”).

(vi) In the event that a Binding Agreement is executed and delivered by the Auction Initiator within the Auction Period and the rights and obligations of the Members are the same therein in all material respects, then the non-Auction Initiator shall be obligated to execute and deliver a counterpart to such Binding Agreement. Upon such execution and delivery by the non-Auction Initiator, the Shotgun Initiator and the Shotgun Recipient shall be obligated to sell all, but not

 

46


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

less than all, of their outstanding Membership Interests and their OpCo Subordinated Units to the Auction Buyer pursuant to such Binding Agreement at the Auction Price and upon the same terms and subject to the same conditions.

(vii) In the event that the Shotgun Recipient initiates an auction process under Section 8.5(c)(iii) above, but a Binding Agreement is not delivered within the Auction Period, then the Shotgun Initiator may elect to purchase all, but not less than all, of the Membership Interests and OpCo Subordinated Units owned by the Shotgun Recipient at the price and on the terms initially offered in the Shotgun Notice with a five percent (5%) discount and an additional deduction equal to the amount of the costs of the auction process borne by the Company or the Shotgun Initiator.

(viii) In the event that the Shotgun Initiator initiates an auction process under Section 8.5(c)(iv) above, but a Binding Agreement is not delivered within the Auction Period, then the Shotgun Recipient may elect to purchase all, but not less than all, of the Membership Interests and OpCo Subordinated Units owned by the Shotgun Initiator at the price and on the terms initially offered in the Shotgun Election with a five percent (5%) discount and an additional deduction equal to the amount of the costs of the auction process borne by the Company or the Shotgun Recipient.

(ix) In the event that an auction process is conducted and a Binding Agreement is executed and delivered and such transaction is consummated, the Auction Price shall be allocated between the Management Members in accordance with the relative Fair Values of their Membership Interests and OpCo Subordinated Units. Within 15 days of the date of consummation of the auction process, each Management Member shall deliver in writing to the other Management Member its proposed allocation of the Auction Price, with an opinion from an impartial senior employee or partner at a nationally recognized investment banking firm attesting to the Fair Value of the Membership Interests and OpCo Subordinated Units of each Member and that such allocation represents the fair allocation of the Auction Price based on the Fair Value of such Membership Interests and OpCo Subordinated Units (each an “Auction Price Allocation Opinion”). If either Management Member fails to timely deliver an Auction Price Allocation Opinion, then the allocation of the Auction Price set forth in the other Management Member’s Auction Price Allocation Opinion shall be the final allocation of the Auction Price between the parties. The Management Members shall attempt to amicably determine the allocation of the Auction Price after delivery of the second Auction Price Allocation Opinion. In the event that, for any reason, the Management Members cannot agree in writing on the allocation of the Auction Price within 15 days of the date of the delivery of the second Auction Price Allocation Opinion, then the allocation of the Auction Price shall be submitted for a final and binding determination by an impartial senior employee or partner at a nationally recognized investment banking firm jointly appointed by the Management Members, which shall not be an investment banking firm that has otherwise given an opinion or attestation in this Section 8.5(c)

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(the “Appraiser”). In the event the Appraiser is not, for any reason, jointly appointed by the Managing Members within 30 days of the date of delivery of the second Auction Price Allocation Opinion, the Appraiser shall be appointed by the AAA on the written request of any party. The Appraiser shall be provided with the two Auction Price Allocation Opinions, and, using the information contained therein and such other materials as it may reasonably request from either Management Member, determine the Fair Value of the Membership Interests and OpCo Subordinated Units of each Member and the fair allocation of the Auction Price based on the Fair Value of such Membership Interests and OpCo Subordinated Units. The final allocation of the Auction Price shall thereafter be the average of (A) the allocation set forth by the Appraiser, and (B) the allocation set forth in an Auction Price Allocation Opinion which is closest to the allocation set forth by the Appraiser; provided, that in the event the allocation set forth by the Appraiser is in the mid-point between the allocations set forth by both Auction Price Allocation Opinions, the allocation shall be as set forth by the Appraiser. For the avoidance of doubt, the Appraiser shall act as an expert, and not as an arbitrator; and this submission to the determination of the Appraiser, and the determination of the Appraiser, shall not be governed by and construed by the Federal Arbitration Act or any state arbitration statute or law.

(x) Sales of the Membership Interests and OpCo Subordinated Units pursuant to this Section 8.5(c) shall be made at the offices of the Company within 60 days of the acceptance of any offer under Section 8.5(c)(iii) or Section 8.5(c)(iv) above, or if later the execution of a Binding Agreement, or on such other date as the Members may agree. Such sales shall be effected by the applicable Member’s delivery of the Membership Interests and OpCo Subordinated Units, free and clear of all Encumbrances (other than restrictions imposed by the governing documents of the Company and the Operating Company and securities laws), to the other Member, against payment to the selling Member(s) of the Shotgun Price, as applicable, and on the terms and conditions specified in the Shotgun Election or Binding Agreement, as applicable.

(d) Notwithstanding anything herein to the contrary, until a Deadlock is resolved, each Management Member agrees to continue to perform its obligations under this Agreement and to cause its directors, officers, Affiliates and agents to continue to perform their obligations under this Agreement.

Section 8.6 Conference Telephone Meetings. Management Members may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 8.7 Action by Consent of Members. Any action that may be taken at a meeting of the Management Members may be taken without a meeting if an approval in writing setting forth such action is signed by Management Members holding a Majority Interest.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 8.8 Representatives.

(a) Each Management Member shall appoint one representative (a “Representative”), which may be a Director of the YieldCo General Partner, who shall be deemed to have the authority to act on behalf of such Management Member to take any and all actions and make any and all decisions required under this Agreement, including with respect to making any determination with respect to those matters requiring unanimous approval of the Management Member set forth in Section 8.4(b). The initial Representative of each Management Member is set forth on Exhibit F.

(b) Any Management Member may change its Representative by providing written notice of a new Representative to the Company and the other Management Member, such change to be effective upon receipt of such notice pursuant to Section 14.4. Any action or omission of a Representative will be deemed to be effective hereunder, and may be relied on by the Company or the other Management Member, until such notice of a replacement Representative is so received.

Section 8.9 Affiliate Contracts.

(a) All contracts or other arrangements between the Company, the YieldCo General Partner, any Group Member or any Joint Venture on the one hand and any Affiliate of any Member on the other hand that is entered into on or after the date of this Agreement, except to the extent otherwise expressly approved by the Board of Directors or a committee thereof, shall (i) be in writing, (ii) contain market-based terms, and (iii) be administered on an arm’s length basis.

(b) No later than 30 days following the end of each Quarter, each of SP Member and FS Member shall cause SP Parent and FS Parent, respectively, to deliver to the other Member a certificate from an authorized officer certifying that, with respect to all contracts or other arrangements between the Company, the YieldCo General Partner or any Group Member (but not any Joint Venture) on the one hand and any Affiliate of any Member on the other hand, there is no material breach or default on the part of SP Parent or FS Parent, respectively, or any Affiliate thereof under any such contract or other arrangement; provided, that in the event there is such a breach or default, the certificate shall identify such breach or default, set out any losses or costs incurred or other consequences resulting from such breach or default and set forth a plan to remedy such breach or default, recover such losses or costs and rectify any consequences of such breach or default as soon as practicable.

Section 8.10 Notices. The Company and the Management Members shall promptly provide or cause to be provided to each Management Member copies of all official notices and reasonably pertinent business correspondence sent by or on behalf of, or addressed to, the Company, the YieldCo General Partner, the Partnership, the Operating Company or any Management Member on behalf of any of the foregoing, in each case to the extent any such official notice or correspondence is not addressed to any such Management Member.

 

49


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

ARTICLE IX

MANAGEMENT OF THE YIELDCO GENERAL PARTNER

Section 9.1 Right to Appoint Members of the Board of Directors.

(a) Subject to this Section 9.1, the Management Members shall designate the Directors as follows:

(i) SP Member shall be entitled to designate two natural persons to serve on the Board of Directors (any such Director designated by SP Member, an “SP Director”). The initial SP Directors as of the Closing Date are set forth on Exhibit C.

(ii) FS Member shall be entitled to designate two natural persons to serve on the Board of Directors (any such Director designated by FS Member, an “FS Director” and collectively with the SP Directors, the “Sponsor Directors”). The initial FS Directors as of the Closing Date are set forth on Exhibit C.

(iii) A Majority Interest shall designate any other Directors, including three Independent Directors, to serve on the Board of Directors. The initial Independent Director(s) as of the Closing Date are set forth on Exhibit C. Unless otherwise agreed by a Majority Interest, each Independent Director shall hold office for a two-year term, or until the earlier removal, death or resignation of such Independent Director. For the avoidance of doubt, Independent Directors shall not be precluded from serving consecutive terms.

(b) The Chief Executive Officer of the YieldCo General Partner shall be the Chairman of the Board of Directors.

(c) If any Management Member elects to transfer its right to designate its Directors in accordance with the terms of this Agreement (including the requirements set forth in Section 4.1(e)), then (1) each Director designated by such Management Member shall be automatically removed from all positions such individual holds with the Company without any further action as of the close of business on the date of such transfer, (2) each vacancy in the Board of Directors created by such removal shall be filled by the Transferee of such transfer, (3) such Management Member shall no longer be permitted to designate any Directors pursuant to this Agreement and (4), subject to Section 9.1(d) and Section 9.1(e), the Transferee of such transfer shall become entitled to designate Directors under this Agreement as of the close of business on the date of transfer.

(d) (i) In the event the Adjustment Percentage of a Management Member is below [40]% in each of the three previous Fiscal Years or if, in each of such three Fiscal Years, the Distributed Cash generated by the Projects contributed by a Management Member or its Affiliates during such Fiscal Year is less than [40]% of the Distributed Cash generated by all Projects contributed by the Management Members or their Affiliates during such Fiscal Year, such Management Member (the “Losing Management Member”) shall lose the right to appoint one Director.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(ii) In the event the Adjustment Percentage of a Losing Management Member is below [30]% in each of the three previous Fiscal Years or if, in each of such three Fiscal Years, the Distributed Cash generated by the Projects contributed by such Losing Management Member or its Affiliates during such Fiscal Year is less than [30]% of the Distributed Cash generated by all Projects contributed by the Management Members or their Affiliates during such Fiscal Year, the Losing Management Member shall lose the right to appoint both Directors.

(iii) Upon the Losing Management Member’s loss of the right to appoint one or more Directors pursuant to Section 9.1(d)(i) or Section 9.1(d)(ii), the other Management Member (the “Gaining Management Member”) shall have the right to, within the earlier of 30 days of the applicable Final Calculation under Section 3.2(d) or the end of the fiscal quarter of the Gaining Management Member in which such loss occurs (the “Option Exercise Period”), elect to remove a Director, or two Directors, as applicable, appointed by the Losing Management Member and appoint a new Director, or two Directors, as applicable (in each case, a “Board Member Option”); provided that in the event that the Losing Management Member has only lost the right to appoint one Director under Section 9.1(d)(i), the Losing Management Member shall have the right to choose which Director is removed upon the exercise of the Board Member Option by the Gaining Management Member. To exercise a Board Member Option, the Gaining Management Member shall deliver to the Company and the Losing Management Member written notice of its election to exercise the Board Member Option before the expiration of the Option Exercise Period. Upon the Company’s receipt of such notice, the Company shall cause, and the Management Members agree to take all actions required to cause, the Director(s) appointed by the Losing Management Member to be removed and the Director(s) being appointed by the Gaining Management Member to be appointed. Notwithstanding the foregoing, in the event that a Gaining Management Member waives its right to exercise a Board Member Option upon the Losing Management Member’s loss, or fails to exercise the Board Member Option during the Option Exercise Period, such waiver shall only apply to the current Fiscal Year and shall not prevent a Gaining Management Member that qualifies as a Gaining Management Member at the beginning of any subsequent Fiscal Year from exercising the Board Member Option in any subsequent Fiscal Year.

(e) (i) In the event a Losing Management Member has lost the right to appoint both Directors in accordance with Section 9.1(d)(ii), the right to appoint one Director shall be regained when (x) such Losing Management Member’s Adjustment Percentage for the previous Fiscal Year is at least [30]% and (y) in any of the three previous Fiscal Years, the Distributed Cash generated by the Projects contributed by such Losing Management Member or its Affiliates during such Fiscal Year is at least [30]% of the Distributed Cash generated by all Projects contributed by the Management Members or their Affiliates during such Fiscal Year.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(ii) In the event a Losing Management Member has lost the right to appoint one or both Directors in accordance with Section 9.1(d)(i) or (ii), the right to appoint two Directors shall be regained when (A) such Losing Management Member’s Adjustment Percentage for the previous Fiscal Year is at least [40]% and (B) in any of the three previous Fiscal Years, the Distributed Cash generated by the Projects contributed by such Losing Management Member or its Affiliates during such Fiscal Year is at least [40]% of the Distributed Cash generated by all Projects contributed by the Management Members or their Affiliates during such Fiscal Year.

(iii) Upon the Losing Management Member regaining the right to appoint one or more Directors pursuant to Section 9.1(e)(i) or Section 9.1(e)(ii), the Losing Management Member shall have the right to, within the earlier of 30 days of the applicable Final Calculation under Section 3.2(d) or the end of the fiscal quarter of the Losing Management Member in which such regain occurs (the “Regain Option Exercise Period”), elect to remove a Director appointed by the Gaining Management Member and appoint a new Director (in each case, a “Regain Board Member Option”); provided that the Gaining Management Member shall have the right to choose which Director(s) is removed upon the exercise of the Regain Board Member Option by the Losing Management Member. To exercise a Regain Board Member Option, the Losing Management Member shall deliver to the Company and the Gaining Management Member written notice of its election to exercise the Regain Board Member Option before the expiration of the Regain Option Exercise Period. Upon the Company’s receipt of such notice, the Company shall cause, and the Management Members agree to take all actions required to cause, the Director(s) appointed by the Gaining Management Member to be removed and the Director(s) being appointed by the Losing Management Member to be appointed. Notwithstanding the foregoing, in the event that a Losing Management Member waives its right to exercise a Regain Board Member Option upon the Losing Management Member’s regain, or fails to exercise the Regain Board Member Option during the Regain Option Exercise Period, such waiver shall only apply to the current Fiscal Year and shall not prevent such Losing Management Member, if it still qualifies, from exercising the Regain Board Member Option at the beginning of any subsequent Fiscal Year.

(f) For purposes of Section 9.1(d) and Section 9.1(e), all determinations of Adjustment Percentages and Distributed Cash shall be made in accordance with Section 3.2. Any changes in rights effected pursuant to Sections 9.1(d) and (e), shall be effective upon the final, conclusive determination of the last required Adjustment Percentage or Distributed Cash Calculation.

(g) Unless a committee is required to only have Independent Directors in accordance with the rules and regulations of the Commission and the NASDAQ Stock Market LLC or any national securities exchange on which the Class A Shares are listed from time to time or a Majority Interest otherwise determines, any committee of the Board Directors of YieldCo General Partner shall comprise at least two Sponsor

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Directors, at least one of which shall be an FS Director and one of which shall be an SP Director, provided that the Company has designated at least one of each of such Sponsor Directors.

Section 9.2 Right to Appoint Officers of the YieldCo General Partner.

(a) Subject to Section 9.2(d), the Management Members shall use reasonable best efforts to cause the Board of Directors to designate the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Vice Presidents of Operations and General Counsel/Secretary of the YieldCo General Partner as follows:

(i) Chief Executive Officer. (A) SP Member shall select the initial Chief Executive Officer of the YieldCo General Partner for approval by the Board of Directors. The Management Member that did not select the initial Chief Executive Officer shall select the successor to the initial Chief Executive Officer for approval by the Board of Directors. Subject to Section 9.2(a)(i)(B), the rights to select the Chief Executive Officer as described above shall alternate between SP Member and FS Member (or any other party to whom any such Management Member transfers its rights to designate Directors). The term of the initial Chief Executive Officer shall end on the second anniversary of the Closing Date. Each successor Chief Executive Officer shall serve for a two-year term.

(B) In the event that a Management Member (the “Retaining Management Member”) elects to retain the Chief Executive Officer previously selected by the other Management Member (the “Retained Chief Executive Officer”) instead of exercising its right to select a new Chief Executive Officer for approval by the Board of Directors, then the Retaining Management Member shall retain the right to select a new Chief Executive Officer for approval by the Board of Directors until such time as it exercises the right to select a new Chief Executive Officer for approval by the Board of Directors.

(ii) Chief Financial Officer. (A) FS Member shall select the initial Chief Financial Officer of the YieldCo General Partner for approval by the Board of Directors. The Management Member that did not select the initial Chief Financial Officer will select the successor to the initial Chief Financial Officer for approval by the Board of Directors. Subject to Section 9.2(a)(ii)(B), the rights to select the Chief Financial Officer as described above shall alternate between SP Member and FS Member (or any other party to whom any such Management Member transfers its rights to designate Directors). The term of the initial Chief Financial Officer shall end on the second anniversary of the Closing Date. Each successor Chief Financial Officer shall serve for a two-year term.

(B) In the event that a Retaining Management Member elects to retain the Chief Executive Officer in accordance with Section 9.2(a)(i)(B), the Retaining Management Member shall

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

have the right to retain the current Chief Financial Officer (a “Retained Chief Financial Officer”) or select a new Chief Financial Officer for approval by the Board of Directors until such time as it exercises the right to select a new Chief Executive Officer for approval by the Board of Directors.

(iii) Chief Accounting Officer. A Majority Interest shall select the Chief Accounting Officer of the YieldCo General Partner for approval by the Board of Directors. The Chief Accounting Officer shall hold office until such person’s successor shall have been duly elected and shall have qualified or until such person’s death or until he shall resign or be removed.

(iv) Vice Presidents of Operations. Unless a Majority Interest otherwise determines, each Management Member shall select one Vice President of Operations for approval by the Board of Directors. Each Vice President of Operations shall hold office until such person’s successor shall have been duly elected and shall have qualified or until such person’s death or until he shall resign or be removed.

(v) General Counsel/Secretary. The Chief Financial Officer shall select the General Counsel/Secretary of the YieldCo General Partner for approval by the Board of Directors. The General Counsel/Secretary shall hold office until such person’s successor shall have been duly elected and shall have qualified or until such person’s death or until he shall resign or be removed.

(b) Removal. (i) The Management Member that appointed the Chief Executive Officer, Chief Financial Officer or Vice President of Operations or, in the case of a Retained Chief Executive Officer or Retained Chief Financial Officer, retained him or her, may, at any time, with or without cause, request that the Board of Directors remove such officer and replace such officer with a person nominated by such Management Member. In such event, the Management Member who is requesting removal of an officer it appointed shall promptly notify the Board of Directors and the other Management Members of the request for removal and the name of the replacement officer, as applicable, to complete such officer’s current term. The Management Members shall use reasonable best efforts to cause the Board of Directors to take all actions required to consummate such removal and replacement. In addition to the foregoing, the Chief Executive Officer, Chief Financial Officer or Vice President of Operations may be removed, with or without cause, at any time by the Board of Directors in accordance with the YieldCo General Partner LLC Agreement and upon such removal, the Management Member that appointed such officer or, in the case of a Retained Chief Executive Officer or Retained Chief Financial Officer, retained him or her shall have the right to select a replacement officer, as applicable, for approval by the Board of Directors to complete such officer’s current term.

(ii) A Majority Interest may, at any time, with or without cause, request that the Board of Directors remove the Chief Accounting Officer and replace such Chief Accounting Officer with a person nominated by a Majority

 

54


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Interest. In such event, a Majority Interest shall promptly notify the Board of Directors of the request for removal and the name of the replacement officer, as applicable, to complete such officer’s current term. The Management Members shall use reasonable best efforts to cause the Board of Directors to take all actions required to consummate such removal and replacement. In addition to the foregoing, the Chief Accounting Officer may be removed, with or without cause, at any time by the Board of Directors in accordance with the YieldCo General Partner LLC Agreement and upon such removal, a Majority Interest shall have the right to select a new Chief Accounting Officer for approval by the Board of Directors.

(iii) The Chief Financial Officer may, at any time, with or without cause, request that the Board of Directors remove the General Counsel/Secretary and replace such General Counsel/Secretary with a person nominated by the Chief Financial Officer. In such event, the Chief Financial Officer shall promptly notify the Board of Directors of the request for removal and the name of the replacement officer, as applicable, to complete such officer’s current term. The Management Members shall use reasonable best efforts to cause the Board of Directors to take all actions required to consummate such removal and replacement. In addition to the foregoing, the General Counsel/Secretary may be removed, with or without cause, at any time by the Board of Directors in accordance with the YieldCo General Partner LLC Agreement and upon such removal, the Chief Financial Officer shall have the right to select a new General Counsel/Secretary for approval by the Board of Directors.

(c) Subject to Section 9.2(d), in no event shall the Chief Executive Officer and Chief Financial Officer be selected by the same Management Member, without the prior consent of the other Management Member.

(d) In the event that a Management Member has lost the right to select one or both Director(s) in accordance with Section 9.1(d), such Management Member shall lose its right to select the Chief Executive Officer or Chief Financial Officer, as applicable, and the other Management Member shall gain the right to select both the Chief Executive Officer and the Chief Financial Officer until such Management Member has regained its right to select both Directors in accordance with Section 9.1(e)(ii).

(e) Unless a Majority Interest determines otherwise, no Person designated by FS Member as an officer of the YieldCo General Partner shall make decisions or sign contractual commitments or approve any payments related to any SP Contributed Company without approval of a Person designated by SP Member as an officer of the YieldCo General Partner, and no Person designated by SP Member as an officer of the YieldCo General Partner shall make decisions or sign contractual commitments or approve any payments related to any FS Contributed Company without approval of a Person designated by FS Member as an officer of the YieldCo General Partner.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 9.3 Right to Appoint Officers and Directors of Contributed Companies.

(a) Unless a Majority Interest determines otherwise, the Vice Presidents of Operations of the YieldCo General Partner shall elect the officers and directors of the Contributed Companies and have the right to remove and replace such officers and directors.

(b) Unless a Majority Interest determines otherwise, the Chief Executive Officer shall elect (and remove and replace) the officers and directors of any Project Company that are not selected for election pursuant to Section 9.3(a).

(c) Except to the extent any decision, contractual commitment or payment approval has been approved by a Majority Interest or the Board of Directors, no Person employed by FS Member who is an officer of the YieldCo General Partner shall make decisions or sign contractual commitments or approve any payments related to any SP Contributed Company without approval of a Person employed by SP Member who is an officer of the YieldCo General Partner, and no Person employed by SP Member who is an officer of the YieldCo General Partner shall make decisions or sign contractual commitments or approve any payments related to any FS Contributed Company without approval of a Person employed by FS Member who is an officer of the YieldCo General Partner.

ARTICLE X

DUTIES; EXCULPATION AND INDEMNIFICATION

Section 10.1 Duties.

(a) Whenever a Member makes a determination or takes or declines to take any other action, or any of its Affiliates causes it to do so, in its capacity as a Member, whether under this Agreement or any other agreement contemplated hereby or otherwise, then such Member or its Affiliates causing it to do so shall be entitled, to the fullest extent permitted by law, to make such determination or to take or decline to take such other action free of any duty or obligation whatsoever to the Company or any Member, and the Member, or such Affiliates causing it to do so, shall not, to the fullest extent permitted by law, be required to act pursuant to any standard imposed by this Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity, it being the intent of all Members that such Member or any such Affiliate, in its capacity as a Member, shall have the right to make such determination, in its sole discretion, solely on the basis of its own interests.

(b) Subject to, and as limited by the provisions of this Agreement, the Members, in the performance of their duties as such, shall not, to the fullest extent permitted by the Delaware Act and other applicable law, owe any duties (including fiduciary duties) as a Member or manager of the Company to the Company, any Member of the Company or any other Person, notwithstanding anything to the contrary existing at law, in equity or otherwise. In furtherance of the foregoing to the fullest extent permitted by the Delaware Act, a Representative, in performing his duties and obligations under this Agreement, shall (i) owe no duty (including fiduciary duties) or obligation whatsoever to the Company or any Member (other than the Management Member

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

designating such Representative) or any other Person, and (ii) be entitled to act or omit to act at the direction of the Management Member that designated such Representative, in such Management Member’s sole discretion, considering only such factors, including the separate interests of the Management Member, as such Representative or Member chooses to consider, and any action of a Representative or failure to act, taken or omitted in good faith reliance on the foregoing provisions shall not constitute a breach of any duty on the part of such Representative or Member to the Company or any other Representative or Member of the Company.

(c) The provisions of this Agreement, to the extent that they restrict, eliminate or otherwise modify the duties and liabilities of a Member or its Representative otherwise existing at law, in equity or by operation of the preceding sentences, are agreed by the Company and the Members to replace such duties and liabilities of such Member or its Representative. The Members (in their own names and in the name and on behalf of the Company), acknowledge, affirm and agree that (i) none of the Members would be willing to make an investment in the Company or enter into this Agreement, and no Representative would be willing to serve, in the absence of this Section 10.1, and (ii) they have reviewed and understand the provisions of Sections 18-1101(b) and (c) of the Delaware Act.

Section 10.2 Indemnification.

(a) To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee acting (or omitting or refraining to act) in such capacity; provided, that the Indemnitee shall not be indemnified and held harmless pursuant to this Agreement to the extent that there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; provided, further, no indemnification pursuant to this Section 10.2 shall be available to any Indemnitee (other than a Group Member or Joint Venture) with respect to any such Indemnitee’s obligations pursuant to the Master Formation Agreement (other than obligations incurred by such Member on behalf of the Company). Any indemnification pursuant to this Section 10.2 shall be made only out of the assets of the Company, it being agreed that the Members shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(b) To the fullest extent permitted by law, expenses (including reasonable legal fees and expenses) incurred by an Indemnitee who is entitled to indemnification pursuant to this Section 10.2 in appearing at, participating in or defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 10.2, the Indemnitee is not entitled to be indemnified upon written request by such Indemnitee and receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately determined that the Indemnitee is not entitled to be indemnified as authorized by this Section 10.2.

(c) The indemnification provided by this Section 10.2 shall be in addition to any other rights to which an Indemnitee may be entitled under this Agreement, any other agreement, pursuant to any vote of a Majority Interest, as a matter of law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Company may purchase and maintain insurance (or reimburse the Management Members or their Affiliates for the cost of), on behalf of the Company, its Affiliates, the Indemnitees and such other Persons as the Company shall determine, against any liability that may be asserted against, or expense that may be incurred by, such Person in connection with the Company’s or any of its Affiliates’ activities or such Person’s activities on behalf of the Company or any of its Affiliates, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement.

(e) For purposes of this Section 10.2: (i) the Company shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Company also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; (ii) excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of Section 10.2(a); and (iii) action taken or omitted by it with respect to any employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the best interests of the Company.

(f) In no event may an Indemnitee subject the Members to personal liability by reason of the indemnification provisions set forth in this Agreement.

(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 10.2 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(h) The provisions of this Section 10.2 are for the benefit of the Indemnitees and their heirs, successors, assigns, executors and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(i) No amendment, modification or repeal of this Section 10.2 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of this Section 10.2 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

(j) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND SUBJECT TO SECTION 10.2(a), THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 10.2 ARE INTENDED BY THE MEMBERS TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSON’S NEGLIGENCE, FAULT OR OTHER CONDUCT.

Section 10.3 Liability of Indemnitees.

(a) Notwithstanding anything to the contrary set forth in this Agreement, any Group Member Agreement, under the Delaware Act or any other law, rule or regulation or at equity, to the fullest extent allowed by law, no Indemnitee or any of its employees or Persons acting on its behalf shall be liable for monetary damages to the Company, the Members or any other Persons, for losses sustained or liabilities incurred, of any kind or character, as a result of any act or omission of an Indemnitee or any of its employees or Persons acting on its behalf unless and to the extent there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee or any of its employees or Persons acting on its behalf engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.

(b) Any amendment, modification or repeal of this Section 10.3 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the Indemnitees under this Section 10.3 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 10.4 Corporate Opportunities. Except as otherwise provided in the Omnibus Agreement or any other agreement or contract to which the Company or any Group Member is a party, (i) each Member and its respective Affiliates shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of any and every type or description, whether in businesses

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

engaged in or anticipated to be engaged in by the Company, the YieldCo General Partner, any Group Member or any Joint Venture, independently or with others, including business interests and activities in direct competition with the business and activities of the Company, the YieldCo General Partner, any Group Member or any Joint Venture, and none of the same shall constitute a breach of this Agreement or any duty otherwise existing at law, in equity or otherwise, to the Company or any Group Member or any Member, and (ii) neither of the Company, any Member or any other Person shall have, and each of them hereby waive, any rights or expectation by virtue of this Agreement, the Partnership Agreement, any Group Member Agreement, or the business relationship established hereby in any business ventures of any Member and its respective Affiliates.

ARTICLE XI

TAXES

Section 11.1 Tax Returns. The Tax Member shall prepare and timely file or cause to be prepared and filed (on behalf of the Company) all federal, state, local and foreign tax returns required to be filed by the Company. Each Member shall furnish to the Company all pertinent information in its possession relating to the Company’s operations that is necessary to enable the Company’s tax returns to be timely prepared and filed. The Company shall bear the costs of the preparation and filing of its returns.

Section 11.2 Tax Elections.

(a) The Company shall make the following elections on the appropriate tax returns:

(i) to adopt as the Company’s taxable year the calendar year, or such other taxable year as the Company may from time to time be required to use under Section 706 of the Code and the regulations thereunder;

(ii) to adopt the accrual method of accounting;

(iii) if a distribution of the Company’s property as described in Section 734 of the Code occurs or upon a Transfer of an Economic Unit as described in Section 743 of the Code occurs, on request by notice from any Member, to elect, pursuant to Section 754 of the Code, to adjust the basis of the Company’s properties; and

(iv) any other election a Majority Interest may deem appropriate.

(b) Neither the Company nor any Member shall make an election for the Company to be excluded from the application of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar provisions of applicable state law and no provision of this Agreement shall be construed to sanction or approve such an election.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 11.3 Tax Matters Member.

(a) FS Member shall act as the “tax matters partner” of the Company pursuant to Section 6231(a)(7) of the Code (the “Tax Matters Member”). The Tax Matters Member shall take such action as may be necessary to cause to the extent possible each Member to become a “notice partner” within the meaning of Section 6223 of the Code. The Tax Matters Member shall inform each Member of all significant matters that may come to its attention in its capacity as Tax Matters Member by giving notice thereof on or before the 15th Business Day after becoming aware thereof and, within that time, shall forward to each Member copies of all significant written communications it may receive in that capacity.

(b) Any reasonable cost or expense incurred by the Tax Matters Member in connection with its duties, including the preparation for or pursuance of administrative or judicial proceedings, shall be paid by the Company.

(c) The Tax Matters Member shall not enter into any extension of the period of limitations for making assessments on behalf of any Member without first obtaining the consent of such Member. The Tax Matters Member shall not bind any Member to a settlement agreement without obtaining the consent of such Member. Any Member that enters into a settlement agreement with respect to any Company item (as described in Section 6231(a)(3) of the Code in respect of the term “partnership item”) shall notify the other Members of such settlement agreement and its terms within 90 days from the date of the settlement.

(d) No Member shall file a request pursuant to Section 6227 of the Code for an administrative adjustment of Company items for any taxable year without first notifying the other Members. If a Majority Interest consents to the requested adjustment, the Tax Matters Member shall file the request for the administrative adjustment on behalf of the Members. If such consent is not obtained within 30 days from such notice, or within the period required to timely file the request for administrative adjustment, if shorter, any Member may file a request for administrative adjustment on its own behalf. Any Member intending to file a petition under Sections 6226, 6228 or other Section of the Code with respect to any item involving the Company shall notify the other Members of such intention and the nature of the contemplated proceeding. In the case where the Tax Matters Member is intending to file such petition on behalf of the Company, such notice shall be given to each other Member 90 days prior to filing and the Tax Matters Member shall obtain the consent of the other Members to the forum in which such petition will be filed prior to filing, which consent shall not be unreasonably withheld or delayed.

(e) If any Member intends to file a notice of inconsistent treatment under Section 6222(b) of the Code, such Member shall give reasonable notice under the circumstances to the other Members of such intent and the manner in which the Member’s intended treatment of an item is (or may be) inconsistent with the treatment of that item by the other Members.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

ARTICLE XII

BOOKS, RECORDS, REPORTS, BANK ACCOUNTS, AND BUDGETS

Section 12.1 Records and Accounting. The Accounting Member shall keep or cause to be kept at the principal office of the Company appropriate books and records with respect to the Company’s business, including the register and all other books and records necessary to provide to the Members any information required to be provided pursuant to this Agreement. Any books and records maintained by or on behalf of the Company in the regular course of its business, including the register, books of account and records of Company proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device; provided, that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Company shall be maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP.

Section 12.2 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the period from December 1 of each year through November 30 of the following year (unless otherwise required by law) unless a different period is specified by a Majority Interest.

Section 12.3 Reports. With respect to each tax year, the Tax Member shall prepare, or cause to be prepared, and deliver, or cause to be delivered, to each Member such federal, state and local income tax returns and such other accounting, tax information and schedules (including any information necessary for unrelated business taxable income calculations by any Member) as shall be necessary for the preparation by each Member on or before July 15 following the end of each tax year of its income tax return with respect to such year, provided, however, that the Tax Member, as applicable, shall also cause the Company to prepare and deliver, or cause to be prepared and delivered, at any time, such other information with respect to taxes as is reasonably requested by a Member at the cost of such Member.

Section 12.4 Bank Accounts. Funds of the Company shall be deposited in such banks or other depositories as shall be designated from time to time by a Majority Interest. All withdrawals from any such depository shall be made only as authorized by a Majority Interest and shall be made only by check, wire transfer, debit memorandum or other written instruction.

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

Section 13.1 Dissolution. The Company shall not be dissolved by the admission of additional Member in accordance with the terms of this Agreement. The Company shall dissolve, and (subject to Section 13.3) its affairs shall be wound up, upon:

(a) an election to dissolve the Company by the affirmative vote of a Majority Interest or, if required by Section 8.4(b) the unanimous vote of the Management Members;

(b) the entry of a decree of judicial dissolution of the Company pursuant to the provisions of the Delaware Act; or

(c) at any time there are no Members, unless the Company is continued without dissolution in accordance with the Delaware Act.

 

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Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 13.2 Liquidator. Upon dissolution of the Company in accordance with the provisions of this Article XIII, a Majority Interest shall select one or more Persons to act as Liquidator. The Liquidator (if other than a Member) shall be entitled to receive such compensation for its services as may be approved by a Majority Interest. The Liquidator (if other than a Member) shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by a Majority Interest. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by a Majority Interest. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly provided in this Article XIII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the Parties hereto, all of the powers conferred upon a Majority Interest under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Company as provided for herein.

Section 13.3 Liquidation. The Liquidator shall proceed to dispose of the assets of the Company, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Section 18-804 of the Delaware Act and the following:

(a) The assets may be disposed of by public or private sale or by distribution in kind to one or more Economic Members on such terms as the Liquidator and such Economic Member or Economic Members may agree. If any property is distributed in kind, the Economic Member receiving the property shall be deemed for purposes of Section 13.3(c) to have received cash equal to its fair market value, net of Liabilities; and contemporaneously therewith, appropriate cash distributions must be made to the other Economic Members. The Liquidator may defer liquidation or distribution of the Company’s assets for a reasonable time if it determines that an immediate sale or distribution of all or some of the Company’s assets would be impractical or would cause undue loss to the Members. The Liquidator may distribute the Company’s assets, in whole or in part, in kind if it determines that a sale would be impractical or would cause undue loss to the Members.

(b) Liabilities of the Company include amounts owed to the Liquidator as compensation for serving in such capacity (subject to the terms of Section 13.2) and amounts to Economic Members otherwise than in respect of their distribution rights under Article VII. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it thinks appropriate or establish a reserve of cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall be distributed as additional liquidation proceeds.

 

63


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

(c) Notwithstanding Section 7.2, any items of income, gain, loss or deduction for the taxable year during which the Company dissolves pursuant to this Section 13.3 will be allocated among the Economic Members in a manner that ensures, to the maximum extent possible, distributions pursuant to the Economic Members Capital Accounts will be in accordance with the Economic Members’ Liquidation Percentages.

(d) After taking into account the allocation set forth in Section 13.3(c), all property and all cash in excess of that required to satisfy or discharge liabilities as provided in Section 13.3(b) shall be distributed to the Economic Members pro rata in accordance with the Economic Member’s Liquidation Percentages.

(e) For purposes of this Section 13.3, the Liquidation Percentages shall be determined using Forecasted Project Values calculated as of the date of any disposition of the assets of the Company, discharge of its liabilities, or such other action as may be taken in connection with the winding up of its affairs, in each case taking into account the then current facts and circumstances and other current information.

Section 13.4 Certificate of Cancellation. Upon the completion of the distribution of Company cash and property as provided in Section 13.3 in connection with the liquidation of the Company, the Certificate of Formation and all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware shall be canceled and such other actions as may be necessary to terminate the Company shall be taken.

Section 13.5 Return of Contributions. No Member shall be personally liable for, and each Member shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate, the return of the Capital Contributions of the Members, or any portion thereof, it being expressly understood that any such return shall be made solely from assets of the Company.

Section 13.6 Waiver of Partition. To the maximum extent permitted by law, each Member hereby waives any right to partition of the Company property.

Section 13.7 Capital Account Restoration. No Member shall have any obligation to restore any negative balance in its Capital Account upon liquidation of the Company.

ARTICLE XIV

GENERAL PROVISIONS

Section 14.1 Offset. Whenever the Company is to pay any sum to any Economic Member, including distributions pursuant to Article VII, any amounts that Economic Member owes the Company, as determined by a Majority Interest, may be deducted from that sum before payment.

Section 14.2 Specific Performance. The Members acknowledge and agree that an award of money damages would be inadequate for any breach of the provisions of this

 

64


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Agreement and any such breach would cause the non-breaching Member irreparable harm. Accordingly, the Members agree that, in the event of any breach or threatened breach of this Agreement by a Member, the other Member, to the fullest extent permitted by law, will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance; provided that a requirement for a Member seeking equitable relief to post a bond or other security shall not be waived if such Member is in material default hereunder. Such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at law or equity to each of the Members.

Section 14.3 Amendment. Subject to Section 8.4(b)(i), this Agreement shall not be altered modified or changed except by a written instrument approved by a Majority Interest.

Section 14.4 Addresses and Notices; Written Communication.

(a) Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Member under this Agreement shall be in writing and shall be deemed given or made when delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, delivered by electronic mail or when received in the form of a facsimile, and shall be directed to the address or facsimile number of such Member at the address set forth on Exhibit E; provided, that to be effective any such notice sent originally by facsimile or email must be followed within two Business Days by a copy of such notice sent by overnight courier service (other than any notice delivered by email for which the intended recipient thereof, by reply email, waives delivery of such copy).

(b) If a Member shall consent to receiving notices, demands, requests, reports or other materials via electronic mail, any such notice, demand, request, report or other materials shall be deemed given or made when delivered or made available via such mode of delivery. An affidavit or certificate of making of any notice, payment or report in accordance with the provisions of this Section 14.4 executed by the Company or the mailing organization shall be prima facie evidence of the giving or making of such notice, payment or report.

(c) Any notice to the Company shall be deemed given if received by the Company at the principal office of the Company designated pursuant to Section 2.3. The Company may rely and shall be protected in relying on any notice or other document from a Member or other Person if believed by it to be genuine.

(d) The terms “in writing,” “written communications,” “written notice” and words of similar import shall be deemed satisfied under this Agreement by use of e-mail and other forms of electronic communication.

Section 14.5 Further Action. In connection with this Agreement and the transactions contemplated hereby, the Parties shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions.

 

65


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 14.6 Confidential Information. From and after the date hereof, each Party (each, a “Receiving Party”) in possession of Confidential Information of the other Party, the Company, the YieldCo General Partner, any Group Member or any Joint Venture (each, a “Disclosing Party”) shall (a) hold, and shall cause its Subsidiaries and Affiliates and its and their shareholders, partners, members, directors, officers, employees, agents, consultants, advisors, lenders, potential lenders, investors, potential investors, and any officer or director of the YieldCo General Partner, any Group Member or any Joint Venture appointed by it and any other representatives (the “Party Representatives”) to hold all Confidential Information of each Disclosing Party in strict confidence with at least the same degree of care that applies to such Receiving Party’s confidential and proprietary information, (b) not use such Confidential Information, except as expressly permitted by such Disclosing Party, and (c) not release or disclose such Confidential Information to any other Person, except its Party Representatives or except as required by applicable law; provided that notwithstanding the foregoing, a Receiving Party shall be permitted to (i) disclose any Confidential Information to the extent required by court order or under applicable law (provided, that it shall (A) exercise commercially reasonable efforts to preserve the confidentiality of such Confidential Information, (B) to the extent legally permissible, use commercially reasonable efforts to provide the Disclosing Party in advance of such disclosure, with copies of any Confidential Information it intends to disclose (and, if applicable, the text of the disclosure language itself), and (C) reasonably cooperate with the Disclosing Party and its Affiliates to the extent they may seek to limit such disclosure), (ii) make a public announcement regarding such matters (A) as agreed to in writing by the Disclosing Party or (B) as required by the provisions of any securities laws or the requirements of any exchange on which any Party’s securities may be listed, or (iii) disclose any Confidential Information to its Affiliates and its and their Party Representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Confidential Information and instructed to keep such Confidential Information confidential pursuant to the terms hereof).

Section 14.7 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 14.8 Integration. This Agreement constitutes the entire agreement among the Parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 14.9 Creditors. None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Company.

Section 14.10 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

 

66


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

Section 14.11 Third-Party Beneficiaries. Each Member agrees that any Indemnitee shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Indemnitee.

Section 14.12 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the Parties hereto, notwithstanding that all such Parties are not signatories to the original or the same counterpart. Each Party shall become bound by this Agreement immediately upon affixing its signature hereto.

Section 14.13 Applicable Law; Forum and Venue.

(a) This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law. In the event of a direct conflict between the provisions of this Agreement and any mandatory, non-waivable provision of the Delaware Act, such provision of the Delaware Act shall control. If any provision of the Delaware Act may be varied or superseded in a limited liability company agreement (or otherwise by agreement of the members or managers of a limited liability company), such provision shall be deemed superseded and waived in its entirety if this Agreement contains a provision addressing the same issue or subject matter.

(b) Subject to Section 8.5(c), any and all claims, suits, actions or proceedings arising out of, in connection with or relating in any way to this Agreement shall be exclusively brought in the Court of Chancery of the State of Delaware. Each party hereto unconditionally and irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware with respect to any such claim, suit, action or proceeding and waives any objection that such party may have to the laying of venue of any claim, suit, action or proceeding in the Court of Chancery of the State of Delaware.

Section 14.14 Invalidity of Provisions. If any provision or part of a provision of this Agreement is or becomes for any reason, invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions and/or parts thereof contained herein shall not be affected thereby and this Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such invalid, illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provisions and/or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent possible.

Section 14.15 Facsimile and Email Signatures. The use of facsimile signatures and signatures delivered by email in portable document format (.pdf) or similar format affixed in the name and on behalf of the Company on certificates representing Membership Interests is expressly permitted by this Agreement.

[Signature page follows.]

 

67


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

IN WITNESS WHEREOF, the Members have executed this Agreement as of the date first set forth above.

 

MEMBERS:
SUNPOWER YC HOLDINGS, LLC
By:

 

Name:
Title:
FIRST SOLAR 8POINT3 HOLDINGS, LLC
By:

 

Name:
Title:

Signature Page to Amended and Restated

Limited Liability Company Agreement


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT A

ECONOMIC UNITS

 

Economic Member

   Capital
Contribution
     Capital
Account
Balance
     Economic
Units
     Ownership
Percentage
 

SP Member

   $ 500.00       $ 500.00         500         50

FS Member

     500.00         500.00         500         50
  

 

 

    

 

 

    

 

 

    

 

 

 

Total:

$ 1,000.00    $ 1,000.00      1,000      100.00

 

A-1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT B

MANAGEMENT UNITS

 

Management Member

   Management
Units
     Percentage
Ownership
 

SP Member

     500         50

FS Member

     500         50
  

 

 

    

 

 

 

Total:

  1,000      100.00
  

 

 

    

 

 

 

 

B-1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT C

INITIAL DIRECTORS OF THE YIELDCO GENERAL PARTNER

 

Charles D. Boynton SP Director
SP Director
Mark R. Widmar FS Director
FS Director
Independent Director1

 

1  Note: Additional Independent Directors to be named here if Sponsors elect to add additional independent directors prior to IPO.

 

C-1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT D

TARGET DISTRIBUTED CASH INCREASE SCHEDULE

[To Come.]

 

D-1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT E

MEMBERS’ ADDRESS FOR NOTICE

 

SP Member

SunPower YC Holdings, LLC

c/o SunPower Corporation

77 Rio Robles

San Jose, California 95134

Tel: (408) 240-5500

Email: chuck.boynton@sunpower.com

Attention:        Charles Boynton, Chief Financial Officer

with copies, which shall not constitute notice, to:

SunPower YC Holdings, LLC

c/o SunPower Corporation

77 Rio Robles

San Jose, California 95134

Tel: (408) 240-5500

Email: lisa.bodensteiner@sunpower.com

Attention:        Lisa Bodensteiner, General Counsel

FS Member

First Solar 8point3 Holdings, LLC

c/o First Solar, Inc.

350 West Washington Street, Suite 600

Tempe, Arizona 85281

Tel: (602) 414-9300

Email: mark.widmar@firstsolar.com

Attention:        Mark Widmar, Chief Financial Officer

with copies, which shall not constitute notice, to:

First Solar 8point3 Holdings, LLC

c/o First Solar, Inc.

350 West Washington Street, Suite 600

Tempe, Arizona 85281

Tel: (602) 427-2925

Email: generalcounsel@firstsolar.com

Attention:        Paul Kaleta, General Counsel

 

E-1


Master Formation Agreement

Exhibit A-1 – Form of Holdings A&R LLC Agreement

 

EXHIBIT F

REPRESENTATIVES

SP Member’s Initial Representative: [                    ]

FS Member’s Initial Representative: [                    ]

 

F-1


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

EXHIBIT A-2

Form of Yieldco Amended and Restated Limited Liability Company Agreement

 

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

8POINT3 GENERAL PARTNER, LLC

A Delaware Limited Liability Company

Dated as of

[            ], 2015

 

 

 


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

TABLE OF CONTENTS

 

             Page  
ARTICLE I DEFINITIONS      1   
  Section 1.1  

Definitions

     1   
  Section 1.2  

Construction

     12   
ARTICLE II ORGANIZATION      12   
  Section 2.1  

Formation

     12   
  Section 2.2  

Name

     13   
  Section 2.3  

Registered Office; Registered Agent; Principal Office; Other Offices

     13   
  Section 2.4  

Purpose and Business

     13   
  Section 2.5  

Powers

     13   
  Section 2.6  

Term

     13   
  Section 2.7  

Title to Company Assets

     14   
ARTICLE III RIGHTS OF SOLE MEMBER      14   
  Section 3.1  

Management

     14   
  Section 3.2  

Distribution

     14   
  Section 3.3  

Limitation of Liability

     14   
ARTICLE IV CAPITAL CONTRIBUTIONS      14   
  Section 4.1  

Initial Capital Contributions

     14   
  Section 4.2  

Additional Capital Contributions

     14   
  Section 4.3  

Fully Paid and Non-Assessable Nature of Membership Interests

     14   
  Section 4.4  

Loans

     15   
  Section 4.5  

Return of Contributions

     15   
ARTICLE V MANAGEMENT      15   
  Section 5.1  

Management by Board of Directors

     15   
  Section 5.2  

Board of Directors Composition

     15   
  Section 5.3  

Increases in the Number of Directors; Vacancies

     17   
  Section 5.4  

Board of Directors Meetings

     17   
  Section 5.5  

Special Meetings

     17   
  Section 5.6  

Notice

     17   
  Section 5.7  

Action by Written Consent of Board of Directors

     17   
  Section 5.8  

Conference Telephone Meetings

     17   
  Section 5.9  

Quorum

     17   
  Section 5.10  

Committees

     18   
  Section 5.11  

Compensation of Directors

     20   
  Section 5.12  

Responsibility and Authority of the Board of Directors; Voting; Project Operations Committee; Extraordinary Matters

     20   
  Section 5.13  

Minutes

     26   
  Section 5.14  

Other Business of Sole Member, Directors and Affiliates

     26   
  Section 5.15  

Reliance by Third Parties

     27   

 

i


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

ARTICLE VI OFFICERS   27   
Section 6.1

Elected Officers

  27   
Section 6.2

Election and Term of Office

  28   
Section 6.3

Chief Executive Officer

  28   
Section 6.4

Chief Financial Officer

  28   
Section 6.5

Vice Presidents

  29   
Section 6.6

Chief Accounting Officer

  29   
Section 6.7

Secretary

  29   
Section 6.8

Removal

  29   
Section 6.9

Vacancies

  30   
ARTICLE VII DUTIES; EXCULPATION AND INDEMNIFICATION   30   
Section 7.1

Duties

  30   
Section 7.2

Indemnification

  31   
Section 7.3

Liability of Indemnitees

  33   
ARTICLE VIII TAXES   34   
Section 8.1

Taxes

  34   
ARTICLE IX BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS   34   
Section 9.1

Records and Accounting

  34   
Section 9.2

Fiscal Year

  34   
Section 9.3

Reports

  35   
Section 9.4

Bank Accounts

  35   
ARTICLE X DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION   35   
Section 10.1

Dissolution

  35   
Section 10.2

Liquidator

  35   
Section 10.3

Liquidation

  35   
Section 10.4

Certificate of Cancellation

  36   
Section 10.5

Return of Contributions

  36   
Section 10.6

Waiver of Partition

  36   
ARTICLE XI GENERAL PROVISIONS   36   
Section 11.1

Amendment

  36   
Section 11.2

Addresses and Notices; Written Communications

  36   
Section 11.3

Further Action

  37   
Section 11.4

Binding Effect

  37   
Section 11.5

Integration

  37   
Section 11.6

Creditors

  37   
Section 11.7

Waiver

  37   
Section 11.8

Third-Party Beneficiaries

  37   
Section 11.9

Counterparts

  38   
Section 11.10

Applicable Law; Forum and Venue

  38   
Section 11.11

Invalidity of Provisions

  38   
Section 11.12

Facsimile and Email Signatures

  38   

 

ii


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

8POINT3 GENERAL PARTNER, LLC

A Delaware Limited Liability Company

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF 8POINT3 GENERAL PARTNER, LLC dated as of [            ], 2015, is adopted, executed and agreed to, for good and valuable consideration, by 8point3 Holding Company, LLC, a Delaware limited liability company. In consideration of the covenants, conditions and agreements contained herein, the Sole Member hereby agrees as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred to below:

Acceptable Project” means a Project, or an interest in a Project, that:

(a) is photovoltaic,

(b) is located in Australia, Canada, Chile, France, Germany, Japan, Mexico, South Africa, the United Kingdom or the United States,

(c) is (i) with respect to Utility Scale Projects, contracted at a fixed price for at least 80% of the output of such Project with a minimum of ten years remaining on the term of such contract at the time of sale or contribution of such Project to the Operating Company and with counterparties that have Investment Grade Credit Ratings, (ii) with respect to C&I Projects, contracted at a fixed price for at least 80% of the output or the modeled revenue of such Project with a minimum of ten years remaining on the term of such contract at the time of sale or contribution of such Project to the Operating Company and with counterparties that (A) have Investment Grade Credit Ratings, or (B) so long as at least 70% of the C&I Projects sold or contributed to the Operating Company by the offering Sponsor have Investment Grade Credit Ratings at such time, meet the Minimum Commercial Requirements, or (iii) with respect to Residential Projects, composed of Residential Systems each of which is contracted with a homeowner at a fixed price for at least 80% of the output or the modeled revenue of such Residential System with a minimum of ten years remaining on the term of such contract at the time of sale or contribution of the Residential Project to the Operating Company; provided, however, that the average FICO Score of the homeowners party to such contracts shall be at least 700, no more than 20% of such homeowners shall have FICO Scores less than

 

1


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

680 and no more than 0.5% of such homeowners shall have FICO Scores less than 650 (the FICO Score of each homeowner being measured at the time such contract was executed),

(d) is at or past its Commercial Operation Date, unless such Project is a Tax Beneficial Project, in which case the Project may be contributed no more than three months prior to the Tax Beneficial Date, and

(e) to the extent such Project has operating and maintenance agreements or asset management agreements entered into directly or indirectly with a Sponsor or an Affiliate of a Sponsor, such operating and maintenance agreements or asset management agreements are directly or indirectly terminable for convenience or otherwise without penalty or premium.

Notwithstanding the foregoing, (i) each of the El Pelicano Project, the La Huella Project and Luz Del Norte Project shall each be deemed to be an Acceptable Project as long as each Project is contracted for a minimum of 65% of its output and otherwise meets the requirements of an Acceptable Project and (ii) a Project that is a Utility Project Site on which a Utility Scale Project is situated which qualifies as an Acceptable Project or is otherwise approved by the Sole Member shall be an Acceptable Project.

Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. Without limiting the foregoing, for purposes of this Agreement, any Person that, individually or together with its Affiliates, has the direct or indirect right to designate or cause the designation of at least one member to the Board of Directors, and any such Person’s Affiliates, shall be deemed to be an Affiliate of the Company and the Sole Member. Notwithstanding anything in the foregoing to the contrary, SP Member and its Affiliates (other than the Company or any Group Member), on the one hand, and FS Member and its Affiliates (other than the Company or any Group Member), on the other hand, will not be deemed to be Affiliates of one another hereunder unless there is a basis for such Affiliation independent of their respective Affiliation with any Group Member, the Company or any Affiliate of any Group Member or the Company.

Agreement” means this Amended and Restated Limited Liability Company Agreement of 8point3 General Partner, LLC, as it may be amended, modified, supplemented or restated from time to time.

Annual Budget” means a budget covering the operations of the Partnership Group (other than the Project Companies) for a Fiscal Year, setting forth reasonable line item detail regarding anticipated expenditures, including: (a) estimated operating expenditures; (b) estimated capital expenditures; (c) proposed financing plans for such expenditures; and (d) such other items as the Board of Directors may deem appropriate.

 

2


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Audit Committee” has the meaning set forth in Section 5.10(b).

Audit Committee Independent Director” means an Independent Director who meets the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the Commission thereunder and by the NASDAQ Stock Market LLC or any national securities exchange on which the Class A Shares are listed.

Board of Directors” has the meaning set forth in Section 5.1(b).

C&I Project” means any ground-mounted or roof-top distributed solar generation system or systems designed and installed for commercial or industrial applications, which is either leased by, or subject to one or more power purchase agreements with, one or more commercial businesses, industrial companies, academic institutions, government entities, hospitals, non-profits, public entities or other entities that are neither electric utilities nor residential customers who purchase solar power directly from a generation company or a solar power plant.

Capital Contribution” means (a) any cash, cash equivalents or the fair market value of Contributed Property that the Sole Member contributes to the Company or that is contributed or deemed contributed to the Company on behalf of the Sole Member, net of any Liabilities either assumed by the Company upon such contribution or to which such property or other consideration is subject when contributed or (b) current distributions that the Sole Member is entitled to receive but otherwise waives.

Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware as referenced in Section 2.6, as such Certificate of Formation may be amended, supplemented or restated from time to time.

Class A Share” has the meaning set forth in the Partnership Agreement.

Closing Date” means the date on which the transactions contemplated by the Master Formation Agreement are consummated.

Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

Commercial Operation Date” means, with respect to a Project, the date on which such Project has (or in the case of (i) a Residential Project, the first date all of the Residential Systems within such Residential Project, or (ii) a C&I Project, the first date all of the solar generation systems within such C&I Project, in each case have) achieved substantial completion or similar milestone (including, for example, block or phase completion for each block or phase of such Project) under each construction contract for the construction of such Project or Residential System and has achieved commercial operation or similar milestone under each interconnection agreement and each power purchase agreement, lease or hedging agreement pursuant to which such Project delivers or transmits Electricity from such Project or Residential System.

 

3


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Commission” means the United States Securities and Exchange Commission.

Company” means 8point3 General Partner, LLC, a Delaware limited liability company.

Conflicts Committee” has the meaning set forth in the Partnership Agreement.

Conflicts Committee Independent Director” means a Director who meets the standards set forth in the definition of “Conflicts Committee” in the Partnership Agreement.

Contributed Company” means any FS Contributed Company or SP Contributed Company, as the context may require.

Contributed Property” means each property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Company.

Delaware Act” means the Delaware Limited Liability Company Act, 6 Del C. Section 18-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute.

Director” or “Directors” has the meaning set forth in Section 5.2(a)(i).

EBITDA” means earnings before interest, tax, depreciation and amortization, each as determined in accordance with U.S. GAAP.

El Pelicano Project” means the 100 Megawatt (AC) solar power project located in Chile to be developed and built by an Affiliate of SP Member.

Electricity” means electric energy, measured in kWh.

Emergency Expenditure” means an expense that is not included in any Project Annual Budget or any permitted variance therefrom and which is incurred in good faith to avoid or to mitigate a material risk of imminent physical injury to any person, an imminent material financial loss or damage to any Group Member, Joint Venture or Project or an imminent violation of applicable law by any such Person.

Equity Interests” means all shares, participations, capital stock, partnership or limited liability company interests, units, participations or similar equity interests issued by any Person, however designated.

Event of Eminent Domain” means any compulsory transfer or taking or transfer under threat of compulsory transfer or taking of any material property or asset owned by the Operating Company or any Project Company, by any governmental authority.

Event of Loss” means an event which causes any material property or asset owned by the Operating Company or any Project Company to be damaged, destroyed or rendered unfit for normal use, other than an Event of Eminent Domain.

 

4


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

Extraordinary Proceeds” means:

(a) the aggregate cash proceeds received by the Operating Company or any Project Company in respect of any sale of an interest in a Project or Joint Venture;

(b) any cash proceeds received by the Operating Company or any Project Company with respect to the incurrence or issuance of any Indebtedness by the Operating Company or such Project Company; and

(c) the cash proceeds (other than proceeds from business interruption insurance) received by the Operating Company or any Project Company from any complete or partial Event of Loss or Event of Eminent Domain.

FICO Score” means a credit score created by Fair Isaac Corporation.

Fiscal Year” has the meaning set forth in Section 9.2.

FS Contributed Company” means any Project Company contributed or sold to the Operating Company by FS Member or its Affiliates.

FS Director” has the meaning set forth in Section 5.2(b)(i).

FS Member” means First Solar 8point3 Holdings, LLC, a Delaware limited liability company.

FS Officer” means an officer of the Company designated as an FS Officer pursuant to Section 6.2(d).

FS Parent” means First Solar, Inc., a Delaware corporation.

Group Member” means a member of the Partnership Group.

Group Member Agreement” means the partnership agreement of any Group Member or Joint Venture, including the Partnership Agreement, that is a limited or general partnership, the limited liability company agreement of any Group Member or Joint Venture that is a limited liability company, the certificate of incorporation and bylaws or similar organizational documents of any Group Member or Joint Venture that is a corporation, the joint venture agreement or similar governing document of any Group Member or Joint Venture that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture, as such may be amended, supplemented or restated from time to time.

Indebtedness” means, with respect to any Person, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan

 

5


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

agreements or similar instruments, or other debt securities or warrants or other rights to acquire any debt securities of such Person, (c) all capitalized lease or leveraged lease obligations of such Person or obligations of such Person to pay the deferred and unpaid purchase price of property and equipment, (d) all “keep well” and other obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the obligations or property of others, (e) all obligations of such Person to pay the deferred purchase price of assets or services (f) all indebtedness of a second Person secured by any lien on any property owned by such Person, whether or not such indebtedness has been assumed, (g) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement may be limited to repossession or sale of such property), (h) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (i) all indebtedness of others guaranteed directly or indirectly by such Person; provided that the definition of “Indebtedness” shall not include trade payables arising in the ordinary course of business so long as such trade payables are payable within 90 days of the date the respective goods are delivered or the respective services are rendered and are not overdue.

Indemnitee” means (a) the Sole Member, (b) any Person who is or was a manager, managing member, general partner, director, officer, fiduciary or trustee of (i) any Group Member, the Company or the Sole Member or (ii) any Affiliate of any Group Member, the Company or the Sole Member, (c) any Person who is or was serving at the request of the Sole Member, the Company or any Group Member as a manager, managing member, general partner, director, officer, fiduciary or trustee of another Person owing a fiduciary duty to the Sole Member, the Company or any Group Member; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, (d) any member of the Sole Member and (e) any Person the Board of Directors designates as an “Indemnitee” for purposes of this Agreement.

Independent Director” means a natural person who meets the independence, qualification and experience requirements of the NASDAQ Stock Market LLC or any other national securities exchange upon which the limited partner or other Equity Interests of the Partnership are listed or are to be listed and the independence, qualification and experience requirements of Section 10A-(3) of the Exchange Act (or any successor law) and the rules and regulations of the Commission and any other applicable law.

Investment Grade Credit Rating” means, with respect to any Person, having a rating equal to or higher than Baa3 (or the equivalent) by Moody’s or BBB- (or the equivalent) by S&P.

Joint Venture” means a joint venture that is not a Subsidiary and through which a Group Member conducts its business and operations and in which such Group Member owns an equity interest.

La Huella Project” means the 60 to 88 Megawatt (AC) solar power project located in Chile to be developed and built by an Affiliate of SP Member.

 

6


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Liability” means any liability or obligation of any nature, whether accrued, contingent or otherwise.

Listing Date” means the first day upon which the Class A Shares are listed or admitted to trading on the NASDAQ Stock Market LLC or another national securities exchange.

Liquidator” means one or more Persons selected by the Sole Member to perform the functions described in Section 10.2 as liquidating trustee of the Company within the meaning of the Delaware Act.

Luz Del Norte Project” means the approximately 141 Megawatt (AC) solar power project located near Copiapó, Chile to being built by an Affiliate of FS Member.

Management Services Agreement” means either (a) the Management Services Agreement, dated as of [            ], 2015, among First Solar 8point3 Management Services, LLC, the Sole Member, the Company, the Partnership and the Operating Company, or (b) the Management Services Agreement, dated as of [            ], 2015, among SunPower Capital Services, LLC, the Sole Member, the Company, the Partnership and the Operating Company.

Master Formation Agreement” means that certain Master Formation Agreement dated as of [            ], 2015 among SP Parent and FS Parent, as it may be further amended, supplemented or restated from time to time.

Material Contract” means (a) any credit agreement, loan agreement, letter of credit, repurchase agreement, mortgage, security agreement, guarantee, pledge agreement, trust indenture, promissory note, line of credit and similar document in each case relating to any Indebtedness of the Company, any Group Member or any Joint Venture for amounts in excess of $10,000,000; (b) any swap, option, trade option, derivative, hedging, futures or other similar agreement or contract that result in an aggregate exposure to any of the Company, the Partnership, the Operating Company or any Project Holding Company in excess of $10,000,000; (c) any real property lease calling for payments by any of the Company, the Partnership, the Operating Company or any Project Holding Company of amounts greater than $10,000,000 per year; (d) any partnership or joint venture agreement; (e) any contract limiting the ability of any of the Group Members to compete in any line of business or with any Person or in any geographic area; (f) any contract relating to any outstanding commitment for capital expenditures by the Company, the Partnership, the Operating Company or any Project Holding Company in excess of $10,000,000, unless such capital expenditure is included in an approved Annual Budget; (g) any contract to which any of the Company, the Partnership, the Operating Company or any Project Holding Company is a party with any labor union or organization; (h) any contract not entered into in the ordinary course of the business of the Partnership Group other than those that are not material to the applicable Group Member and those that are included in an approved Annual Budget; (i) any contract that prohibits any Group Member from making cash distributions in respect of its equity interests, other than restrictions in the governing documents of such entity or customary restrictions under project financing agreements for a Project; (j) any material amendment or waiver to any of the foregoing and (k) any indemnity by the Company, the Partnership, the Operating Company or any Project Holding Company arising outside of the contracts described in (a)-(j) above and expected to exceed $10,000,000.

 

7


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Membership Interest” means the ownership interest of the Sole Member in the Company, including its share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company.

Minimum Commercial Requirements” means (a) with respect to for-profit counterparties, a Person that has been in business for a minimum of five years with current annual revenue of at least $5 million per 1 MW of capacity of the applicable C&I Project, a maximum EBITDA to debt service ratio of 1.2x and a maximum debt to equity ratio of 4x and, (b) with respect to not-for-profit counterparties, a Person that has been operating for a minimum of five years and has, in its audited financial statements or unaudited financial statements prepared by an independent accounting firm covering the current fiscal year-to-date and the previous two complete fiscal years, recorded ratios of change in net unrestricted assets before interest, depreciation and amortization to debt service and change in net total assets before interest, depreciation, and amortization to debt service of at least 1.2x during each complete or year-to-date fiscal period.

Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

MW” means megawatts.

Operating Company” means 8point3 Operating Company, LLC, a Delaware limited liability company.

Partnership” means 8point3 Energy Partners LP, a Delaware limited partnership.

Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of 8point3 Energy Partners LP, to be dated as of [            ], 2015, as it may be further amended, supplemented or restated from time to time.

Partnership Group” means, collectively, the Partnership and its Subsidiaries.

Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association, government agency or political subdivision thereof or other entity.

POC Material Contract” means (a) any power purchase agreement, offtake agreement or other agreement for the sale of energy, capacity or ancillary services related to any Project with revenues of at least $10,000,000 per year, or in the case of a Residential Project, $5,000,000; (b) any engineering, procurement and construction agreement, construction agreement or equipment supply agreement related to any Utility Scale Project or C&I Project, but excluding any subcontracts thereof, with revenues of at least $10,000,000 per year and, with respect to a Residential Project, any engineering, procurement and construction agreement, construction agreement or equipment supply agreement with revenues of at least $5,000,000 per year; (c) any transmission agreement or interconnection agreement relating to any Project with revenues of at

 

8


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

least $10,000,000 per year, or in the case of a Residential Project, $5,000,000; (d) any operation and maintenance agreement, administrative services agreement and other services agreement in each case related to any Project, but excluding any subcontracts thereof, with revenues of at least $10,000,000 per year, or in the case of a Residential Project, $5,000,000; (e) any swap, option, trade option, derivative, hedging, futures or other similar agreement or contract that result in an aggregate exposure to any Project in excess of $10,000,000, or in the case of a Residential Project, $5,000,000; (f) any real property lease related to any Project with revenues of at least $10,000,000 per year, or in the case of a Residential Project, $5,000,000; (g) any contract relating to any outstanding commitment for capital expenditures of any Project Company in excess of $10,000,000, unless such capital expenditure is included in an approved Project Annual Budget; (h) any contract of any Project Company with any labor union or organization; (i) any contract not entered into in the ordinary course of the business of the Partnership Group or any Joint Venture other than those that are not material to the applicable Group Member or Joint Venture and those that are included in an approved Project Annual Budget; (j) any contract that prohibits any Group Member or Joint Venture from making cash distributions in respect of its equity interests, other than restrictions in the governing documents of such entity; (k) any contract for the sale of renewable energy credits, “green” tags or other like environmental credits or benefits with revenues of at least $10,000,000 per year; (l) any material amendment or waiver to any of the foregoing; and (m) any indemnity by any Project Company arising outside of the contracts described in (a)-(l) above and expected to exceed $10,000,000.

Project” means a Utility Scale Project, C&I Project, Residential Project, Utility Project Site and any other asset or project that the Sole Member designates as a “Project.”

Project Annual Budget” means a budget of anticipated revenues and anticipated expenditures of the Project Company, such budget to include:

(a) all projected income and cash revenues received by the Project Company from the ownership or operation of the Project (or in the case of a Residential Project, Residential Systems), including (i) any payments due under the applicable power purchase agreement and all other income derived from the sale or use of electric energy, capacity and ancillary services generated by the Project or Residential Systems, (ii) all interest earned on permitted investments, (iii) payments due to the Project Company (or refunds received by the Project Company) under any POC Material Contract and (iv) all other operating income, however earned or received, by the Project Company during such period;

(b) with respect to any debt at the Project Company or Project, an amount equal to all principal scheduled to become due and payable including, without duplication, all amounts overdue and not paid from any prior period, any interest and fees that will accrue and become due and payable, ordinary course settlement amounts payable by the Project Company under any interest rate agreements (net of ordinary course settlement amounts received by the Project Company thereunder during the relevant period);

(c) scheduled and proposed distributions; and

 

9


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

(d) maintenance, repair and operation expenses (including reasonable allowance for contingencies), including (i) expenses for operating the Project or Residential System and maintaining the Project or Residential Systems in good repair and operating condition during such period, including payments to the counterparties to the Material Contracts, (ii) management and other fees payable under the operations and maintenance agreement and the asset management agreement, (iii) insurance costs of the Project during such period, (iv) applicable sales and excise taxes, franchise taxes, property taxes or other direct taxes (if any) during such period, (v) costs and fees attendant to the obtaining and maintaining in effect the permits projected during such period and (vi) legal, accounting and other professional fees attendant to any of the foregoing items projected during such period.

Project Company” means a corporation, limited liability company, partnership, joint venture, trust or other entity which is a Subsidiary or Joint Venture of the Operating Company and the direct or indirect owner of a Project.

Project Holding Company” means a Project Company that directly or indirectly owns interests in more than one Project other than through a Joint Venture.

Project Operations Committee” has the meaning set forth in Section 5.10(d).

Project Services Agreement” means an operating and management agreement or an administrative services agreement entered into by a Project Company which provides for the operations and maintenance and asset management of the Project.

Removed Sponsor” has the meaning set forth in Section 5.12(c)(iii).

Residential Project” means a portfolio of Residential Systems owned directly or indirectly by a Contributed Company.

Residential System” means a ground-mounted or roof-top distributed solar generation system designed and installed for residential applications, which is leased by, or subject to a power purchase agreement with, the owner of a residence for the purpose of generating Electricity for that residence.

S&P” means Standard & Poor’s Ratings Group, or any successor thereto.

Service Provider” means the Service Provider under and as defined in the applicable Management Services Agreement.

SP Contributed Company” means any Project Company contributed or sold to the Operating Company by SP Member or its Affiliates.

SP Director” has the meaning set forth in Section 5.2(b)(i).

SP Member” means SunPower YC Holdings, LLC, a Delaware limited liability company.

 

10


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

SP Officer” means an officer of the Company designated as an SP Officer pursuant to Section 6.2(d).

SP Parent” means SunPower Corporation, a Delaware corporation.

Shareholders” has the meaning set forth in the Partnership Agreement.

Sole Member” means 8point3 Holding Company, LLC, a Delaware limited liability company.

Sponsor” or “Sponsors” means SP Parent and FS Parent, individually or collectively, as applicable.

Sponsor Director” has the meaning set forth in Section 5.2(b)(i).

Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if such Person, directly or by one or more Subsidiaries of such Person, or a combination thereof, controls such partnership on the date hereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has the power to elect or direct the election of a majority of the directors or other governing body of such Person.

Tax Beneficial Date” means, with respect to any Project, (i) in general, the last date upon which such Project may be transferred to the Operating Company without materially reducing the amount, or affecting the availability, of a material solar energy tax benefit to the Project or its direct or indirect owners on account of their interests in the Project, including (A) if such Project is eligible for the active solar energy system new construction exclusion from assessment for California property tax purposes, the day immediately preceding the date on which new construction is deemed completed with respect to the Project (or (I) in the case of a Residential Project, the first Residential System to be deemed complete within such Residential Project or (II) in the case of a C&I Project, the first solar generation system to be deemed complete within such C&I Project), within the meaning of California Revenue and Tax Code Section 75.12 and regulations adopted thereunder, and (B) if such Project is eligible for the energy credit determined under Section 48 of the Code, the day immediately preceding the date upon which the Project (or in the case of a Residential Project, the first Residential System within such Residential Project) is placed in service within the meaning of Section 48 of the Code and (ii) if such Project is eligible for more than one material solar energy tax benefit, the date determined by calculating a tentative Tax Beneficial Date for each such material solar energy tax benefit with respect to such Project and selecting the earliest such date.

 

11


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Tax Beneficial Project” means a Project with a Tax Beneficial Date.

Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

U.S. GAAP” means United States generally accepted accounting principles, as amended from time to time.

Utility Project Site” means the real property on which a Utility Scale Project is situated, provided that such real property and the Utility Scale Project are separately owned.

Utility Scale Project” means any wholesale solar energy production facility that is neither a C&I Project nor a Residential Project, including the rights to the site on which the facility is located, the other assets, tangible and intangible, that compose such facility and the transmission and interconnection facilities connecting the Project to an electric utility or other wholesale power offtaker.

Section 1.2 Construction. Unless the context requires otherwise: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) references to Articles and Sections refer to Articles and Sections of this Agreement; (iii) the terms “include,” “includes,” “including” or words of like import shall be deemed to be followed by the words “without limitation”; and (iv) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement. If any date on which any action is required to be taken hereunder by any of the Parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day. The Sole Member has the power to construe and interpret this Agreement and to act upon any such construction or interpretation. To the fullest extent permitted by law, any construction or interpretation of this Agreement by the Sole Member and any action taken pursuant thereto and any determination made by the Sole Member in good faith shall, in each case, be conclusive and binding on all record holders and all other Persons for all purposes.

ARTICLE II

ORGANIZATION

Section 2.1 Formation. The Sole Member has formed the Company as a limited liability company pursuant to the provisions of the Delaware Act and hereby amends and restates the original Limited Liability Company Agreement of 8point3 General Partner, LLC in its entirety. This amendment and restatement shall become effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties, liabilities and obligations of the Sole Member and the administration, dissolution and termination of the Company shall be governed by the Delaware Act. All Membership Interests shall constitute personal property of the record owner thereof for all purposes.

 

12


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Section 2.2 Name. The name of the Company shall be “8point3 General Partner, LLC.” Subject to applicable law, the Company’s business may be conducted under any other name or names as determined by the Board of Directors or the Sole Member, including the name of the Sole Member. The words “Limited Liability Company,” “LLC” or similar words or letters shall be included in the Company’s name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The Board of Directors or the Sole Member may change the name of the Company at any time and from time to time.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices. Unless and until changed by the Board of Directors or the Sole Member, the registered office of the Company in the State of Delaware shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the registered agent for service of process on the Company in the State of Delaware at such registered office shall be The Corporation Trust Company. The principal office of the Company shall be located at such place as the Board of Directors or the Sole Member may from time to time designate, which need not be in the State of Delaware, and the Company shall maintain records there. The Company may maintain offices at such other place or places within or outside the State of Delaware as the Board of Directors or the Sole Member determines to be necessary or appropriate. The address of the Sole Member shall be 77 Rio Robles, San Jose, California 95134 or such other place as the Board of Directors or the Sole Member may from time to time designate.

Section 2.4 Purpose and Business. The purpose and nature of the business to be conducted by the Company shall be to (a) act as the general partner of, and to own, acquire, hold, sell, transfer, assign, dispose of or otherwise deal with partnership interests and related rights in, the Partnership as described in the Partnership Agreement, (b) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by the Board of Directors or the Sole Member and that lawfully may be conducted by a limited liability company organized pursuant to the Delaware Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Company pursuant to the agreements relating to such business activity, and (c) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member or a Joint Venture. To the fullest extent permitted by law, the Sole Member has no duty or obligation to the Company to propose or approve the conduct by the Company of any business and may decline to do so in its sole and absolute discretion free of any duty or obligation whatsoever.

Section 2.5 Powers. The Company shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described in Section 2.4 and for the protection and benefit of the Company.

Section 2.6 Term. The term of the Company commenced upon the filing of the Certificate of Formation in accordance with the Delaware Act and shall continue in existence

 

13


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

until the dissolution of the Company in accordance with the provisions of Article X. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware Act.

Section 2.7 Title to Company Assets. Title to the assets of the Company, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and the Sole Member shall not have any ownership interest in such assets of the Company or any portion thereof.

ARTICLE III

RIGHTS OF SOLE MEMBER

Section 3.1 Management. Unless otherwise granted to the Board of Directors by this Agreement and, to the extent permitted, further delegated by the Board of Directors, the management of the Company is fully reserved to the Sole Member, and the Company shall not have “managers” as that term is used in the Delaware Act. The powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Sole Member, who, except as expressly granted to the Board of Directors by this Agreement and, to the extent permitted, further delegated by the Board of Directors, shall make all decisions and take all actions for the Company, including matters relating to the amendment of this Agreement, any merger, consolidation or conversion of the Company, sale of all or substantially all of the assets of the Company and the termination, dissolution and liquidation of the Company.

Section 3.2 Distribution. Distributions by the Company of cash or other property shall be made to the Sole Member at such time as the Sole Member deems appropriate.

Section 3.3 Limitation of Liability. To the fullest extent permitted by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Sole Member shall not be obligated personally for any of such debts, obligations or liabilities of the Company solely by reason of being a member of the Company.

ARTICLE IV

CAPITAL CONTRIBUTIONS

Section 4.1 Initial Capital Contributions. At the time of the formation of the Company, the Sole Member, as the initial or organizational member of the Company, made a Capital Contribution in the amount of $1,000 in exchange for all of the Membership Interests in the Company.

Section 4.2 Additional Capital Contributions. The Sole Member shall not be obligated to make any additional Capital Contributions to the Company.

Section 4.3 Fully Paid and Non-Assessable Nature of Membership Interests. All Membership Interests issued pursuant to, and in accordance with the requirements of, this Article IV shall be fully paid and non-assessable Membership Interests in the Company, except as such non-assessability may be affected by Sections 18-607 and 18-804 of the Delaware Act.

 

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Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Section 4.4 Loans. If the Company does not have sufficient cash to pay its obligations, the Sole Member, if it so elects, may advance all or part of the needed funds to or on behalf of the Company. Any advance described in this Section 4.4 will constitute a loan from the Sole Member to the Company, will bear interest at a lawful rate determined by the Sole Member from the date of the advance until the date of payment and will not be a Capital Contribution.

Section 4.5 Return of Contributions. Except as expressly provided herein, the Sole Member is not entitled to the return of any part of its Capital Contributions or to be paid interest in respect of its Capital Contributions. An unreturned Capital Contribution is not a liability of the Company.

ARTICLE V

MANAGEMENT

Section 5.1 Management by Board of Directors.

(a) The Sole Member shall have the power and authority to delegate to one or more other persons the rights and power to manage and control the business and affairs, or any portion thereof, of the Company, including to delegate to agents, officers and employees of the Sole Member or the Company, and to delegate by a management agreement with or otherwise to other Persons.

(b) Except to the extent specifically reserved to the Sole Member hereunder, the Sole Member hereby delegates to the Board of Directors of the Company (the “Board of Directors”) all power and authority related to the Company’s management of the business and affairs of the Partnership.

Section 5.2 Board of Directors Composition.

(a) General.

(i) On the date hereof, the Board of Directors shall be composed of [five] members, and shall automatically increase, up to seven members, as additional Independent Directors are elected in accordance with Section 5.2(b)(ii) (or such other number of directors as permitted in accordance with Section 5.3) who shall be natural persons (the “Directors” and each such person, a “Director”). Each Director shall be elected by the Sole Member and, except as set forth in Section 5.2(b)(ii), shall continue in office until the removal of such Director in accordance with the provisions of this Agreement or until the earlier death or resignation of such Director. A Director need not be a resident of the State of Delaware or an officer of the Company.

 

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Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

(ii) Notwithstanding the foregoing, no Director in his or her individual capacity shall have the authority to manage the Company or approve matters relating to, or otherwise to bind the Company, such powers being reserved to a Director acting through the Board of Directors, and to such other committees of the Board of Directors, and officers and agents of the Company, as designated by the Board of Directors.

(iii) The Chairman of the Board of Directors shall be the Chief Executive Officer and shall set the agenda, incorporating input from the Chief Financial Officer and the Vice Presidents of Operations, for and preside at all meetings of the Board of Directors. The initial Chairman of the Board of Directors as of the Closing Date is set forth on Exhibit A.

(b) Designation of Directors.

(i) Sponsor Directors. The Sole Member shall designate four Directors as “FS Directors” or as “SP Directors” or any combination thereof (collectively, the “Sponsor Directors”). The initial Sponsor Directors in office at the Closing Date and their classification as SP Directors or FS Directors are set forth on Exhibit A hereto. The Chief Executive Officer shall be one of the Sponsor Directors.

(ii) Independent Directors. The Sole Member will designate at least one Independent Director as of the Listing Date, at least two Independent Directors within 90 days of the Listing Date and at least three Independent Directors within one year of the Listing Date, all of whom shall also be Audit Committee Independent Directors. Thereafter, and as long as the Company is the general partner of the Partnership, at least three of the Directors shall be Independent Directors, all of whom shall also be Audit Committee Independent Directors. At least two of the Independent Directors shall meet the requirements to serve as a Conflicts Committee Independent Director. The initial Independent Director(s) in office at the Closing Date are set forth on Exhibit A hereto. Each Independent Director shall hold office for a two-year term or until the earlier removal, death or resignation of such Independent Director. For the avoidance of doubt, Independent Directors shall not be precluded from serving consecutive terms.

(c) Removal. Any Director or the entire Board of Directors may be removed at any time, with or without cause, by the Sole Member. In addition, any Independent Director may be removed at any time, with or without cause, by the majority vote of the Board of Directors.

(d) Resignation. A Director may resign at any time, such resignation to be made in writing and to take effect immediately or on such later date as may be specified therein.

 

16


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Section 5.3 Increases in the Number of Directors; Vacancies. Subject to Section 5.2(a)(i), the number of Directors constituting the full Board of Directors may be increased or decreased from time to time pursuant to a resolution adopted by the Sole Member. Vacancies and newly created directorships resulting from any increase in the number of Directors shall be filled by the Sole Member. Except as set forth in Section 5.2(b)(ii), any Director so appointed shall hold office until his removal in accordance with the provisions of this Agreement or until his earlier death or resignation.

Section 5.4 Board of Directors Meetings. The Board of Directors shall meet at least quarterly at the offices of the Company (or such other place as determined by the Board of Directors), with the participation of such officers of the Company as any Director may request.

Section 5.5 Special Meetings. Special meetings of the Board of Directors, to be held at the offices of the Company (or such other place as shall be determined by the Board of Directors), shall be called at the direction of any one Director.

Section 5.6 Notice. Oral, telegraphic or written notice of all meetings of the Board of Directors must be given to all Directors at least five days prior to any meeting of the Board of Directors, provided that a shorter notice period of not less than 24 hours shall be permitted in the event that circumstances do not reasonably permit such advance notice. All notices and other communications to be given to Directors shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or when received in the form of an e-mail or facsimile, and shall be directed to the address, e-mail address or facsimile number as such Director shall designate by notice to the Company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting as provided herein. A meeting may be held at any time without notice if all the Directors are present or if those not present waive notice of the meeting either before or after such meeting.

Section 5.7 Action by Written Consent of Board of Directors. To the extent permitted by applicable law, the Board of Directors, or any committee of the Board of Directors, may act without a meeting so long as a majority of the Directors or members of such committee, including at least one SP Director and one FS Director, unless, the membership of the Board of Directors or such committee does not include both an SP Director and an FS Director, shall have executed a written consent with respect to any action taken in lieu of a meeting.

Section 5.8 Conference Telephone Meetings. Directors or members of any committee of the Board of Directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment or by such other means by which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 5.9 Quorum. As long as one SP Director and one FS Director are present, a majority of all Directors, present in person or participating in accordance with Section 5.8, shall constitute a quorum for the transaction of business, but if at any meeting of the Board of

 

17


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Directors there shall be less than a quorum present, a majority of the Directors present may adjourn the meeting from time to time without further notice. Notwithstanding the foregoing, in the event that (i) neither SP Director is present at a meeting of the Board of Directors duly noticed in accordance with Section 5.6, then a quorum for the next meeting of the Board of Directors duly noticed in accordance with Section 5.6 shall not require an SP Director to be present and (ii) neither FS Director is present at a meeting of the Board of Directors duly noticed in accordance with Section 5.6, then a quorum for the next meeting of the Board of Directors duly noticed in accordance with Section 5.6 shall not require an FS Director to be present, but in each case only to the extent the agenda is unchanged for such next meeting. Notwithstanding the foregoing, in the event that the Sole Member does not designate any Sponsor Director as either an SP Director or an FS Director, a majority of all Directors, present in person or participating in accordance with Section 5.8, shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the Directors present may adjourn the meeting from time to time without further notice.

Section 5.10 Committees.

(a) The Board of Directors may establish committees of the Board of Directors and may delegate any of its responsibilities to such committees, except as prohibited by applicable law.

(b) On or before the Listing Date, the Board of Directors shall have an audit committee (the “Audit Committee”) comprised of at least three Directors. At least one such Director shall be an Audit Committee Independent Director as of the Listing Date; at least two such Directors shall be Audit Committee Independent Directors within 90 days of the Listing Date; and at least three such Directors shall be Audit Committee Independent Directors within one year of the Listing Date. The Audit Committee shall establish a written audit committee charter in accordance with the rules and regulations of the Commission and the NASDAQ Stock Market LLC or any national securities exchange on which the Class A Shares are listed from time to time, in each case as amended from time to time. Each member of the Audit Committee shall satisfy the rules and regulations of the Commission and the NASDAQ Stock Market LLC or any national securities exchange on which the Class A Shares are listed from time to time, in each case as amended from time to time, pertaining to qualification for service on an audit committee. Without limiting Article V of the Management Services Agreement (including the ability of the Service Provider to replace such Person), any person providing internal audit services pursuant to a Management Services Agreement shall report directly to the Audit Committee.

(c) The Board of Directors may, from time to time, establish a Conflicts Committee. The Conflicts Committee shall be composed of at least two Conflicts Committee Independent Directors. The Conflicts Committee shall function in the manner described in the Partnership Agreement. Notwithstanding any duty otherwise existing at law or in equity, any matter approved by the Conflicts Committee in accordance with the provisions, and subject to the limitations, of the Partnership Agreement, shall not be deemed to be a breach of any duties owed by the Board of Directors or any Director to the Company or the Sole Member.

 

18


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

(d) The Board of Directors shall establish a committee of the Board of Directors consisting of two Sponsor Directors, one from each Sponsor, if applicable (the “Project Operations Committee”). Unless otherwise prescribed by the Board of Directors or delegated to the officers of the Company, the Board of Directors delegates to the Project Operations Committee all power and authority to make the decisions and to perform the duties reserved to the Project Operations Committee in this Agreement. Any action of the Project Operations Committee shall require the consent of both Sponsor Directors appointed to the Project Operations Committee. If both Sponsor Directors do not unanimously agree on any matter before the Project Operations Committee after having met in an attempt to resolve such disagreement, either such Sponsor Director may refer the matter to the Board of Directors for decision.

(e) Unless a committee is required to only have Independent Directors in accordance with the rules and regulations of the Commission and the NASDAQ Stock Market LLC or any national securities exchange on which the Class A Shares are listed from time to time, (i) unless the Sole Member otherwise determines, each committee shall comprise at least two Sponsor Directors, at least one of which shall be an FS Director and one of which shall be an SP Director, provided that the Sole Member has designated at least one of each of such Sponsor Directors, and (ii) for any committee comprising at least one SP Director and one FS Director, as long as one SP Director and one FS Director are present, a majority of any committee, present in person or participating in accordance with Section 5.8, shall constitute a quorum for the transaction of business of such committee. Notwithstanding the foregoing, with respect to committees which have at least one SP Director and one FS Director, in the event that (i) no SP Director is present at a committee meeting duly noticed in accordance with Section 5.6, then a quorum for the next meeting of such committee duly noticed in accordance with Section 5.6 shall not require an SP Director to be present and (ii) no FS Director is present at a committee meeting duly noticed in accordance with Section 5.6, then a quorum for the next meeting of such committee duly noticed in accordance with Section 5.6 shall not require an FS Director to be present, but in each case only to the extent the agenda is unchanged for such next meeting. In the event that a committee does not include at least one SP Director and one FS Director, a majority of such committee, present in person or participating in accordance with Section 5.8, shall constitute a quorum for the transaction of business of such committee. Except as otherwise required by law or the Partnership Agreement, all decisions of a committee shall require the affirmative vote of at least a majority of the committee members at any meeting at which a quorum is present.

(f) A majority of any committee may determine its action and fix the time and place of its meetings unless the Board of Directors shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 5.6. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.

 

19


Master Formation Agreement

Exhibit A-2 – Form of YieldCo GP A&R LLC Agreement

 

Section 5.11 Compensation of Directors. Except as expressly provided in any written agreement between the Company and a Director or by resolution of the Board of Directors, no Director shall receive any compensation from the Company for services provided to the Company in its capacity as a Director, except that each Director shall be compensated for attendance at Board of Directors meetings at rates of compensation as from time to time established by the Board of Directors or a committee thereof; provided, however, that Directors who are also employees of the Company or any Affiliate thereof shall receive no compensation for their services as Directors or committee members. In addition, the Directors who are not employees of the Company or any Affiliate thereof shall be entitled to be reimbursed for out-of-pocket costs and expenses incurred in connection with attending meetings of the Board of Directors or committees thereof.

Section 5.12 Responsibility and Authority of the Board of Directors; Voting; Project Operations Committee; Extraordinary Matters.

(a) General. Except as otherwise provided in this Agreement, the relative authority, duties and functions of the Board of Directors, on the one hand, and the officers of the Company, on the other hand, shall be identical to the relative authority, duties and functions of the board of directors and officers, respectively, of a corporation organized under the General Corporation Law of the State of Delaware; provided that any authority or function of the Board of Directors may be delegated, to the extent permitted by the Delaware Act, by the Board of Directors to the officers. The officers shall be vested with such powers and duties as are set forth in Article VI hereof and as are specified by the Board of Directors from time to time. Accordingly, except as otherwise specifically provided in this Agreement, the day-to-day activities of the Company shall be conducted on the Company’s behalf by the officers who shall be agents of the Company. In addition to the powers and authorities expressly conferred on the Board of Directors by this Agreement, the Board of Directors may exercise all such powers of the Company and do all such acts and things as are not restricted by this Agreement, the Partnership Agreement, the Delaware Act or applicable law. Notwithstanding any duty otherwise existing at law or in equity, any matter approved by the Board of Directors in accordance with the provisions, and subject to the limitations, of the Partnership Agreement, shall not be deemed to be a breach of any duties owed by the Board of Directors or any Director to the Company or the Sole Member.

(b) Majority Voting. Each Director shall be entitled to one vote. On all matters requiring the vote o