EX-10.53 31 a2200305zex-10_53.htm EX-10.53

Exhibit 10.53

 

Execution Version

 

 

COMMON AGREEMENT

 

 

dated as of July 26, 2010

 

 

among

 

 

KAHUKU WIND POWER, LLC, as Borrower

 

 

U.S. DEPARTMENT OF ENERGY, as Guarantor and Loan Servicer,

 

 

and

 

 

MIDLAND LOAN SERVICES, INC., as Collateral Agent

 

 

Kahuku Wind Project
Oahu, Hawaii

 



 

Table of Contents

 

ARTICLE 1 DEFINITIONS; RULES OF INTERPRETATION

 

2

 

 

 

 

1.1.

Definitions

 

2

 

 

 

 

1.2.

Rules of Interpretation

 

2

 

 

 

 

1.3.

Conflict with DOE Credit Facility Documents

 

2

 

 

 

 

ARTICLE 2 FUNDING

 

2

 

 

 

 

2.1.

Financial Plan; Advance Schedule

 

2

 

 

 

 

2.2.

Availability of Advances

 

3

 

 

 

 

 

2.2.1.

Availability

 

3

 

 

 

 

 

 

2.2.2.

Loan Commitment Reductions and Cancellations

 

3

 

 

 

 

 

2.3.

Mechanics for Requesting Advances

 

3

 

 

 

 

 

 

2.3.1.

Master Advance Notice

 

3

 

 

 

 

 

2.4.

Mechanics for Funding Advances

 

5

 

 

 

 

 

 

2.4.1.

Funding of Advances

 

5

 

 

 

 

 

 

2.4.2.

Equity Contributions

 

6

 

 

 

 

 

 

2.4.3.

Drawstop Notices

 

6

 

 

 

 

 

 

2.4.4.

No Liability

 

7

 

 

 

 

 

2.5.

Advance Requirements under the DOE Credit Facility Documents

 

7

 

 

 

 

2.6.

No Approval of Work

 

7

 

 

 

 

 

ARTICLE 3 PAYMENTS; PREPAYMENTS

 

8

 

 

 

 

 

3.1.

Place and Manner of Payments

 

8

 

 

 

 

 

 

3.1.1.

Collateral Agency Agreement

 

8

 

 

 

 

 

 

3.1.2.

Net of Tax, Etc.

 

8

 

 

 

 

 

3.2.

Interest Provisions Relating to All Advances

 

10

 

 

 

 

 

 

3.2.1.

Interest Account and Interest Computations

 

10

 

 

 

 

 

 

3.2.2.

Interest Payment Dates

 

10

 

 

 

 

 

3.3.

FFB Loan Transfer

 

11

 

 

 

 

 

 

3.3.1.

Illegality

 

11

 

 

 

 

 

 

3.3.2.

Increased Costs

 

11

 

 

 

 

 

 

3.3.3.

Alternate Office; Minimization of Costs

 

11

 

i



 

3.4.

Prepayments

 

11

 

 

 

 

 

 

3.4.1.

Terms of all Prepayments

 

11

 

 

 

 

 

 

3.4.2.

Voluntary Prepayments

 

12

 

 

 

 

 

 

3.4.3.

Mandatory Prepayments

 

13

 

 

 

 

 

3.5.

Payment of DOE Credit Facility Fees

 

14

 

 

 

 

3.6.

Evidence of Debt

 

15

 

 

 

 

 

ARTICLE 4 CONDITIONS PRECEDENT

 

15

 

 

 

 

 

4.1.

Conditions Precedent to Financial Closing Date

 

15

 

 

 

 

 

 

4.1.1.

Loan Documents

 

15

 

 

 

 

 

 

4.1.2.

Project Documents

 

17

 

 

 

 

 

 

4.1.3.

Advance Schedule

 

19

 

 

 

 

 

 

4.1.4.

Financial Plan; Base Case Projections; Project Milestone Schedule and Construction Budget

 

19

 

 

 

 

 

 

4.1.5.

Financial Statements

 

20

 

 

 

 

 

 

4.1.6.

Update of Conditional Commitment

 

20

 

 

 

 

 

 

4.1.7.

Update of Credit Rating

 

20

 

 

 

 

 

 

4.1.8.

Coverage Ratios

 

20

 

 

 

 

 

 

4.1.9.

Pre-Closing Equity; No Unapproved Charges for Budgeted Contingencies

 

20

 

 

 

 

 

 

4.1.10.

Consents and Approvals

 

21

 

 

 

 

 

 

4.1.11.

Reports

 

21

 

 

 

 

 

 

4.1.12.

Consultants’ and Advisors’ Certificates

 

21

 

 

 

 

 

 

4.1.13.

Fee Arrangements for Independent Consultants

 

22

 

 

 

 

 

 

4.1.14.

Construction Contract Price

 

22

 

 

 

 

 

 

4.1.15.

Notice to Proceed; Conditions Precedent to Construction Contracts

 

22

 

 

 

 

 

 

4.1.16.

Market Study

 

22

 

 

 

 

 

 

4.1.17.

Security Interests

 

22

 

 

 

 

 

 

4.1.18.

Borrower Certificate; Kahuku Holdings Certificate; Sponsor Certificate; Project Operator Certificate; Solvency Certificate

 

23

 

 

 

 

 

 

4.1.19.

Legal Opinions

 

23

 

 

 

 

 

 

4.1.20.

Taxes; Costs and Expenses

 

24

 

ii



 

 

4.1.21.

Evidence of Insurance

 

24

 

 

 

 

 

 

4.1.22.

Third-Party Materials Supply Agreements

 

24

 

 

 

 

 

 

4.1.23.

Project Accounts

 

25

 

 

 

 

 

 

4.1.24.

Lobbying Certification

 

25

 

 

 

 

 

 

4.1.25.

Title to Project Site

 

25

 

 

 

 

 

 

4.1.26.

Environmental

 

25

 

 

 

 

 

 

4.1.27.

Earthquake Risk Assessment

 

25

 

 

 

 

 

 

4.1.28.

Utility Services

 

26

 

 

 

 

 

 

4.1.29.

Conditions Precedent in DOE Credit Facility Documents

 

26

 

 

 

 

 

 

4.1.30.

Conditions Precedent in Transaction Documents

 

26

 

 

 

 

 

 

4.1.31.

DOE Requirements

 

26

 

 

 

 

 

 

4.1.32.

Confirmation of Non-Disclosure and Assignment of Inventions Agreements

 

26

 

 

 

 

 

 

4.1.33.

No Litigation

 

26

 

 

 

 

 

 

4.1.34.

Funding of Base Equity Amount; Equity Commitments

 

27

 

 

 

 

 

 

4.1.35.

Due Diligence Review

 

27

 

 

 

 

 

 

4.1.36.

Review and Payment of Credit Subsidy

 

27

 

 

 

 

 

 

4.1.37.

Intellectual Property

 

27

 

 

 

 

 

 

4.1.38.

Payment and Performance Bonds

 

27

 

 

 

 

 

 

4.1.39.

No Judgment Liens

 

28

 

 

 

 

 

 

4.1.40.

USA Patriot Act

 

28

 

 

 

 

 

 

4.1.41.

Davis-Bacon Compliance

 

28

 

 

 

 

 

 

4.1.42.

OMB Certification

 

28

 

 

 

 

 

 

4.1.43.

Turbine Supplier Report

 

28

 

 

 

 

 

4.2.

Quarterly Conditions Precedent to Advances

 

28

 

 

 

 

4.2.1.

Certification of Updated Advance Schedule

 

29

 

 

 

 

 

 

4.2.2.

Construction Progress Report

 

29

 

 

 

 

 

 

4.2.3.

Fees and Expenses

 

30

 

 

 

 

 

 

4.2.4.

Consents and Approvals

 

31

 

 

 

 

 

 

4.2.5.

Insurance

 

31

 

iii



 

 

4.2.6.

Proceedings and Other Documents

 

31

 

 

 

 

 

 

4.2.7.

Representations and Warranties; No Default; Program Requirements

 

31

 

 

 

 

 

 

4.2.8.

No Change in Circumstances

 

32

 

 

 

 

 

 

4.2.9.

Performance Metrics

 

32

 

 

 

 

 

 

4.2.10.

Certificates

 

32

 

 

 

 

 

 

4.2.11.

Construction Budget

 

33

 

 

 

 

 

 

4.2.12.

Equity Contributions

 

33

 

 

 

 

 

 

4.2.13.

Base Case Projections

 

33

 

 

 

 

 

4.3.

Conditions Precedent to Each Advance

 

33

 

 

 

 

 

 

4.3.1.

Advance Request; Quarterly Approved Advance Schedule

 

33

 

 

 

 

 

 

4.3.2.

Issuance of FFB Advance Request Approval Notice

 

34

 

 

 

 

 

 

4.3.3.

Fees and Expenses

 

34

 

 

 

 

 

 

4.3.4.

Absence of Drawstop Notice

 

34

 

 

 

 

 

 

4.3.5.

Base Equity

 

34

 

 

 

 

 

 

4.3.6.

Title Continuation

 

34

 

 

 

 

 

 

4.3.7.

Additional Requirements

 

35

 

 

 

 

 

 

4.3.8.

Advance Schedule; Base Case Projections; and Construction Budget

 

35

 

 

 

 

 

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

 

36

 

 

 

 

 

5.1.

Organization

 

36

 

 

 

 

5.2.

Authorization; No Conflict

 

36

 

 

 

 

5.3.

Legality, Validity and Enforceability

 

36

 

 

 

 

5.4.

Capitalization

 

37

 

 

 

 

5.5.

Investments; Subsidiaries

 

37

 

 

 

 

5.6.

Title

 

37

 

 

 

 

5.7.

Leases

 

37

 

 

 

 

5.8.

Security Interests

 

38

 

 

 

 

5.9.

Liens

 

38

 

 

 

 

5.10.

Permits; Other Required Consents

 

38

 

 

 

 

5.11.

Litigation, Labor Disputes

 

39

 

iv



 

5.12.

Tax

 

39

 

 

 

 

5.13.

Business, Indebtedness, Contracts, Etc.

 

40

 

 

 

 

5.14.

Transactions with Affiliates

 

40

 

 

 

 

5.15.

Compliance with Governmental Rules

 

41

 

 

 

 

5.16.

Environmental Laws

 

41

 

 

 

 

5.17.

Investment Company Act

 

42

 

 

 

 

5.18.

Regulation of Parties

 

42

 

 

 

 

5.19.

ERISA

 

42

 

 

 

 

5.20.

Insurance

 

43

 

 

 

 

5.21.

Intellectual Property

 

43

 

 

 

 

5.22.

No Defaults

 

44

 

 

 

 

5.23.

No Judgment Liens

 

44

 

 

 

 

5.24.

Sufficiency of Project Documents

 

44

 

 

 

 

5.25.

Financial Statements

 

45

 

 

 

 

5.26.

Project Milestone Schedule and Construction Budget; Operating Forecasts and Base Case Projections

 

46

 

 

 

 

5.27.

Sufficient Funds

 

46

 

 

 

 

5.28.

Fees and Enforcement

 

46

 

 

 

 

5.29.

Immunity

 

47

 

 

 

 

5.30.

No Other Powers-of-Attorney, Etc.

 

47

 

 

 

 

5.31.

No Additional Fees

 

47

 

 

 

 

5.32.

Foreign Assets Control Regulations, Prohibited Persons, Etc.

 

47

 

 

 

 

5.33.

Lobbying

 

48

 

 

 

 

5.34.

Insolvency Proceedings

 

48

 

 

 

 

5.35.

Use of Proceeds

 

48

 

 

 

 

5.36.

No Material Adverse Effect

 

48

 

 

 

 

5.37.

Certain Program Requirements

 

48

 

 

 

 

5.38.

Davis-Bacon Act

 

49

 

 

 

 

5.39.

Buy American Provisions

 

49

 

 

 

 

5.40.

Compliance with Governmental Rules; Environmental Laws; Governmental Approvals

 

49

 

 

 

 

5.41.

Full Disclosure

 

49

 

v



 

5.42.

Domestic Procurement Consideration

 

50

 

 

 

 

 

ARTICLE 6 AFFIRMATIVE COVENANTS

 

50

 

 

 

 

 

6.1.

Information Covenants

 

50

 

 

 

 

6.2.

Books, Records and Inspections; Accounting and Auditing Matters

 

58

 

 

 

 

6.3.

Maintenance of Property and Insurance

 

60

 

 

 

 

6.4.

Maintenance of Existence; Conduct of Business

 

60

 

 

 

 

6.5.

Compliance with Governmental Rules; Environmental Laws; Governmental Approvals

 

60

 

 

 

 

6.6.

Compliance with Debarment Regulations

 

61

 

 

 

 

6.7.

Tax, Duties, Proper Legal Form

 

61

 

 

 

 

6.8.

Construction and Approved Construction Changes

 

61

 

 

 

 

6.9.

Operating Forecasts

 

62

 

 

 

 

6.10.

Diligent Construction of Project and Operations

 

62

 

 

 

 

6.11.

Ineligible and Overrun Project Costs

 

63

 

 

 

 

6.12.

Cost Overruns and Contingencies

 

63

 

 

 

 

6.13.

Use of Proceeds; Repayment of Indebtedness

 

63

 

 

 

 

6.14.

Performance of Obligations

 

63

 

 

 

 

6.15.

Project Documents

 

63

 

 

 

 

6.16.

Cash Deposits

 

64

 

 

 

 

6.17.

Reserve Accounts

 

64

 

 

 

 

6.18.

Safety Audit

 

64

 

 

 

 

6.19.

Replacement of Certain Project Participants

 

64

 

 

 

 

6.20.

Security Interest in Newly Acquired Property; Additional Project Documents

 

65

 

 

 

 

6.21.

Title; Rights to Land

 

65

 

 

 

 

6.22.

Independent Consultants

 

65

 

 

 

 

6.23.

Additional Documents; Filings and Recordings

 

65

 

 

 

 

6.24.

Compliance with Governmental Rules

 

67

 

 

 

 

6.25.

Event of Loss

 

67

 

 

 

 

6.26.

Application of Loss Proceeds

 

67

 

 

 

 

6.27.

Acceptance and Startup Testing

 

68

 

vi



 

6.28.

Debt-to-Equity Contribution Ratio

 

68

 

 

 

 

6.29.

Compliance With Certain U.S. Government Requirements

 

68

 

 

 

 

6.30.

Davis-Bacon Act

 

69

 

 

 

 

6.31.

ERISA Covenants

 

70

 

 

 

 

6.32.

Domestic Procurement Consideration

 

71

 

 

 

 

6.33.

Initial Advance Date

 

71

 

 

 

 

6.34.

Separateness Provisions

 

72

 

 

 

 

ARTICLE 7 NEGATIVE COVENANTS

 

72

 

 

 

 

7.1.

Indebtedness

 

72

 

 

 

 

7.2.

Liens

 

72

 

 

 

 

7.3.

Leases

 

73

 

 

 

 

7.4.

Loans, Advances and Investments

 

73

 

 

 

 

7.5.

Capital Expenditures

 

73

 

 

 

 

7.6.

Subsidiaries; Partnerships

 

73

 

 

 

 

7.7.

Ordinary Course of Conduct; No Other Business

 

73

 

 

 

 

7.8.

Merger, Bankruptcy, Dissolution or Transfer of Assets

 

74

 

 

 

 

7.9.

Organizational Documents; Fiscal Year; Legal Form; Capital Structure

 

74

 

 

 

 

7.10.

Restricted Payments

 

74

 

 

 

 

7.11.

Redemption or Issuance of Stock

 

75

 

 

 

 

7.12.

Other Transactions

 

75

 

 

 

 

7.13.

Accounts

 

75

 

 

 

 

7.14.

Debt Service Coverage Ratio

 

76

 

 

 

 

7.15.

Commissions

 

76

 

 

 

 

7.16.

Amendment of and Notices Under Transaction Documents

 

76

 

 

 

 

7.17.

Other Agreements

 

77

 

 

 

 

7.18.

Hedging Agreements

 

77

 

 

 

 

7.19.

Compromise or Settlement of Disputes

 

77

 

 

 

 

7.20.

Abandonment of Project

 

78

 

 

 

 

7.21.

Improper Use

 

78

 

 

 

 

7.22.

Assignment

 

78

 

vii



 

7.23.

Margin Regulations

 

78

 

 

 

 

7.24.

Environmental Laws

 

78

 

 

 

 

7.25.

ERISA

 

79

 

 

 

 

7.26.

Investment Company Act

 

79

 

 

 

 

7.27.

Public Utility Holding Company Act

 

79

 

 

 

 

7.28.

Powers of Attorney

 

79

 

 

 

 

7.29.

Prohibited Persons

 

79

 

 

 

ARTICLE 8 EVENTS OF DEFAULT; REMEDIES

 

79

 

 

 

 

8.1.

Events of Default

 

79

 

 

 

 

8.2.

Remedies for Events of Default

 

88

 

 

 

 

8.3.

Automatic Acceleration

 

90

 

 

 

 

ARTICLE 9 AGENTS AND ADVISORS

 

90

 

 

 

9.1.

Appointment of Agents

 

90

 

 

 

 

9.2.

Duties and Responsibilities

 

90

 

 

 

 

9.3.

Rights and Obligations

 

91

 

 

 

 

9.4.

No Responsibility for Certain Conduct

 

93

 

 

 

 

9.5.

Defaults

 

94

 

 

 

 

9.6.

No Liability

 

95

 

 

 

 

9.7.

Fees and Expenses of Agents

 

95

 

 

 

 

9.8.

Resignation and Removal

 

96

 

 

 

 

9.9.

Successor Agents

 

96

 

 

 

 

9.10.

Authorization

 

98

 

 

 

 

9.11.

Agent as Lender

 

98

 

 

 

 

9.12.

Appointment of Independent Consultants

 

98

 

 

 

ARTICLE 10 REIMBURSEMENT AGREEMENT

 

98

 

 

 

10.1.

Reimbursement Obligation

 

98

 

 

 

 

10.2.

Payments and Computations

 

99

 

 

 

 

 

10.2.1.

Interest

 

99

 

 

 

 

 

 

10.2.2.

Method of Payment

 

99

 

 

 

 

 

 

10.2.3.

Taxes

 

99

 

 

 

 

 

 

10.2.4.

Calculations

 

99

 

viii



 

 

10.2.5.

Determinations

 

100

 

 

 

 

 

10.3.

Obligations Absolute

 

100

 

 

 

 

10.4.

Security

 

102

 

 

 

 

 

10.4.1.

Borrower Reimbursement Obligations Secured

 

102

 

 

 

 

 

 

10.4.2.

Actions

 

102

 

 

 

 

 

10.5.

DOE Rights

 

102

 

 

 

 

 

 

10.5.1.

Rights Cumulative

 

102

 

 

 

 

 

 

10.5.2.

Subrogation

 

102

 

 

 

 

 

10.6.

Further Assurances

 

102

 

 

 

 

 

ARTICLE 11 MISCELLANEOUS

 

103

 

 

 

 

11.1.

Addresses

 

103

 

 

 

 

11.2.

Further Assurances

 

103

 

 

 

 

11.3.

Delay and Waiver

 

103

 

 

 

 

11.4.

Right of Set-Off

 

104

 

 

 

 

11.5.

Amendment or Waiver

 

104

 

 

 

 

11.6.

Entire Agreement

 

104

 

 

 

 

11.7.

Governing Law

 

105

 

 

 

 

11.8.

Severability

 

105

 

 

 

 

11.9.

Calculations

 

105

 

 

 

 

11.10.

Limitation on Liability

 

105

 

 

 

 

11.11.

Waiver of Jury Trial

 

105

 

 

 

 

11.12.

Consent to Jurisdiction

 

106

 

 

 

 

11.13.

Successors and Assigns

 

107

 

 

 

 

11.14.

Participations

 

107

 

 

 

 

11.15.

Reinstatement

 

107

 

 

 

 

11.16.

No Partnership; Etc.

 

108

 

 

 

 

11.17.

Payment of Costs and Expenses

 

108

 

 

 

 

11.18.

Counterparts

 

111

 

ix


 

COMMON AGREEMENT

 

This COMMON AGREEMENT (the “Common Agreement”), dated as of July 26, 2010, is by and among (i) KAHUKU WIND POWER, LLC, a limited liability company organized and existing under the laws of Delaware, as Borrower, (ii) the U.S. DEPARTMENT OF ENERGY, acting by and through the Secretary of Energy, for itself as a Credit Party and as guarantor of the Advances made under the DOE Credit Facility Documents (in such capacity, “DOE”), (iii) DOE, acting by and through the Secretary of Energy, as the Loan Servicer (in such capacity, the “Loan Servicer”), and (iv) MIDLAND LOAN SERVICES, INC., a corporation formed and existing under the laws of Delaware, as the Collateral Agent.

 

RECITALS

 

WHEREAS, pursuant to the Loan Documents, the Borrower intends to develop, construct, own and operate the Project.

 

WHEREAS, Kahuku Holdings is the sole Equity Owner of the Borrower;

 

WHEREAS, 92% of the Equity Interests of Kahuku Holdings are held by the Sponsor, and 8% of the Equity Interests of Kahuku Holdings are held by Makani Nui Associates, LLC, a limited liability company organized and existing under the laws of Hawaii;

 

WHEREAS, subject to the terms and conditions of the Equity Funding Agreement, the Sponsor and Kahuku Holdings have made and have agreed to make, or procure the making of, Equity Contributions to the Borrower.

 

WHEREAS, the Borrower, in furtherance of its obligations with respect to the Project has requested that:

 

(i)            FFB make Advances pursuant to the DOE Credit Facility Documents in the aggregate principal amount not exceeding $117,330,968, and

 

(ii)           DOE guarantee the repayment of the DOE Guaranteed Loan pursuant to the DOE Guarantee.

 

WHEREAS, the execution of this Common Agreement, which provides for, inter alia (i) certain common representations, warranties and covenants of the Borrower, (ii) certain uniform conditions of disbursement of the Advances, and (iii) certain common events of default, is a condition precedent to the obligations of the Credit Parties under the DOE Credit Facility Documents.

 



 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the Credit Parties entering into the DOE Credit Facility Documents, and other good and valid consideration, the receipt and adequacy of which are hereby expressly acknowledged, the parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS; RULES OF INTERPRETATION

 

1.1.         Definitions.

 

Except as otherwise expressly provided herein, capitalized terms used in this Common Agreement and its exhibits and schedules shall have the meanings given in Exhibit A.

 

1.2.         Rules of Interpretation.

 

Except as otherwise expressly provided herein, the rules of interpretation set forth in Exhibit B shall apply to this Common Agreement.

 

1.3.         Conflict with DOE Credit Facility Documents.

 

Except as expressly provided otherwise hereunder, in the case of any conflict between the terms of this Common Agreement and the terms of any DOE Credit Facility Document, the terms of this Common Agreement, as between the Borrower and the Credit Parties party hereto, shall control.

 

ARTICLE 2
FUNDING

 

2.1.         Financial Plan; Advance Schedule.

 

(a)           The proposed sources and uses of financing with respect to the Project are set forth on the Financial Plan attached as Exhibit Al. This Article 2 does not represent any undertaking of any of the Credit Parties to make any Advances to the Borrower.

 

(b)           Attached hereto as Schedule 2.1(b) is an initial Advance Schedule, which represents the Borrower’s best estimate in all material respects as of the Financial Closing Date, based on all facts and circumstances existing and known to the Borrower, of the timing and amount of proposed Advances and Equity Contributions for the Project set forth on a monthly basis. The Advance Schedule shall be amended from time to time as set forth in Section 4.2.

 

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2.2.         Availability of Advances.

 

2.2.1.       Availability.

 

Subject to the satisfaction (or waiver by DOE or the Collateral Agent, as applicable, in writing) of each applicable condition precedent set forth in Article 4 and in the DOE Credit Facility Documents, Advances under the DOE Credit Facility Documents shall be made during the applicable Availability Period.

 

2.2.2.       Loan Commitment Reductions and Cancellations.

 

The Borrower may, on not less than fifteen (15) days prior written notice to DOE and upon the satisfaction of any consent requirement or other applicable provisions of each DOE Credit Facility Document, permanently reduce the unutilized portions of the DOE Credit Facility Commitment, in full or in part, but only if:

 

(a)           each partial reduction is in an amount permitted under the DOE Credit Facility Documents;

 

(b)           DOE, in consultation with the Lender’s Engineer, is satisfied that such cancellation or reduction will not impair construction or development of the Project; and

 

(c)           upon such cancellation or reduction, the Borrower pays all fees, Periodic Expenses, and other amounts then due with respect to such cancellation or reduction under the DOE Credit Facility Documents.

 

Once reduced or canceled, the DOE Credit Facility Commitment may not be reinstated.

 

2.3.         Mechanics for Requesting Advances.

 

2.3.1.       Master Advance Notice.

 

(a)           The Borrower may request an Advance under the DOE Credit Facility Documents by delivering to the Credit Parties and the Lender’s Engineer, within three (3) months after the Quarterly Approval Date but not less than ten (10) Business Days prior to the Requested Advance Date, an appropriately completed Master Advance Notice with respect to such Advance. The Borrower may request an Advance no more frequently than once per calendar month; provided, however, that the Borrower may request one additional Advance in any calendar month that includes a Principal Payment Date, but only for the purpose of paying interest owing on the outstanding DOE Guaranteed Loan that constitutes Eligible Base Project Costs.

 

(b)           Each Master Advance Notice shall specify:

 

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(i)            the amount of the Advance requested under the DOE Credit Facility Documents, which shall be in the minimum amount and increments required by the DOE Credit Facility Documents;

 

(ii)           the Requested Advance Date, which shall be any Business Day;

 

(iii)          pursuant to Section 2.4.2, (A) the portion of the Approved Pre-Closing Equity Credit to be allocated as Base Equity with respect to a requested Advance (not to exceed the Approved Pre-Closing Equity Credit Balance), and (B) the amount of Base Equity and Overrun Equity to be transferred from the Equity Contribution Account prior to or concurrently with such Advances;

 

(iv)          the aggregate amount, on a prospective basis after giving effect to the requested Advance, of (A) all Advances outstanding under the DOE Credit Facility Documents, (B) all Equity Contributions allocated from the Approved Pre-Closing Equity Credit as Base Equity with respect to outstanding Advances, (C) Base Equity and Overrun Equity (if any) contributed from the Equity Contribution Account or in cash with respect to outstanding Advances, and (D) the revised Approved Pre-Closing Equity Credit Balance, if greater than zero;

 

(v)           the Project Costs being financed using the proceeds of the requested Advances, which shall be only Eligible Base Project Costs;

 

(vi)          if applicable, the “Prepayment Election” (as defined in the FFB Promissory Note) for such Advance as set forth in the FFB Advance Request;

 

(vii)         that (A) the representations and warranties of the Borrower contained in the Loan Documents to which the Borrower is a party are true, correct and complete on and as of the Requested Advance Date, (B) no Event of Default or Potential Default has occurred and is continuing, and (C) such other matters as are required to be certified by the Borrower pursuant to Section 4.3; and

 

(viii)        Such other information as may be required in the form of Master Advance Notice, if applicable.

 

(c)           The Borrower shall include as attachments to each Master Advance Notice, and shall deliver the same to DOE and the Loan Servicer:

 

(i)            a draft of the FFB Advance Request with respect to the requested Advance, together with any information necessary for FFB and DOE to process such request; and

 

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(ii)           all other certificates and documentation required in respect of such Advance under the DOE Credit Facility Documents and the related Loan Documents.

 

2.4.         Mechanics for Funding Advances.

 

2.4.1.       Funding of Advances.

 

(a)           Satisfaction of Conditions Precedent.

 

(i)            Promptly after receipt of a Master Advance Notice, DOE shall review such Master Advance Notice and the attachments thereto to determine whether all certificates and documentation required under Section 2.3 have been delivered to it. At such time as DOE has determined that it has received all such required certificates and documentation, it shall promptly so notify the other Credit Parties and the Borrower;

 

(ii)           No later than six (6) Business Days prior to the Requested Advance Date, the Borrower shall deliver to DOE a completed FFB Advance Request with respect to the requested Advance, including all wire transfer information for the designated payees of the proceeds of such Advance, together with any other information required on such FFB Advance Request; and

 

(iii)          As soon as DOE determines that (A) all conditions precedent set forth in Article 4 in respect of the requested Advance have been satisfied (or waived), (B) the required Equity Contributions have been made in accordance with Section 2.4.2, and (C) the FFB Advance Request and all other certificates and documentation required under the DOE Credit Facility Documents in respect of the requested Advance have been provided and are satisfactory (or have been waived), then DOE shall sign the FFB Advance Request Approval Notice attached to the FFB Advance Request and forward both to the FFB, with a copy to the Borrower, the Collateral Agent and the Lender’s Engineer, it being agreed that, if DOE makes such determination no later than six (6) Business Days prior to the Requested Advance Date, then DOE shall use all reasonable efforts to sign and forward such FFB Advance Request Approval Notice no later than five (5) Business Days prior to the Requested Advance Date.

 

(b)           FFB Funding.  For any requested Advance for which a FFB Advance Request Approval Notice has been issued pursuant to this Section 2.4.1 and for which no Drawstop Notice has been issued pursuant to Section 2.4.3, in accordance with the terms of the FFB Note Purchase Agreement FFB has agreed to fund such Advance on the Requested Advance Date in accordance with the DOE Credit Facility Documents. Such funds shall be applied as specified in the Collateral Agency Agreement; provided, however, that, if any Drawstop Notice has been issued and is in effect on the Requested Advance Date with respect to

 

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any funds received by the Collateral Agent, such funds shall be applied pursuant to Section 2.4.3(c).

 

2.4.2.       Equity Contributions.

 

(a)           Determinations.  On or prior to the date that is nine (9) Business Days prior to the Requested Advance Date, the Borrower shall cause Equity Contributions to be allocated from the Approved Pre-Closing Equity Credit, disbursed from the Equity Contribution Account or contributed in cash in an aggregate amount such that, after giving effect to all Advances to be made on such Requested Advance Date, the Debt-to-Equity Contribution Ratio is not more than 79:21. If the Equity Contribution for an Advance will include amounts from the Approved Pre-Closing Equity Credit, the Borrower shall allocate in the Master Advance Notice of such Advance that portion of the Approved Pre-Closing Equity Credit (not to exceed the Approved Pre-Closing Equity Credit Balance) to be deemed contributed as Base Equity on the related Requested Advance Date. After the Approved Pre-Closing Equity Credit Balance has been fully utilized, the Borrower shall indicate on each Master Advance Notice the amount of Base Equity or Overrun Equity, as the case may be, to be deposited into the Construction Account from the Equity Contribution Account or contributed in cash with respect to the Advance requested pursuant to such Master Advance Notice.

 

(b)           Confirmation.  As of the date that is eight (8) Business Days prior to the Requested Advance Date, (i) if at such time as the Collateral Agent has determined that the Equity Contributions contributed or deemed contributed are sufficient to satisfy the requirements of Section 2.4.2(a), the Collateral Agent shall so notify the Borrower, the Equity Investor, and the Credit Parties, and (ii) to the extent that the Collateral Agent has determined that the Equity Contributions contributed or deemed contributed are not sufficient to satisfy the requirements of Section 2.4.2(a), the Collateral Agent shall so notify the Borrower, the Equity Investor, and the Credit Parties. If as of the date that is six (6) Business Days prior to the Requested Advance Date there continues to be a shortfall in the Base Equity or Overrun Equity required to be contributed or deemed contributed, the Collateral Agent shall issue a notice substantially in the form attached as Exhibit N (a “Drawstop Notice”), in accordance with Section 2.4.3, to the Borrower and the other Credit Parties.

 

2.4.3.       Drawstop Notices.

 

(a)           Issuance.  At any time after the issuance of a Master Advance Notice up to the date that is one (1) Business Day prior to the Requested Advance Date, whether or not DOE has issued an FFB Advance Request Approval Notice, DOE may, from time to time, issue a Drawstop Notice to the Borrower and the

 

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other Credit Parties, if DOE determines that the conditions in Article 4 with respect to such Advance are not met, or having been met, are no longer met.

 

(b)           Consequences. If a Drawstop Notice is issued, FFB shall not be obligated to make the requested Advance; provided, however, that the issuance of a Drawstop Notice shall be without prejudice to the Borrower’s right to request future Advances in accordance with the terms and provisions hereof.

 

(c)           Funds Advanced.  If any Drawstop Notice has been issued, funds delivered to the Collateral Agent pursuant to Section 2.4.1(b) shall not be applied and shall be returned promptly to the FFB.

 

(d)           Costs.  The Borrower shall pay all reasonable, documented out-of-pocket expenses incurred by DOE, FFB, Loan Servicer or the Collateral Agent in respect of any Advance failed to be made under this Section 2.4.3.

 

2.4.4.       No Liability.

 

Without limiting the generality of Section 9.6 or Section 11.10, no Credit Party shall have any liability to the Borrower or any Affiliate thereof or to any other Credit Party solely arising from the issuance of or failure to issue any FFB Advance Request Approval Notice, Drawstop Notice, or any other notice contemplated by this Section 2.4.

 

2.5.         Advance Requirements under the DOE Credit Facility Documents.

 

Notwithstanding anything to the contrary contained in this Article 2, the Borrower shall also comply with all separate disbursement requirements set forth in the DOE Credit Facility Documents. Unless otherwise specified in the DOE Credit Facility Documents, all determinations to be made with respect to the DOE Credit Facility Documents shall be made by DOE.

 

2.6.         No Approval of Work.

 

The making of any Advance under the Loan Documents shall not be deemed to constitute approval or acceptance by any Credit Party of any work, labor, supplies, materials or equipment furnished or supplied with respect to the Project in respect of any provision in the Loan Documents pursuant to which a Credit Party has the right or obligation to provide such approval or acceptance.

 

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ARTICLE 3
PAYMENTS; PREPAYMENTS

 

3.1.         Place and Manner of Payments.

 

3.1.1.       Collateral Agency Agreement.

 

The Borrower shall repay the DOE Guaranteed Loan, including all fees and interests accrued thereon, in accordance with the DOE Credit Facility Documents. All payments due under the DOE Credit Facility Documents shall be made by the Borrower pursuant to the terms of the DOE Credit Facility Documents and the Collateral Agency Agreement. The Collateral Agent shall apply each payment received by it in accordance with the Collateral Agency Agreement; provided, however, that, notwithstanding any instructions to the contrary in the FFB Note, for purposes of administering payments to FFB, the Borrower shall remit such payments directly to an account designated by the Loan Servicer for payment to FFB. The Borrower may not reborrow any principal amount of the DOE Guaranteed Loan that is repaid.

 

3.1.2.       Net of Tax, Etc.

 

(a)           Tax.  Any and all payments to any Secured Party by the Borrower hereunder or under any other Loan Document shall be made free and clear of, and without deduction for, any and all Taxes, and all liabilities with respect thereto, excluding (i) taxes imposed on or measured by the net income (however denominated) of such Secured Party by any jurisdiction or any political subdivision or taxing authority thereof or therein solely as a result of a present or former connection between such Secured Party and such jurisdiction or political subdivision (other than any connection arising as a result of the transactions contemplated by the Loan Documents), and (ii) any withholding Taxes or other Tax based on gross income imposed by the United States of America (all such Taxes being hereinafter referred to as “Covered Taxes”). If the Borrower shall be required by law to withhold or deduct any Covered Taxes from or in respect of any sum payable hereunder or under any other Loan Document to any Secured Party, (A) the sum payable shall be increased as may be necessary so that after making all such required deductions (including deductions applicable to additional sums payable under this Section 3.1.2), such Secured Party receives an amount equal to the sum it would have received had no such deductions been made, (B) the Borrower shall make such deductions and (C) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with all Governmental Rules. If the Borrower shall make any payment with respect to Covered Taxes under this Section 3.1.2(a) to or for the benefit of any Secured Party and if such Secured Party shall claim any credit or deduction for such Covered Taxes against any other Taxes payable by such Secured Party that are not Covered Taxes then such Secured Party shall pay to the Borrower an amount equal to the amount the Secured Party determines in its sole discretion, absent manifest error, is the amount by which such other Taxes are actually reduced; provided, that the aggregate amount payable by such Secured Party pursuant to this sentence shall not exceed the aggregate amount previously paid by the Borrower with respect to such Covered Taxes and no amount shall be payable while a Potential Default or Event of Default is continuing.

 

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(b)           Indemnity.  The Borrower shall indemnify each Secured Party for the full amount of Covered Taxes (including any Covered Taxes imposed by any jurisdiction on amounts payable under this Section 3.1.2) paid by any Secured Party, whether or not such Covered Taxes were correctly or legally asserted. Each Secured Party shall give notice to the Borrower of the assertion of any claim against such Secured Party relating to such Secured Party’s Covered Taxes as promptly as is practicable after being notified of such assertion; provided, that any failure to notify the Borrower promptly of such assertion shall not relieve the Borrower of its obligation under this Section 3.1.2, except to the extent the Borrower is actually and materially prejudiced by such failure. Payments by the Borrower pursuant to this indemnification shall be made within ten (10) days after the date such Secured Party makes written demand therefor (submitted through the Loan Servicer), which demand shall be accompanied by a certificate describing in reasonable detail the basis thereof. Each Secured Party agrees to repay to the Borrower any refund (including that portion of any interest that was included as part of such refund with respect to Covered Taxes paid by the Borrower pursuant to this Section 3.1.2(b)) received by such Secured Party for Covered Taxes that were paid by the Borrower pursuant to this Section 3.1.2(b), and to provide reasonable assistance to the Borrower (and at the expense of the Borrower) to contest any such Covered Taxes that such Secured Party or the Borrower reasonably believes not to have been lawfully or properly assessed.

 

(c)           Notice.  Within ten (10) days after the date of any payment of Covered Taxes by the Borrower, the Borrower shall furnish to the Loan Servicer and each affected Secured Party the original or a certified copy of a receipt evidencing such payment, or if the relevant tax authority has not provided the Borrower with such a receipt, shall furnish such other evidence of such payment as may be available to the Borrower (in which case the Borrower shall promptly request a receipt from the relevant tax authority, and so furnish the original or a certified copy thereof promptly on receipt thereof). The Borrower shall compensate each Secured Party for all reasonable losses and expenses sustained by such Secured Party as a result of any failure by the Borrower to so furnish such copy of such evidence or, if available, such receipt.

 

(d)           Survival of Obligations.  The obligations of the Borrower under this Section 3.1.2 shall survive the termination of this Common Agreement and the repayment of the Secured Obligations, but no longer than the applicable statute of limitations.

 

(e)           Documentation.  Any Secured Party that is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code that is entitled to an exemption from or reduction of withholding of U.S. federal income tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower, at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed

 

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and executed documentation prescribed by applicable law as will permit such payments to be made without withholding of U.S. federal income tax, or at a reduced rate of such withholding. In addition, any Secured Party, if requested by the Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower as will enable the Borrower to determine whether or not such Secured Party is subject to backup withholding or information reporting requirements. Each Secured Party shall promptly (i) notify the Borrower of any change in circumstances which (other than as a result of a Change in Law or interpretation thereof) would modify or render invalid any such claimed exemption or reduction and (ii) at the request and expense of the Borrower, take such steps as shall not be disadvantageous to it, in the sole judgment of such Secured Party, and as may be reasonably necessary (including the re-designation of its lending office) to avoid any requirement of applicable laws of any such jurisdiction that the Borrower make any deduction or withholding for Covered Taxes from amounts payable to such Secured Party.

 

3.2.         Interest Provisions Relating to All Advances.

 

3.2.1.       Interest Account and Interest Computations.

 

In accordance with Section 609.10(e)(1) of the Applicable Regulations, interest shall accrue on the unpaid principal amount of each Advance from the date such Advance is disbursed to the Collateral Agent or otherwise disbursed or deemed disbursed pursuant to the DOE Credit Facility Documents, to the date such Advance is paid in full, at a rate per annum relating thereto as specified in the DOE Credit Facility Documents. The Borrower hereby authorizes each Credit Party to record in an account or accounts maintained by such Credit Party on its books (A) the interest rates applicable to all Advances, (B) the interest periods for each Advance outstanding, (C) the date and amount of each principal and interest payment on the DOE Guaranteed Loan outstanding, and (D) such other information as such Credit Party may determine is necessary for the computation of interest payable by the Borrower hereunder. The Borrower agrees that all computations of interest by a Credit Party pursuant to this Section 3.2.1 shall, absent manifest error, constitute prima facie evidence of the amount thereof, and shall be conclusive absent manifest error. All computations of interest shall be made as set forth in the relevant DOE Credit Facility Documents.

 

3.2.2.       Interest Payment Dates.

 

Subject to the terms of the DOE Credit Facility Documents, the Borrower shall pay accrued interest on the outstanding principal amount of each Advance on each Quarterly Payment Date, on prepayment (to the extent thereof), and at maturity (whether by acceleration or otherwise).

 

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3.3.         FFB Loan Transfer.

 

3.3.1.       Illegality.

 

Upon any FFB Loan Transfer or receipt by the Borrower or any Credit Party of notice of FFB’s intention to make any FFB Loan Transfer in accordance with the FFB Note Purchase Agreement, the Borrower, DOE, Loan Servicer and Collateral Agent shall cooperate with the transferee of the FFB Loan to amend this Common Agreement and any other Loan Documents to incorporate customary provisions for a commercial loan transaction of this type reasonably satisfactory to such transferee with respect to any Change of Law that makes it unlawful or impossible for any lender to make or maintain any FFB Loans.

 

3.3.2.       Increased Costs.

 

Upon any FFB Loan Transfer or receipt by the Borrower or any Credit Party of notice of FFB’s intention to make any FFB Loan Transfer in accordance with the FFB Note Purchase Agreement, the Borrower, DOE, Loan Servicer and Collateral Agent shall cooperate with the transferee of the FFB Loans to amend this Common Agreement and any other Loan Documents to incorporate customary provisions reasonably satisfactory to such transferee with respect to any Change of Law that subjects such transferee lender to any tax, duty or other charge with respect to any FFB Loans.

 

3.3.3.       Alternate Office; Minimization of Costs.

 

Upon any FFB Loan Transfer or receipt by the Borrower or any Credit Party of notice of FFB’s intention to make any FFB Loan Transfer in accordance with the FFB Note Purchase Agreement, the Borrower, DOE, Loan Servicer and Collateral Agent shall cooperate with the transferee of the FFB Loans to amend this Common Agreement and any other Loan Documents to incorporate customary provisions for a commercial loan transaction of this type reasonably satisfactory to such transferee lender with respect to such transferee lender designating an alternative lending office with respect to its FFB Loan to mitigate costs or to avoid any circumstances that might make it unlawful or impossible for such transferee lender to maintain an FFB Loan.

 

3.4.         Prepayments.

 

3.4.1.       Terms of all Prepayments.

 

(a)           With respect to any prepayment of all or any part of the DOE Guaranteed Loan, whether such prepayment is voluntary or mandatory, including a prepayment upon acceleration, the Borrower shall comply with all applicable terms and provisions of the FFB Note Purchase Agreement.

 

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(b)           All prepayments shall be allocated first, to any Late Charge, next, to any associated make-whole premiums, next, to accrued and unpaid interest on the DOE Guaranteed Loan, and next, to principal on the DOE Guaranteed Loan, which shall be applied first to prepay in full one or more Advances selected by the Borrower, and if necessary, to prepay in part an Advance selected by the Borrower, which partial prepayment shall be applied to installments of principal of such selected Advance in the inverse order of maturity, pursuant to the DOE Credit Facility Documents, in each case such prepayment shall be allocated to principal in the maximum possible amount when taken together with any associated make-whole premiums or discounts (it being understood that (x) if there is an associated premium, the principal amount prepaid would be less than the prepayment amount, and (y) if there is an associated discount, the principal amount prepaid would be greater than the prepayment amount).

 

(c)           All prepayments of the DOE Guaranteed Loan shall be applied in accordance with the DOE Credit Facility Documents.

 

(d)           The Borrower may not reborrow any principal amount of the DOE Guaranteed Loan that is prepaid.

 

3.4.2.       Voluntary Prepayments.

 

(a)           Without the consent of DOE, the Borrower may not prepay the DOE Guaranteed Loan in full or in part prior to the end of the Availability Period. Any prepayment in full or in part with the consent of DOE prior to the end of the Availability Period shall be subject to any applicable prepayment premiums, discounts, charges or other amounts as may be required by the DOE Credit Facility Documents.

 

(b)           After the end of the Availability Period, the Borrower may prepay all or any part of the principal amount of the DOE Guaranteed Loan upon prior written notice submitted by the Borrower to the Credit Parties not later than the fifth (5th) Business Day prior to the Intended Prepayment Date, and satisfaction of the following conditions:

 

(i)            compliance with any restrictions contained in the DOE Credit Facility Documents, including any minimum prepayment amount requirement of the DOE Credit Facility Documents; and

 

(ii)           payment of all accrued and unpaid interest on such principal amount, and any other fees and Periodic Expenses then payable, including any prepayment premiums, or other amounts as may be required under the DOE Credit Facility Documents.

 

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3.4.3.       Mandatory Prepayments.

 

(a)           The Borrower shall be required to make, or cause to be made, as applicable, mandatory prepayments of the DOE Guaranteed Loan upon the occurrence of any of the following and in amounts set forth in this Section 3.4.3:

 

(i)            upon the receipt by the Borrower of performance liquidated damages pursuant to any Project Document in excess of the amounts needed, as determined by DOE in consultation with the Lender’s Engineer (as appropriate), to pay corresponding performance liquidated damages payable to a Project Participant who is not a First Wind Entity or an Affiliate thereof, the excess amount of such performance liquidated damages;

 

(ii)           upon the receipt by the Borrower of Loss Proceeds in an amount that exceeds by more than $10,000 the amount of such Loss Proceeds used or to be used to repair or restore the Project in accordance with Section 6.26, such amount;

 

(iii)          upon the payment of any amounts to the Borrower in respect of the termination or repudiation of any Project Document or in respect of any damages paid to the Borrower as a result of a breach of any such Project Document (in the case of damages, in excess of the amount applied in remedying the relevant breach and, in the case of termination or repudiation, in excess of any reasonable out-of-pocket costs incurred by the Borrower in replacing such Project Document and approved by DOE), such amount;

 

(iv)          upon any sale of any assets no longer used or useful in the operation of the Project in excess of $500,000 in a single transaction or a series of related transactions, in an amount equal to the proceeds of such sales unless applied or to be applied to the acquisition of replacement assets;

 

(v)           promptly upon the receipt of Cash Grant proceeds, an amount equal to 79% of the Cash Grant awarded in respect of the Project;

 

(vi)          on the Quarterly Payment Date after the failure by Borrower to comply with the Debt Service Coverage Ratio requirements set forth in Section 7.14, an amount, which after giving effect to such prepayment, would achieve compliance with such Debt Service Coverage Ratio requirements from and after such date;

 

(vii)         on the Guaranteed Operational Completion Date, if Operational Completion has not been achieved, the Borrower shall cause the Sponsor, pursuant to the Sponsor Guarantee, to pay an amount equal to $10,000,000 less any amounts previously paid by the Sponsor pursuant to the Sponsor Guarantee;

 

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(viii)        on the Guaranteed Project Completion Date, if Project Completion has not been achieved, the Borrower shall cause the Sponsor, pursuant to the Sponsor Guarantee, to pay an amount equal to the remaining amounts available under the Sponsor Guarantee;

 

(ix)           on any date on which a Restricted Payment is allowed to be made in accordance with Section 7.10, the Excess Cash Prepayment Amount; and

 

(x)            if no Restricted Payments were allowed to be made in accordance with Section 7.10 within the previous twenty-four (24) months, an amount equal to all funds on deposit at such time in the Equity Distribution Account.

 

(b)           Any mandatory prepayments of the DOE Guaranteed Loan shall be applied, and shall be subject to the terms and conditions, as set forth in the DOE Credit Facility Documents.

 

3.5.         Payment of DOE Credit Facility Fees.

 

(a)           Borrower shall pay (i) to DOE on the Financial Closing Date, a Loan Facility Fee in the amount of $938,647.74, and (ii) to FFB, the fees payable to FFB from time to time in accordance with the requirements of the DOE Credit Facility Documents.

 

(b)           Borrower shall pay annually in advance to DOE, for its own account, the DOE Maintenance Fee each year in advance, commencing on the Financial Closing Date and then on each anniversary thereof.

 

(c)           Borrower shall pay a DOE Modification Fee, if any, at the time reasonably determined by DOE.

 

(d)           All DOE Credit Facility Fees shall be paid on the dates due, in immediately available funds in Dollars, to DOE. Once paid, the DOE Credit Facility Fees shall not be refundable under any circumstances.

 

(e)           All amounts payable to DOE under this Section 3.5 shall be paid by wire transfer to the following account, or to such other account as may be specified by DOE from time to time:

 

U.S. Treasury Department

ABA No. 0210-3000-4 TREASNYC/CTR/BNF=89000001

OBI=LGPO Kahuku Wind Power Loan No. 1103

 

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3.6.         Evidence of Debt.

 

(a)           The FFB shall maintain or cause to be maintained, in accordance with its usual practice, internal records evidencing the amounts from time to time lent by and owing to it under the DOE Credit Facility Documents and each of the payments from time to time made in respect thereof.

 

(b)           The Loan Servicer shall maintain, in accordance with its usual practice, internal records evidencing the amounts from time to time (i) advanced by FFB under the FFB Note Purchase Agreement, and (ii) paid by DOE with respect to the DOE Guarantee and, in each case, each of the payments made from time to time in respect thereof.

 

(c)           Except as otherwise provided in any Loan Document, the entries made in the internal records maintained by or on behalf of each of the Credit Parties, respectively, pursuant to clauses (a) and (b), above shall, absent manifest error, constitute prima facie evidence of the existence and amount of Secured Obligations of the Borrower as therein recorded and shall be conclusive absent manifest error. Notwithstanding anything to the contrary, in the event of any conflict among the records of the Credit Parties, the records of the FFB shall prevail.

 

ARTICLE 4
CONDITIONS PRECEDENT

 

4.1.         Conditions Precedent to Financial Closing Date.

 

The occurrence of the Financial Closing Date is subject to the prior satisfaction (or waiver in writing), as determined by (x) in all cases, DOE, (y) with respect to any documents or instruments addressed to FFB or to which FFB is party, FFB, and (z) with respect to Collateral Agent, as specifically set forth in this Article 4, each in its sole discretion, of each of the following conditions precedent (the “Initial Conditions Precedent”) as of the Financial Closing Date.

 

4.1.1.       Loan Documents.

 

DOE shall have received fully executed originals in sufficient counterparts for each Credit Party of each of the following documents, each of which shall be in form and substance satisfactory to DOE and the Collateral Agent, as applicable:

 

(a)           Common Agreement.  This Common Agreement.

 

(b)           DOE Credit Facility Documents.  Each of the following documents and all other contracts and documents required in connection with the DOE Guaranteed Loan (the “DOE Credit Facility Documents”):

 

(i)            the FFB Program Financing Agreement;

 

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(ii)           the FFB Note Purchase Agreement;

 

(iii)          the FFB Promissory Note;

 

(iv)          the DOE Guarantee;

 

(v)           the Collateral Agency Agreement; and

 

(vi)          all other documents, certificates and instruments required to be delivered in connection with any of the foregoing documents.

 

(c)           Equity Documents.  Each of the following documents and all other contracts and documents required in connection with the Equity Commitments (the “Equity Documents”):

 

(i)            the Equity Funding Agreement;

 

(ii)           the Sponsor Support Agreement; and

 

(iii)          the Sponsor Guarantee.

 

(d)           Security Documents.  Each of the following documents and all other contracts and documents entered into prior to, on, or after the Initial Advance Date that provide any Lien, charge or security interest to the Secured Parties (or any of them) to secure the Secured Obligations (the “Security Documents”):

 

(i)            Asset Pledge Documents.  Each of the following documents and all other contracts and documents that provide any Lien, charge or security interest to the Secured Parties (or any of them) on the assets of the Borrower to secure the Secured Obligations (the “Asset Pledge Documents”):

 

(A)          the Deed of Trust;

 

(B)           the Security Agreement;

 

(C)           the Account Control Agreements; and

 

(D)          agreements pledging all other real or personal property interests of the Borrower, including all leasehold or other property interests relating to the Project, and all related fixtures, easements, rights-of-way and licenses.

 

(ii)           Equity Pledge Documents.  The Equity Pledge Agreement and each of the other documents, pledge agreements and related documents, pursuant to which the owners thereof will pledge to the Collateral Agent for the

 

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benefit of the Secured Parties all of their respective right, title and interest in the Pledged Equity Interests (the “Equity Pledge. Documents”); and

 

(iii)          Direct Agreements.  Each of the following agreements and any other agreement consenting to the assignment to the Secured Parties of the Borrower’s interest in any Project Documents (the “Direct Agreements”), together with customary legal opinions and officer’s certificates in connection therewith:

 

(A)          the Consent and Direct Agreement among the Project Construction Contractor, the Borrower and the Collateral Agent;

 

(B)           the Consent and Direct Agreement among the Battery Supplier, the Borrower and the Collateral Agent;

 

(C)           the Consent and Direct Agreement among the Turbine Supplier, the Borrower and the Collateral Agent;

 

(D)          the Consent and Direct Agreement among the Project Operator, the Borrower and the Collateral Agent;

 

(E)           the Consent and Direct Agreement among the Turbine Operator, the Borrower and the Collateral Agent;

 

(F)           the Consent and Direct Agreement among the Battery Operator, the Borrower and the Collateral Agent;

 

(G)           the Consent and Direct Agreement among the Output Purchaser, the Borrower and the Collateral Agent; and

 

(H)          any other Consent and Direct Agreement entered into from time to time after the Financial Closing Date among a Project Participant, the Borrower and the Collateral Agent.

 

(e)           Subordination Agreements.  Each Subordination Agreement required by the DOE.

 

(f)            Other Documents.  Any other documents and agreements as may be required under the Program Requirements or as otherwise reasonably required by DOE.

 

4.1.2.       Project Documents.

 

DOE shall have received a copy of a fully executed original of each of the following documents, each of which shall be in form and substance satisfactory to DOE, and certified by the Borrower that (x) such copy is a true, correct, and complete copy of such document (including all schedules, exhibits, attachments,

 

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supplements and amendments thereto and any related protocols or side letters), (y) such document has been duly executed and delivered by the parties thereto and is in full force and effect, and (z) to the Borrower’s knowledge, no party to such document is, or but for the passage of time or giving of notice or both will be, in breach of any obligation thereunder:

 

(a)           Land Documents.  Each of the contracts and other documents evidencing the Borrower’s ownership or control of land and rights to land for the Project, all easements, licenses, and covenants, conditions and restrictions in connection with the Project Site, and any and all other documents affecting an interest in or right to use the Project Site (the “Land Documents”).

 

(b)           Construction Documents.  Each of the following documents and all other contracts required for construction, procurement, installation, and improvement of land, buildings, equipment, and manufacturing facilities for the Project, including related material subcontracts entered into after the Financial Closing Date, as in effect from time to time (the “Construction Documents”):

 

(i)            the Engineering Agreements;

 

(ii)           an assignment of each Engineering Agreement to the Borrower;

 

(iii)          the Project Construction Contract;

 

(iv)          the Turbine Supply Documents;

 

(v)           the Battery Purchase Agreement;

 

(vi)          the Transformer Agreement; and

 

(vii)         the Equipment Purchase Agreement, until such time as Borrower’s rights and interests under such agreement are transferred to the Output Purchaser in accordance with the terms of the Power Purchase Agreement.

 

(c)           Operating Documents.  Each of the following documents and all other contracts required for operation and maintenance of the Project (the “Operating Documents”):

 

(i)            the Power Purchase Agreement;

 

(ii)           the Project O&M Agreement;

 

(iii)          the Battery O&M Agreement;

 

(iv)          the Turbine O&M Agreement;

 

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(v)           the Turbine Warranty Agreement; and

 

(vi)          the Administrative Services Agreement.

 

4.1.3.       Advance Schedule.

 

At least ten (10) Business Days prior to the Financial Closing Date (or such shorter period as may be satisfactory to DOE), DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, a copy of the Advance Schedule, certified by the Borrower, the Sponsor and the Lender’s Engineer, which shall be, as of the date specified in the Borrower Certificate, the Borrower’s good faith estimate in all material respects, based on all facts and circumstances then existing and known to the Borrower and the Sponsor, of the timing and amount of proposed Advances and Equity Contributions for the Project (showing the total Advances expected in each calendar month).

 

4.1.4. Financial Plan; Base Case Projections; Project Milestone Schedule and Construction Budget.

 

The Lender’s Engineer and DOE shall have received, unless otherwise set forth below, at least ten (10) Business Days prior to the Financial Closing Date (or such shorter period as may be satisfactory to DOE) the following items, each in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, and certified by the Borrower, the Sponsor and the Lender’s Engineer, which shall be, as of the date specified in the Borrower Certificate, the Borrower’s reasonable estimate of the information contained therein:

 

(i)            the Project Plans, certified by the Lender’s Engineer;

 

(ii)           an updated Financial Plan, acceptable to DOE, together with evidence that the DOE Credit Facility Commitment, when combined with other funds committed to the Project, including the Base Equity, will be available and sufficient to carry out the Project and pay Total Project Costs (including Debt Service through Operational Completion and required funding of reserve accounts);

 

(iii)          the Base Case Projections, including a computer file containing the Base Case Projections and the underlying models and assumptions and explanations thereto;

 

(iv)          the Project Milestone Schedule;

 

(v)           the Construction Budget; and

 

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(vi)          the Lender’s Engineer and DOE shall have received and approved, at least ten (10) Business Days prior to the Financial Closing Date, a detailed description, with supporting documents as reasonably requested, of Development Costs incurred to date and a Development Costs Statement summarizing those costs which the Borrower seeks credit as Approved Pre-Closing Equity Credit to be applied toward Base Equity and which are to be reviewed by the Lender’s Engineer.

 

4.1.5.       Financial Statements.

 

At least ten (10) Business Days prior to the Financial Closing Date (or such shorter period as may be satisfactory to DOE, DOE shall have received, in form and substance satisfactory to DOE, the most recent audited Financial Statements of the Sponsor and the most recent unaudited Financial Statements, from each of the Borrower, Kahuku Holdings and the Sponsor, together in each case with a corresponding Financial Officer Certificate.

 

4.1.6.       Update of Conditional Commitment.

 

Either (i) DOE shall have determined that no material changes are proposed with respect to the terms and conditions provided in the term sheet, or (ii) at least thirty (30) days prior to the requested Financial Closing Date, Borrower shall have provided to DOE, in form and substance satisfactory to DOE, a written summary of such changes.

 

4.1.7.       Update of Credit Rating.

 

DOE shall have received, in form and substance satisfactory to DOE, a credit rating of the Borrower from the Rating Agency, dated at least thirty (30) days prior to the Financial Closing Date, in accordance with the Applicable Regulations.

 

4.1.8.       Coverage Ratios.

 

DOE shall have received, in form and substance satisfactory to DOE, evidence that the Base Case Projections delivered pursuant to Section 4.1.4 indicate throughout the term of the DOE Credit Facility Documents a minimum annual Debt Service Coverage Ratio of 1.15 to 1.00 for the period after the Project Completion Date is expected to be achieved and until repayment in full of the DOE Guaranteed Loan.

 

4.1.9.       Pre-Closing Equity; No Unapproved Charges for Budgeted Contingencies.

 

DOE shall have received the following items, each in form and substance satisfactory to DOE in consultation with the Lender’s Engineer:

 

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(i)            the Development Costs Statement, certified by the Lender’s Engineer;

 

(ii)           certification from the Borrower and the Lender’s Engineer that the amounts reflected in the Approved Pre-Closing Equity Credit have been or are to be applied in accordance with the Construction Budget only for Eligible Base Project Costs, together with a description of amounts in the Construction Budget that have been applied to Ineligible Base Project Costs; and

 

(iii)          certification from the Borrower and the Lender’s Engineer that no changes have been made to the line item for Contingencies in the Construction Budget, except for Approved Construction Changes.

 

4.1.10.     Consents and Approvals.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) certification from the Borrower, together with such other evidence as DOE may request, that all Governmental Approvals and other Required Consents listed on Schedule 5.10 (except those identified on Schedule 5.10 as to be obtained at a later stage in the development of the Project), each in form and substance satisfactory to DOE, have been duly obtained and are not subject to any waiting period or appeal, and (ii) a copy of each such Governmental Approval or other Required Consent, certified by the Borrower as being true and complete.

 

4.1.11.     Reports.

 

DOE shall have received the Lender’s Engineer Report, Independent Wind Resource Consultant Report and the Interconnection Requirements Study, each in form and substance satisfactory to DOE.

 

4.1.12.     Consultants’ and Advisors’ Certificates.

 

DOE shall have received, in form and substance satisfactory to DOE, the following certificates, each dated the Financial Closing Date:

 

(i)            Lender’s Engineer Certificate.  A Lender’s Engineer Certificate regarding the matters required to be certified by it as set forth in this Section 4.1 and such other matters specified in the form attached as Exhibit Dl;

 

(ii)           Insurance Advisor Certificate.  An Insurance Advisor Certificate regarding the scope of coverage proposed of the Required Insurance that has been obtained by the Borrower in the form attached as Exhibit Fl; and

 

(iii)          Plans and Budgets; Accountant Letter.  Each of (i) a certification from the Lender’s Engineer as to the Financial Plan and the Construction Budget, (ii) a certification from the Borrower relating to the tax

 

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assumptions in the Base Case Projections, and (iii) a certification from the Lender’s Engineer as to its independent review of the technical inputs included in the Base Case Projections.

 

4.1.13.     Fee Arrangements for Independent Consultants.

 

DOE shall have received, in form and substance satisfactory to DOE, evidence that the Periodic Expenses of any Independent Consultants incurred and invoiced prior to the Financial Closing Date (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements.

 

4.1.14.     Construction Contract Price.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, certification from the Borrower and the Lender’s Engineer that the price set forth in each Construction Document has not been amended, changed or modified from the price as of the Financial Closing Date, except for Approved Construction Changes.

 

4.1.15.     Notice to Proceed; Conditions Precedent to Construction Contracts.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, certification from the Borrower and the Lender’s Engineer that (i) all conditions precedent to effectiveness of, or the issuance of the Construction Notice to Proceed or performance of obligations under, the Project Construction Contract, have been satisfied or waived, or will be concurrently with the initial Advance, and (ii) a Construction Notice to Proceed under the Project Construction Contract has been issued, or will be issued concurrently with the initial Advance, in either event that specifies that construction work shall commence not later than thirty (30) days after the initial Advance.

 

4.1.16.     Market Study.

 

DOE shall have received a report from DOE’s marketing advisor in form and substance satisfactory to DOE:

 

4.1.17.     Security Interests.

 

(a)           Security Interests.  DOE shall have received, in form and substance satisfactory to DOE and the Collateral Agent, evidence that all security interests in the Collateral Security intended to be created by the Security Documents have been or will be created and, where appropriate, registered or otherwise perfected to create a first priority perfected security interest and Lien, subject only to

 

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Permitted Liens, over the Collateral Security in favor of the Collateral Agent, as applicable. Subject only to Permitted Liens, each such Lien (i) to the extent it arises or attaches under the Uniform Commercial Code of any jurisdiction in the United States, shall be valid and enforceable and shall constitute a first priority perfected security interest, and (ii) in all other cases, shall be enforceable against the Borrower, any subsequent lienor (including a judgment lienor), any junior lienor, or any transferee for or not for value, in bulk, by operation of law, for the benefit of creditors, or otherwise.

 

(b)           Filings.  The Collateral Agent shall have received, in form and substance satisfactory to DOE and the Collateral Agent, that (i) each of the Security Documents has been or will be duly filed and registered or recorded in every jurisdiction in which such filing and registration or recording is necessary to make valid and effective the Liens intended to be created thereby and the rights of the Secured Parties thereunder, (ii) all fees and duties in connection with such registration (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements.

 

(c)           Collateral Agent Certificate.  DOE shall have received, in form and substance satisfactory to DOE, a Collateral Agent Certificate as to all matters as are required to be certified by the Collateral Agent pursuant to this Section 4.1.

 

4.1.18.     Borrower Certificate; Kahuku Holdings Certificate; Sponsor Certificate;  Project Operator Certificate; Solvency Certificate.

 

DOE shall have received (i) a Borrower Certificate regarding the matters required to be certified by it as set forth in this Section 4.1 and such other certifications as may be required to be made to the Credit Parties by the Borrower as of the Financial Closing Date under the DOE Credit Facility Documents, (ii) a Kahuku Holdings Certificate regarding the matters required to be certified by it as set forth in this Section 4.1 and such other certifications as may be required to made to the Credit Parties by Kahuku Holdings as of the Financial Closing Date under the DOE Credit Facility Documents, (iii) a Sponsor Certificate regarding the matters required to be certified by it as set forth in this Section 4.1 and such other certifications as may be required to made to the Credit Parties by the Sponsor as of the Financial Closing Date under the DOE Credit Facility Documents, (iv) a Project Operator Certificate regarding the matters required to be certified by it as set forth in this Section 4.1 and such other certifications as may be required to made to the Credit Parties by the Project Operator as of the Financial Closing Date under the DOE Credit Facility Documents, and (v) the Solvency Certificate.

 

4.1.19.     Legal Opinions.

 

DOE and the Collateral Agent shall have received legal opinions from each of Chadbourne & Parke LLP, Cades Schutte LLP, Carlsmith Ball LLP, Morgan

 

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Lewis & Bockius LLP and Law Offices of Kim McCormick, dated the Financial Closing Date and in form and substance satisfactory to DOE, with respect to the laws of the jurisdictions governing the Transaction Documents to which each of the Borrower, Kahuku Holdings, the Sponsor and the Project Operator is a party and the laws of the jurisdictions of organization of the Borrower, Kahuku Holdings, the Sponsor and the Project Operator. Such legal opinions shall be in customary form and include, as applicable and without limitation, the following (i) due authorization, execution, delivery, and enforceability of the Transaction Documents to which such First Wind Entity is a party, (ii) creation and perfection of security interests, (iii) receipt of all Governmental Approvals necessary to (1) construct and operate the Project, (2) enter into financing arrangements with respect to the Project, and (3) enter into the applicable Transaction Documents, and that such Governmental Approvals are in full force and effect and all applicable appeal periods have expired, (iv) the DOE will not be regulated as an electric corporation or public utility under the United States or Hawaii law solely as a result of entering into Transaction Documents, (v) absence of conflicts with law, agreements or organizational documents, and absence of litigation, and (vi) non-consolidation matters.

 

4.1.20.     Taxes; Costs and Expenses.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Borrower, and such other evidence as DOE may reasonably request, that all required Taxes, all Periodic Expenses, and all recordation and other costs, fees and Periodic Expenses due in connection with the execution, delivery, filing, registration, or performance of the Transaction Documents or the perfection of the security interests in the Collateral Security (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements.

 

4.1.21.     Evidence of Insurance.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Borrower and the Insurance Advisor, certificates from insurers, and such other evidence as DOE may reasonably request (i) that insurance coverage for the Project satisfies the requirements for Required Insurance as set forth on Schedule 6.3(b), and (ii) that the applicable insurance policies are in full force and effect without default.

 

4.1.22.     Third-Party Materials Supply Agreements.

 

DOE shall have received copies of each of the Third-Party Materials Supply Agreements in effect on the Financial Closing Date, if any, certified by the Borrower as being true, correct and complete as of the Financial Closing Date.

 

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4.1.23.     Project Accounts.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Collateral Agent that each of the Project Accounts has been established in accordance with the Collateral Agency Agreement.

 

4.1.24.     Lobbying Certification.

 

DOE shall have received, in form and substance satisfactory to DOE, evidence that the Borrower has provided a Standard Form-LLL “Disclosure Form to Report Lobbying” as required.

 

4.1.25.     Title to Project Site.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) evidence of the Borrower’s ownership of unencumbered fee title (subject only to Permitted Liens), under the relevant laws of Hawaii of the owned portion of the Project Site as are necessary for the development of the Project, (ii) the ALTA Survey with respect to the owned portion of the Project Site, and (iii) an ALTA Deed of Trust Loan Policy (or similar policy form) issued by the Title Company, with such coinsurers or reinsurers as may be reasonably acceptable to DOE, in the aggregate amount of not less than $7,700,000 insuring as of the Financial Closing Date that the Deed of Trust creates a first and prior Lien on the owned portion of the Project Site subject only to Permitted Liens.

 

4.1.26.     Environmental.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) environmental assessments for the Project Site, (ii) a Finding of No Significant Impact with respect to the Project Site, and (iii) evidence of satisfaction of any additional environmental requirements (including required mitigations) in accordance with Environmental Laws, including, without limitation, all required National Environmental Policy Act documentation.

 

4.1.27.     Earthquake Risk Assessment.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, (i) a geotechnical report prepared by an independent geologist satisfactory to DOE setting forth an acceptable assessment of the earthquake risk for the Project Site and any other property where the Project will be located and recommendations for mitigation of earthquake risk, and (ii) certification from the Borrower and the Lender’s Engineer, together with such other evidence as DOE may request, that such recommendations for mitigation of earthquake risk have been adequately addressed in the Construction Documents.

 

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4.1.28.     Utility Services.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, together with such other evidence as DOE may request, certification from the Borrower and the Lender’s Engineer, that (i) arrangements reflected in the Project Milestone Schedule and the Construction Budget have been made under the Construction Documents or are otherwise available to the extent required in Section 5.24 for the provision of all services, materials and utilities necessary for the construction, startup and commissioning of the Project, and (ii) arrangements reflected in the Base Case Projections have been made or can be made under the Operating Documents to the extent then appropriate in the determination of DOE or are otherwise available to the extent required in Section 5.24 for the provision of all services, materials and utilities necessary for the operation and maintenance of the Project as contemplated by the Project Documents.

 

4.1.29.     Conditions Precedent in DOE Credit Facility Documents.

 

Each condition precedent to the initial Advance under the DOE Credit Facility Documents shall have been satisfied in the sole determination of each relevant Credit Party thereto.

 

4.1.30.     Conditions Precedent in Transaction Documents.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Borrower that to the Borrower’s Knowledge all conditions precedent to the obligations of any party under any Transaction Document to be performed as of the Financial Closing Date have been satisfied or waived.

 

4.1.31.     DOE Requirements.

 

All DOE Requirements required to have been satisfied as of the Financial Closing Date shall have been satisfied.

 

4.1.32.     Confirmation of Non-Disclosure and Assignment of Inventions Agreements.

 

DOE shall have received, in form and substance satisfactory to DOE, together with such other evidence as DOE may request, certification from the Borrower and the Sponsor of the existence of valid and binding non-disclosure and assignment of invention agreements with all employees of the Borrower.

 

4.1.33.     No Litigation.

 

There shall be no pending or threatened (in writing) Action (i) that relates to the Project or to any transaction contemplated by any of the Transaction Documents

 

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or (ii) to which the Borrower, the Sponsor or, to the Borrower’s Knowledge, any other Major Project Participant is a party, that (in the case of this clause (ii) only), either singly or in the aggregate, has, or could reasonably be expected to have, a Material Adverse Effect. DOE shall have received, in form and substance satisfactory to DOE, all such information as it shall have requested in respect of any pending or threatened Action (i) that relates to the Project or to any transactions contemplated by any of the Transaction Documents or (ii) to which the Borrower, the Sponsor or any other Major Project Participant is a party.

 

4.1.34.     Funding of Base Equity Amount; Equity Commitments.

 

DOE shall have received evidence in form and substance satisfactory to DOE and the Collateral Agent that an amount equal to (x) the Base Equity Commitment, less (y) the Approved Pre-Closing Equity Credit, has been deposited in the Equity Contribution Account and that all Equity Commitments are in full force and effect.

 

4.1.35.     Due Diligence Review.

 

DOE shall have confirmed to the Borrower that it has completed its due diligence review of the Project and all other matters related thereto and that the results thereof are satisfactory to DOE.

 

4.1.36.     Review and Payment of Credit Subsidy.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation (i) from OMB that OMB has reviewed and approved DOE’s calculation of the Credit Subsidy Cost for the DOE Guarantee as of the Financial Closing Date, and (ii) from the U.S. Treasury Department that DOE has made payment in full of the Credit Subsidy Cost in accordance with the Program Requirements.

 

4.1.37.     Intellectual Property.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation that the Borrower owns or holds a valid and enforceable license or right to use all Technology and Intellectual Property Rights necessary for the construction and operation of the Project for the term of the DOE Credit Facility Documents (which includes, without limitation, all Intellectual Property Rights granted or conferred under the Construction Documents).

 

4.1.38.     Payment and Performance Bonds.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation that any payment and performance bonds required to be issued under any Project Construction Contract are in full force and effect.

 

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4.1.39.     No Judgment Liens.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation that that the Borrower does not have a judgment lien against any of its property for a debt owed to the United States of America.

 

4.1.40.     USA Patriot Act.

 

DOE shall have received at least ten (10) Business Days prior to the Financial Closing Date, all documentation and other information required by financial institutions in comparable transactions under applicable “know-your-customer” and anti-money laundering rules and regulations, including the USA Patriot Act.

 

4.1.41.     Davis-Bacon Compliance.

 

DOE shall have received, in form and substance satisfactory to DOE, a written certification from Borrower, as of the Financial Closing Date, that the Borrower has timely complied in all material respects with the requirements set forth in Section 6.30 and Exhibit A4 with respect to the Davis-Bacon Act.

 

4.1.42.     OMB Certification.

 

OMB shall have certified in writing (in form and substance satisfactory to DOE) that the DOE Credit Facility Documents and the Project comply with the provisions of the Omnibus Appropriations Act, 2009, P.L. No. 111-8, Division C, Title III, as amended by Section 408 of the Supplemental Appropriations Act, 2009, P.L. No. 111-32.

 

4.1.43.     Turbine Supplier Report.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Lender’s Engineer that the Turbine Supplier has successfully implemented all known corrective actions with respect to the turbines that are the subject of the Turbine Supply Documents.

 

4.2.         Quarterly Conditions Precedent to Advances.

 

The obligation of FFB to make, and DOE to guarantee, each Advance (including the initial Advance) is subject to the prior satisfaction (or waiver in writing) as determined by DOE, in its sole discretion, of each of the following conditions precedent (the “Quarterly Conditions  Precedent”) as of a date (the “Quarterly Approval Date”) not more than three (3) months prior to the Requested Advance Date (which Quarterly Approval Date shall be the date falling three (3) months after the Financial Closing Date and each date falling three (3) months thereafter or, if such date is not a Business Day, then in each case, the first Business Day thereafter):

 

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4.2.1.       Certification of Updated Advance Schedule.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer:

 

(i)            certification from the Borrower and the Lender’s Engineer that the updated Advance Schedule provided by the Borrower, including the estimates set forth therein, of the timing and amount of Advances required in connection with the construction and financing of the Project is consistent with the Construction Budget and the Project Milestone Schedule;

 

(ii)           certification from the Borrower and the Lender’s Engineer that the proceeds of all Advances made since the Financial Closing Date (for the first Quarterly Approval Date) or the previous Quarterly Approval Date (for all other Quarterly Approval Dates) have been applied as set forth in the corresponding FFB Advance Requests or as otherwise approved by DOE; and

 

(iii)          certification from the Borrower that the proceeds of all Advances to be made with respect to the updated Advance Schedule for the upcoming three-month period will be needed for Eligible Project Costs that have been incurred or by the Requested Advance Date will be incurred, together with a description in reasonable detail of such Eligible Project Costs, and that the cumulative percentage of Eligible Project Costs that are funded by the proceeds of all Advances made since the Financial Closing Date does not violate the Debt-to-Equity Contribution Ratio requirement of 79:21.

 

4.2.2.       Construction Progress Report.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer:

 

(a)           the most recent Construction Progress Report, certified by the Borrower and the Lender’s Engineer as being accurate and complete in all material respects based upon the Borrower’s good faith reasonable estimates of the information contained therein with respect to the following:

 

(i)            construction of the Project is proceeding in accordance with the Project Milestone Schedule and the Construction Budget, or if construction is not proceeding in accordance with the Project Milestone Schedule and the Construction Budget, then the Construction Progress Report shall describe any variances and state that the variances could not reasonably be expected to have a Material Adverse Effect;

 

(ii)           the Project is expected to achieve Operational Completion by the Anticipated Operational Completion Date; and

 

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(iii)          Total Funding Available is sufficient to pay all remaining Total Project Costs (including Debt Service through Operational Completion, DOE Credit Facility Fees, Periodic Expenses, identified Cost Overruns, and required funding of reserve accounts);

 

(iv)          evidence that as of the date of such Construction Progress Report (A) each Construction Contractor, any sub-contractor, and each Operator shall have irrevocably waived and released all Liens, statutory or otherwise, that any of them may have or acquire on the Collateral Security with respect to work completed prior to the last submission for payment; and (B) all unpaid balances that are due or unsettled claims with any Construction Contractor or any sub-contractor, if any, have been adequately paid and that those being contested or negotiated in good faith are provisioned to the reasonable satisfaction of DOE; and

 

(b)           certification from the Borrower and the Lender’s Engineer that, as of the Quarterly Approval Date:

 

(i)            the Borrower is in material compliance with all Environmental Laws and any other applicable environmental requirements in respect of the Project;

 

(ii)           the Borrower is in material compliance with all Governmental Approvals;

 

(iii)          there is no reason to believe that anything is incorrect or misleading in any material respect in the most recent Construction Progress Report; and

 

(iv)          nothing has occurred since the date of the most recent Construction Progress Report or the date of the Lender’s Engineer’s most recent site visit, whichever is later, that could reasonably be expected to prevent construction of the Project and payment of Total Project Costs (including Debt Service through Operational Completion and required funding of reserve accounts) in accordance with the Project Milestone Schedule and the Construction Budget, together with the resources available to the Borrower from the Overrun Equity Commitment and, with DOE’s consent, as provided in the Sponsor Guarantee.

 

4.2.3.       Fees and Expenses.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation that all DOE Credit Facility Fees and Periodic Expenses then due (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements.

 

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4.2.4.       Consents and Approvals.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) certification from the Borrower, together with such other evidence as DOE may reasonably request or as may be required under the Transaction Documents, that all consents and approvals of third Persons as may be required in connection with the proposed Advances and all Governmental Approvals required as of the Quarterly Approval Date have been duly obtained and are in full force and effect and are not under appeal or subject to other proceedings or unsatisfied conditions that could reasonably be expected to result in a material modification or cancellation thereof, and (ii) copies of all material Governmental Approvals not previously delivered, certified by the Borrower as being true and complete.

 

4.2.5.       Insurance.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) certification from the Borrower and the Insurance Advisor that all Required Insurance is in place, in good standing and in full force and all premiums due thereon (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements, and (ii) certificates or policies with respect to any additional renewal or substitute insurance obtained by the Borrower since the previous Quarterly Approval Date, designating the Collateral Agent as loss payee and additional insured, as appropriate, certified by the Borrower and the Insurance Advisor as being true and complete.

 

4.2.6.       Proceedings and Other Documents.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) certification from the Borrower that all corporate and similar proceedings concluded since the last Quarterly Approval Date are in proper form and substance, (ii) original counterparts or copies certified by the Borrower of all Additional Project Documents entered into since the last Quarterly Approval Date, and (iii) such other evidence as DOE may reasonably request in order to evidence the consummation of the transactions contemplated thereby and compliance with the Quarterly Conditions Precedent.

 

4.2.7.       Representations and Warranties; No Default; Program Requirements.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Borrower in the Master Advance Notice, and such other evidence that DOE may reasonably request, that (i) the representations and warranties of the Borrower in the Loan Documents (other than those that speak only as to an earlier date) are true and correct in all material respects, (ii) no Event of Default or

 

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Potential Default has occurred and is continuing, and (iii) the Borrower is in compliance with the Program Requirements.

 

4.2.8.       No Change in Circumstances.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, certification from the Borrower that no event has occurred since the date of this Agreement (for Advances prior to the first Quarterly Approval Date) and, thereafter, since the previous Quarterly Approval Date, or could reasonably be expected to occur, with respect to the Project or any Project Participant that has had or could reasonably be expected to have a Material Adverse Effect.

 

4.2.9.       Performance Metrics.

 

DOE shall have received, in form and substance satisfactory to DOE in consultation with the Lender’s Engineer, certification from the Borrower and the Lender’s Engineer that the Borrower has achieved the targets provided in Project Milestone Schedule applicable to such Quarterly Approval Date.

 

4.2.10.     Certificates.

 

DOE shall have received, in form and substance satisfactory to DOE:

 

(i)            Borrower Certificate.  A Borrower Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit C2;

 

(ii)           Kahuku Holdings Certificate.  A Kahuku Holdings Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit E4;

 

(iii)          Sponsor Certificate.  A Sponsor Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit E2;

 

(iv)          Lender’s Engineer Certificate.  A Lender’s Engineer Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit D2;

 

(v)           Insurance Advisor Certificate.  An Insurance Advisor Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit F2; and

 

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(vi)          Collateral Agent Certificate.  A Collateral Agent Certificate regarding the matters required to be certified by it as set forth in this Section 4.2 in the form attached as Exhibit G2.

 

4.2.11.     Construction Budget.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Borrower and the Lender’s Engineer that (i) there have been no changes to the Construction Budget since the previous Quarterly Approval Date, except for Approved Construction Changes, and (ii) the aggregate amounts expended for each type of Project Cost do not exceed the aggregate amounts budgeted for such costs in the Construction Budget, except for Approved Construction Changes.

 

4.2.12.     Equity Contributions.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from Kahuku Holdings, the Sponsor and the Collateral Agent, and such other evidence as DOE may reasonably request, that the amount of Base Equity required with respect to Advances made as of the date of the updated Advance Schedule has been funded through allocations of the Approved Pre-Closing Equity Credit or amounts transferred from the Equity Contribution Account as required under the Equity Funding Agreement.

 

4.2.13.     Base Case Projections.

 

DOE shall have received, in form and substance satisfactory to DOE, updated Base Case Projections.

 

4.3.          Conditions Precedent to Each Advance.

 

The obligation of FFB to make, and DOE to guarantee, each Advance (including the initial Advance) is subject to the prior satisfaction (or waiver in writing) as determined by DOE, in its sole discretion of each of the following conditions precedent (the “Advance Conditions Precedent”) as of the date of the relevant Master Advance Notice and as of the Advance Date:

 

4.3.1.       Advance Request; Quarterly Approved Advance Schedule.

 

DOE shall have received, in form and substance satisfactory to DOE, (i) a Master Advance Notice, together with all certificates and documentation required under Section 2.3, (ii) certification from the Borrower that (A) the requested Advance conforms in all material respects with the Quarterly Approved Advance Schedule and any difference is expressly noted in the Master Advance Notice), (B) the representations and warranties certified in connection with the previous Quarterly Approval Date (other than those that speak only as to an earlier date) are true and correct in all material respects, (C) the Borrower is in compliance in all material

 

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respects with all covenants and other obligations under this Agreement, (D) no event, including any Change of Law, has occurred since the previous Quarterly Approval Date with respect to the Project or the Borrower that has had or could reasonably be expected to have a Material Adverse Effect, and (iii) certification from the Sponsor that no event has occurred since the previous Quarterly Approval Date with respect to the Sponsor and Kahuku Holdings that has had or could reasonably be expected to have a Material Adverse Effect.

 

4.3.2.       Issuance of FFB Advance Request Approval Notice.

 

FFB shall have received, in accordance with the DOE Credit Facility Documents, the FFB Advance Request signed by the Borrower, together with the FFB Advance Request Approval Notice signed by DOE.

 

4.3.3.       Fees and Expenses.

 

DOE shall have received, in form and substance satisfactory to DOE, confirmation that all DOE Credit Facility Fees and Periodic Expenses then due (x) have been paid in full, (y) are to be paid with the proceeds of the requested Advance, or (z) are to be paid by other satisfactory arrangements.

 

4.3.4.       Absence of Drawstop Notice.

 

The Loan Servicer shall not have received a Drawstop Notice with respect to such Advance.

 

4.3.5.       Base Equity.

 

DOE shall have received, in form and substance satisfactory to DOE, certification from the Collateral Agent, together, with such other evidence as DOE may request, (a) of the aggregate amount of Base Equity that has been funded with respect to such Advance, and (b) that, after the application of such Advance, the amount of Base Equity that has been used to fund Eligible Project Costs is equal to at least 21% of the Eligible Project Costs incurred and paid.

 

4.3.6.       Title Continuation.

 

DOE shall have received, in form and substance satisfactory to DOE, a title run-down and date-down endorsement (dated within two (2) Business Days of the applicable Advance Request) of the Borrower’s (or in respect of leased real property, the landlord’s) continued ownership of unencumbered fee title (subject only to Permitted Liens), under the relevant laws of Hawaii, of the Project Site as is necessary for the development of the Project.

 

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4.3.7.       Additional Requirements.

 

DOE shall have received, in form and substance satisfactory to DOE, written certification from an Authorized Official of the Borrower stating, to such Authorized Official’s Knowledge as of a date not earlier than fifteen (15) Business Days prior to the relevant Advance Date, that (i) the Borrower has timely complied in all material respects with (A) its reporting obligations under Section 6.29(a) with respect to the Recovery Act and (B) the requirements set forth in Section 6.30 and Exhibit A4 with respect to the Davis-Bacon Act, and (ii) that Commencement of Construction has occurred.

 

4.3.8.       Advance Schedule; Base Case Projections; and Construction Budget.

 

In respect of the initial Advance, the Lender’s Engineer and DOE shall have received, at least two (2) Business Days prior to the Initial Advance Date (or such shorter period as may be satisfactory to DOE), the following items, each in form and substance satisfactory to DOE in consultation with the Lender’s Engineer:

 

(i)            updated Advance Schedule, certified by the Borrower, the Sponsor and the Lender’s Engineer, which shall be the Borrower’s good faith estimate, as of the date delivery, of the information contained therein in all material respects, based on all facts and circumstances existing and known to the Borrower and the Sponsor, of the timing and amount of proposed Advances and Equity Contributions for the Project (showing the total Advances expected in each calendar month);

 

(ii)           updated Base Case Projections, including a computer file containing the Base Case Projections and the underlying models and assumptions and explanations thereto, certified by the Borrower, the Sponsor and the Lender’s Engineer, which shall be the Borrower’s reasonable estimate, as of the date delivery, of the information contained therein;

 

(iii)          updated Construction Budget, certified by the Borrower, the Sponsor and the Lender’s Engineer, which shall be the Borrower’s reasonable estimate, as of the date delivery, of the information contained therein; and

 

(iv)          certification from the Borrower that (A) the representations and warranties made in Section 5.26 are true and correct, as of the date of their delivery, with respect to the Advance Schedule, Base Case Projections, and Construction Budget delivered pursuant to this Section 4.3.8, and (B) the updated Advance Schedule, Base Case Projections, and Construction Budget delivered pursuant to this Section 4.3.8 do not contain any material adverse change from the versions that were delivered as of the Financial Closing Date.

 

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ARTICLE 5
REPRESENTATIONS AND WARRANTIES

 

The Borrower makes all of the following representations and warranties to and in favor of each Credit Party as of (i) the Financial Closing Date, (ii) each Quarterly Approval Date, (iii) each Advance Date, and (iv) the Project Completion Date, except as such representations and warranties relate to an earlier date, and all of these representations and warranties shall survive the Financial Closing Date.

 

5.1.         Organization.

 

The Borrower (a) is a limited liability company organized and existing under the laws of Delaware, (b) is duly qualified to do business in Hawaii and in each other jurisdiction where the failure to so qualify could reasonably be expected to have a Material Adverse Effect, and (c) has all requisite corporate power and authority to (i) own or hold under lease and operate the property it purports to own or hold under lease, (ii) carry on its business as now being conducted and as now proposed to be conducted in respect of the Project, (iii) incur Indebtedness and create Liens on its properties, and (iv) execute, deliver, perform and observe the terms and conditions of each of the Transaction Documents to which it is a party.

 

5.2.         Authorization; No Conflict.

 

The Borrower has duly authorized, executed and delivered the Loan Documents and the other Transaction Documents to which it is a party, and neither its execution and delivery thereof nor its consummation of the transactions contemplated thereby nor its compliance with the terms thereof (a) does or will contravene its Organizational Documents or any other Governmental Rules, (b) does or will contravene or result in any breach or constitute any default under any Governmental Judgment, (c) does or will contravene or result in any breach or constitute any default under, or result in or require the creation of any Lien upon any of its revenues, properties or assets under any agreement or instrument to which it is a party or by which it or any of its revenues, properties or assets may be bound, except for Permitted Liens, or (d) does or will require the consent or approval of any Person other than the Required Consents and any other consents or approvals that have been obtained and are in full force and effect.

 

5.3.         Legality, Validity and Enforceability.

 

(a)           Each Transaction Document to which the Borrower is a party is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to Bankruptcy Laws and general principles of equity regardless of whether enforcement is considered in a proceeding at law or in equity.

 

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(b)           To Borrower’s Knowledge, each Transaction Document is the legal, valid and binding obligation of any other party thereto (other than Kahuku Holdings, the Sponsor and the Project Operator), enforceable against such party in accordance with its terms, subject to Bankruptcy Laws and general principles of equity regardless of whether enforcement is considered in a proceeding at law or in equity.

 

(c)           Each Transaction Document to which the Sponsor, Kahuku Holdings or the Project Operator is a party is the legal, valid and binding obligation of such party, enforceable against it in accordance with its terms, subject to Bankruptcy Laws and general principles of equity regardless of whether enforcement is considered in a proceeding at law or in equity.

 

5.4.         Capitalization.

 

All of the Equity Interests of the Borrower are owned by Kahuku Holdings. There are no outstanding options or rights for conversion into or acquisition, purchase or transfer of Equity Interests of the Borrower or any agreements or arrangements for the issuance by the Borrower of additional Equity Interests. The Borrower does not have outstanding (a) any securities convertible into or exchangeable for its Equity Interests or (b) any rights to subscribe for or to purchase, or any option for the purchase of, or any agreement, arrangement or understanding providing for the issuance (contingent or otherwise) of, or any call, loan commitment or claims of any character relating to, its Equity Interests.

 

5.5.         Investments; Subsidiaries.

 

The Borrower has not made any Investments other than Permitted Investments. The Borrower has no Subsidiaries and does not beneficially own the whole or any part of the Equity Interests of any other Person.

 

5.6.         Title.

 

The Borrower owns and has, or will have, valid legal and beneficial title to, or a valid leasehold interest in, the Project Site, the personal property and other assets and revenues of the Borrower on which it purports to grant Liens pursuant to the Security Documents, in each case free and clear of any Lien of any kind except for the lien created by the Security Documents and Permitted Liens.

 

5.7.         Leases.

 

Any Leases material to the Project in existence on the date of this representation and under which the Borrower is lessee are valid and subsisting, the Borrower is not in default in any material respect under any of such Leases, and the Borrower enjoys peaceful and undisturbed possession of the property subject to such Leases

 

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and the right to continue to enjoy such possession during the time when such property is necessary for the Project.

 

5.8.         Security Interests.

 

Pursuant to the Security Documents, as of the date of each Advance, the Collateral Agent (for the benefit of the Credit Parties) has a perfected first priority Lien in the Collateral Security, subject only to the Permitted Liens. Such security interest in the Collateral Security will, as of the Financial Closing Date and with respect to any subsequently acquired property (absent a Change of Law), when so subsequently acquired, be superior and prior to the rights of all third Persons now existing or hereafter arising whether by way of deed of trust, mortgage, lien, security interests, encumbrance, assignment or otherwise, except for any such rights of third Persons permitted pursuant to this Common Agreement or the Security Documents, including any Permitted Lien. As of the Financial Closing Date, all documents and instruments, including the Deeds of Trust and Financing Statements, have been recorded or filed for record in such manner and in such places as are required, and all other action as is necessary shall have been taken to establish and perfect the Collateral Agent’s Lien in and to the Collateral Security (for the benefit of the Secured Parties) to the extent contemplated by the Security Documents. All Taxes and filing fees and Periodic Expenses that are due and payable in connection with the execution, delivery or recordation of the Deeds of Trust and the Financing Statements, or the execution, issuance and delivery of the FFB Promissory Note, or the mortgaging of the mortgaged property under the Deed of Trust, have been paid or satisfactory arrangements have been made with the relevant Credit Parties to satisfy such obligations.

 

5.9.         Liens.

 

Except for Permitted Liens, the Borrower has not created, and is not under any obligation to create, and has not entered into any transaction or agreement that would result in the imposition of, any Lien upon any of its revenues, properties or assets. There are no Liens on the Pledged Equity Interests, except for any Permitted Liens related to the rights and interests of the Secured Parties pursuant to the Equity Pledge Documents.

 

5.10.       Permits; Other Required Consents.

 

Except as disclosed in writing by the Borrower from time to time, Schedule 5.10 to the Disclosure Letter sets forth all consents and approvals, including all Governmental Approvals, that are required to have been obtained or to be obtained by the Borrower in connection with the Transaction Documents and the Project either (x) as of the Financial Closing Date, or (y) to the Borrower’s Knowledge, at a later stage in the development of the Project (the “Required Consents”). The Borrower has filed applications for or obtained such Required

 

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Consents required as of the date of representation (including any Required Consents disclosed in writing by the Borrower and required on that date) and such Required Consents then required to have been obtained are in full force and effect and are not then under appeal or subject to other proceedings or unsatisfied conditions that could reasonably be expected to result in a material modification or cancellation as of such date, and Borrower has provided DOE with copies of all such Required Consents. The Borrower is in compliance with all such Required Consents, the non-compliance with which could reasonably be expected to have a Material Adverse Effect, including all Federal, state, and local regulatory requirements.

 

5.11.       Litigation, Labor Disputes.

 

(a)           Except as set forth on Schedule 5.11 to the Disclosure Letter (or disclosed in writing to DOE pursuant to Section 6.1(h) following the Financial Closing Date), there is no pending or threatened (in writing) Action that relates to the Project or to any transaction contemplated by any of the Transaction Documents or to which the Borrower or (so long as the Sponsor has obligations under the Sponsor Guarantee) the Sponsor is a party that, either singly or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect.  No such Action is pending or threatened against any other First Wind Entity, and the Borrower is not aware of, nor does it have any reason to expect, any such Action to be pending or threatened against any other Major Project Participant that, either singly or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect.

 

(b)           The Borrower has not failed to observe in any material respect any order of any court, arbitrator, administrative agency or other Governmental Authority that has, or could reasonably be expected to have, a Material Adverse Effect. There is no injunction, writ, or preliminary restraining order of any nature issued by an arbitrator, court or other Governmental Authority directing that any of the transactions provided for in any of the Transaction Documents not be consummated as herein or therein provided.

 

(c)           There are no strikes, slowdowns or work stoppages by the employees of any of the Borrower or, to the Borrower’s Knowledge, any Major Project Participant on-going, or currently threatened in writing, that have caused or could reasonably be expected to cause a Material Adverse Effect.

 

5.12.       Tax.

 

(a)           The Borrower has filed all material tax returns required by Governmental Rules to be filed by it and has paid (i) all income Taxes payable by it that have become due pursuant to such tax returns and (ii) all other material Taxes and assessments payable by it that have become due (other than those

 

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Taxes that it is contesting in good faith and by appropriate proceedings, for which reserves have been established to the extent required by GAAP). The Borrower has paid or has provided cash or cash-equivalent reserves adequate in the reasonable judgment of the Borrower’s management and consistent with GAAP for the payment of all income or other Taxes imposed on it for all prior Fiscal Years and accrued for the current Fiscal Year to the date hereof, which reserves shall be in an amount at least equal to the full assessed amount of such Taxes. The Borrower shall not be liable for, absent a Change of Law, any material Tax liability in connection with the Project or the other transactions contemplated by the Transaction Documents that is not specifically reflected in the Base Case Projections as in effect on the Financial Closing Date and in the Construction Budget or as reflected in the assumptions in the then applicable Operating Forecast, as the case may be.

 

(b)           No withholding Tax is payable by the Borrower to any government authority in connection with any amounts payable by the Borrower under or in respect of the Loan Documents.

 

(c)           No First Wind Entity, in accordance with Section 609.10(d)(21) of the Applicable Regulations, nor, to the Borrower’s knowledge, any Major Project Participant, has owed any delinquent Indebtedness to any Governmental Authority of the United States, including Tax liabilities, unless the delinquency has been resolved with the appropriate Governmental Authority in accordance with the standards of the Debt Collection Improvement Act.

 

5.13.       Business, Indebtedness, Contracts, Etc.

 

The Borrower has not conducted any business other than the business contemplated by the Transaction Documents and such other business as may be related to the Project, has no outstanding Indebtedness other than Permitted Indebtedness and has no other liabilities other than those permitted under the Loan Documents, and is not a party to or bound by any contract other than those contracts permitted under the Loan Documents.

 

5.14.       Transactions with Affiliates.

 

Except as set forth on Schedule 5.14 to the Disclosure Letter or as permitted by Section 7.12, the Borrower is not a party to any contracts or agreements with, and does not have any other loan commitments to, whether or not in the ordinary course of business, any Affiliate. The Borrower is not a party to any agreement requiring the payment of development fees.

 

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5.15.       Compliance with Governmental Rules.

 

In accordance with Section 609.10(d)(20) of the Applicable Regulations, the Borrower is in compliance with, and has conducted its business, operations, assets, equipment, property, leaseholds, and other facilities in compliance with all Environmental Laws and in compliance with all other Governmental Rules the noncompliance with which could reasonably be expected to have a Material Adverse Effect, and no notices of violation of any Governmental Rule have been issued, entered or received by the Borrower that have not been cured with no remaining liability to the Borrower, other than those notices that have been disclosed to the extent required by the terms of the Loan Documents. Neither the Borrower nor, to the Borrower’s Knowledge, Kahuku Holdings or Sponsor is in default with respect to any Governmental Judgment which default would be reasonably expected to have a Material Adverse Effect.

 

5.16.       Environmental Laws.

 

(a)           The Borrower (x) has been issued all Governmental Approvals relating to, and (y) has received no complaint, order, directive, claim, citation or notice by any Governmental Authority (that has not been disclosed to the extent required by the Loan Documents) relating to its then-existing obligations with respect to: (A) air emissions, (B) discharges to surface water or ground water, (C) noise emissions, (D) solid or liquid waste disposal, (E) the use, generation, storage, transportation or disposal of toxic or Hazardous Substances or wastes, or (F) other environmental, health or safety matters.

 

(b)           Except as set forth on Schedule 5.16 to the Disclosure Letter, neither the Borrower nor, to the Borrower’s Knowledge, any third party, has used, released, discharged, generated, manufactured, produced, stored, or disposed of in, on, under or about the Project Site or the Improvements or transported thereto or therefrom, any Hazardous Substances that could reasonably be expected to have a Material Adverse Effect or material harm to environmental, health or safety matters as reasonably determined by DOE.

 

(c)           There is not and has not been any condition, circumstance, action, activity or event with respect to the Project, the Borrower or the Project Site that could reasonably form the basis of any violation of any Environmental Law or that could reasonably be expected to have a Material Adverse Effect or material harm to environmental, health or safety matters as reasonably determined by DOE.

 

(d)           The Borrower has satisfied all conditions of approval in connection with issuance of the Government Approvals listed on Schedule 5.10 that are required to have been satisfied by the Financial Closing Date.

 

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5.17.       Investment Company Act.

 

The Borrower is not required to register as an “investment company” and it is not “controlled” by a company required to register as an “investment company” under the Investment Company Act.

 

5.18.       Regulation of Parties.

 

The Borrower is not subject to the Public Utility Holding Company Act. None of the Credit Parties shall by reason if its ownership or operation of the Project upon the exercise of remedies under the Security Documents, by virtue of such exercise alone (without regard to any other asset owned, or any entity controlled, by such Credit Party), be subject to the Public Utility Holding Company Act.

 

5.19.       ERISA.

 

(a)           The Borrower has operated the Employee Benefit Plans, and the ERISA Affiliates have operated the Pension Plans, in compliance with their terms and with all applicable provisions and requirements of the Internal Revenue Code, ERISA, and other applicable Federal or state laws and have performed all their respective obligations under each such plan.

 

(b)           No ERISA Event has occurred or is reasonably expected to occur.

 

(c)           Except to the extent required under Section 4980B of the Internal Revenue Code or comparable state law, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of the Borrower or any ERISA Affiliate.

 

(d)           As of the most recent valuation date for each Pension Plan, there are no outstanding benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities).

 

(e)           The execution and delivery of this Common Agreement and the consummation of the transactions contemplated hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which taxes could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Internal Revenue Code.

 

(f)            All liabilities under each Pension Plan are (i) funded to at least the minimum level required by applicable law or, if higher, to the level required by the terms governing the Pension Plans (ii) insured with a reputable insurance company, (iii) provided for or recognized in the Financial Statements most recently delivered to DOE pursuant to Section 6.1 or (iv) estimated in the formal

 

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notes to the Financial Statements most recently delivered to DOE pursuant to Section 6.1.

 

(g)           There are no circumstances which may give rise to a liability in relation to any Pension Plan which is not funded, insured, provided for, recognized or estimated in the manner described in subsection (f) above.

 

(h)           (i) The Borrower is not and will not be a “plan” within the meaning of Section 4975(e) of the Internal Revenue Code; (ii) the assets of the Borrower do not and will not constitute “plan assets” within the meaning of Section 3(42) of ERISA and the United States Department of Labor Regulations set forth in 29 C.F.R. § 2510.3-101; (iii) the Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; (iv) transactions by or with the Borrower are not and will not be subject to state statutes applicable to the Borrower regulating investments of fiduciaries with respect to governmental plans; and (v) the Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by the Credit Parties of any of their respective rights under this Common Agreement) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA, Section 4975 of the Internal Revenue Code or any similar state law. The Borrower further agrees to deliver to Credit Parties such certifications or other evidence of compliance with the provisions of this Section 5.19(h) as the Credit Parties may from time to time request.

 

5.20.       Insurance.

 

All Required Insurance to be obtained and maintained for the Project pursuant to Section 6.3 is in full force and effect.

 

5.21.       Intellectual Property.

 

(a)           The Borrower owns or holds a valid and enforceable license or right to use the Technology and Intellectual Property Rights necessary to do the following in a commercially reasonable manner and as contemplated in connection with the Project: (i) construct, operate, use and maintain the Project; (ii) produce, manufacture, process, finish, package, label, ship, sell and support the products specified in the Power Purchase Agreement, including process formulation development, validation, qualify assurance and quality control, using equipment and materials supplied under the Construction Documents (as may be applicable); and (iii) exercise its rights and perform its obligations under the Operating Documents in connection with the Project, except, in each case, where the failure to own or hold a valid and enforceable license or right to use such Technology and Intellectual Property Rights could not reasonably be expected to result in a Material Adverse Effect.

 

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(b)           No actions by the Borrower or any product, process, method, substance, part or other material presently contemplated to be sold or employed by the Borrower infringe upon or misappropriate the Intellectual Property Rights of any other Person, except, in each case, where such infringement or misappropriation of such Intellectual Property Rights or such other rights could not reasonably be expected to result in a Material Adverse Effect.

 

5.22.       No Defaults.

 

No Event of Default or Potential Default has occurred and is continuing. Other than a breach that has been cured or waived in writing, there is no breach by the Borrower of any material obligation under any Loan Document, and no notices of breach of any Loan Document have been issued, entered or received by the Borrower.

 

5.23.       No Judgment Liens.

 

The Borrower does not have a judgment lien against any of its property for a debt owed to the United States of America and does not have an outstanding debt (other than a debt under the Internal Revenue Code) owed to the United States of America or any agency thereof that is in delinquent status, as the term “delinquent status” is defined in 31 C.F.R.§ 285.13(d).

 

5.24.       Sufficiency of Project Documents.

 

(a)           All easements, leasehold and other property interests, and all utility and other services, means of transportation, facilities, other materials and other rights that can reasonably be expected to be necessary for the construction, completion and operation of the Project in accordance with Governmental Rules and the Transaction Documents (including without limitation gas, electrical, water and sewage services and facilities) have been procured under the Project Documents or are commercially available to the Project at the Project Site on terms consistent with the Construction Budget and the Base Case Projections, and, to the extent appropriate, arrangements have been made on terms consistent with the Construction Budget and the Base Case Projections for such easements, interests, services, means of transportation, facilities, materials and rights.

 

(b)           DOE has received a true, complete and correct copy of each of the Project Documents (including all exhibits, schedules, protocols and side letters referred to therein or delivered pursuant thereto, if any, and all amendments, modifications, additions, waivers thereto or thereof). None of the Project Documents has been amended or modified, except in accordance with this Common Agreement. Prior to the execution of each such Project Document entered into on or prior to the date this representation is made, Borrower believed that each party to each such Project Document could carry out its obligations in

 

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accordance therewith, and nothing has come to the attention of Borrower to cause it to believe that any such party will not be able to carry out its obligations in accordance therewith except as has been disclosed to the extent required under the Loan Documents.

 

(c)           Each Principal Project Document is in full force and effect and all conditions precedent to the obligations of the respective parties under the Principal Project Documents have been satisfied or where required, with the written consent of DOE, waived.

 

(d)           All representations, warranties and other factual statements made by any First Wind Entity in any Project Document to which such entity is a party are true and correct in all material respects, and (i) to the Borrower’s Knowledge at the time of execution and delivery of any Project Document, all representations, warranties and other factual statements made in each Project Document by each other party thereto were true and correct in all material respects, and (ii) to the Borrower’s knowledge, after the execution and delivery of any Project Document, all representations, warranties and other factual statements made in each Project Document by each other party thereto are, at any time the Borrower makes this representation, true and correct in all material respects.

 

(e)           Borrower believed on the Financial Closing Date that it is technically feasible for the Battery to be operated so as to fulfill in all material respects the design specifications and requirements contained in the Lender’s Engineer Report.

 

(f)            Borrower believes that it is technically feasible for the Project (with the exception of the Battery) to be operated so as to fulfill in all material respects the design specifications and requirements contained in the Lender’s Engineer Report.

 

5.25.       Financial Statements.

 

Each of the Financial Statements of the Borrower, Kahuku Holdings and the Sponsor delivered to the Credit Parties has been prepared in accordance with GAAP and presents fairly in all material respects the financial condition of Borrower, Kahuku. Holdings or the Sponsor as of the respective dates of the balance sheets included therein and the results of operations of Borrower, Kahuku Holdings or Sponsor for the respective periods covered by the statements of income included therein. In the case of the Borrower, except as reflected in such Financial Statements, there are no liabilities or obligations of any nature whatsoever for the period to which such Financial Statements relate (other than under the Transaction Documents) that are required to be disclosed in accordance with GAAP.

 

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5.26.       Project Milestone Schedule and Construction Budget; Operating Forecasts and Base Case Projections.

 

(a)           The Project Milestone Schedule, the Construction Budget, the Operating Forecast and the Base Case Projections, as amended or supplemented by Approved Construction Changes, (i) are complete and based on reasonable assumptions, (ii) are consistent with the provisions of the Project Documents, (iii) have been prepared in good faith and with due care, and (iv) fairly represent the Borrower’s expectation as to the matters covered thereby as of the date of the representation (or such other date as may be set forth in the applicable Borrower Certificate).

 

(b)           The Project Milestone Schedule accurately specifies in summary form the work that the Project Construction Contractor, Turbine Supplier and Battery Supplier propose to complete on or before the deadlines specified therein.

 

(c)           The Construction Budget represents the Borrower’s best estimate, as of the date of such representation (or such other date as may be set forth in the applicable Borrower Certificate), of all costs and expenses anticipated by the Borrower to be incurred to construct the Project in the manner contemplated by the Transaction Documents.

 

(d)           Borrower’s good faith estimate and belief as of the Financial Closing Date is that (i) Operational Completion will occur no later than the Anticipated Operational Completion Date, (ii) Project Completion will occur no later than the Guaranteed Project Completion Date, (iii) Total Project Costs will not exceed Base Project Costs except to the extent that DOE has been notified to the contrary in accordance with the Loan Documents, and (iv) each of Total Project Costs, Base Project Costs, Eligible Base Project Costs and Ineligible Base Project Costs will not exceed the respective amounts therefor set forth in the Financial Plan. Nothing has occurred to cause Borrower to believe that the Project Milestone Schedule and Base Case Projections, as amended or supplemented by Approved Construction Changes, are unreasonable in any material respect.

 

5.27.       Sufficient Funds.

 

In accordance with Section 609.10(d)(8) of the Applicable Regulations, the Total Funding Available to the Borrower will be sufficient to carry out the Project, including adequate contingency funds for identified cost overruns.

 

5.28.       Fees and Enforcement.

 

Other than amounts that have been paid in full or with respect to which arrangements satisfactory to DOE have been made, no fees or Taxes including documentary, stamp, transaction, registration, or similar Taxes are required to

 

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have been paid to ensure the legality, validity, enforceability, priority or admissibility in evidence in applicable jurisdictions of any Transaction Documents.

 

5.29.       Immunity.

 

In any proceedings in connection with any Transaction Document to which the Borrower is a party, the Borrower has not been and will not be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal processes.

 

5.30.       No Other Powers-of-Attorney, Etc.

 

The Borrower has not executed and delivered any powers of attorney or similar documents, except (i) to its directors and employees in the ordinary course of business, and (ii) in connection with Permitted Liens.

 

5.31.       No Additional Fees.

 

The Borrower has not paid nor become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of arranging the financing of the transactions contemplated by the Transaction Documents.

 

5.32.       Foreign Assets Control Regulations, Prohibited Persons, Etc.

 

(a)           Neither the making of any Advances nor the use of the proceeds thereof will violate the Foreign Asset Control Regulations.

 

(b)           All First Wind Entities are in compliance with all applicable orders, rules and regulations of OFAC.

 

(c)           None of the First Wind Entities or Major Project Participants, nor, to the Borrower’s Knowledge, any of their respective Principal Persons, or members, parents or subsidiaries is or ever has been a Prohibited Person.

 

(d)           No event has occurred and no condition exists that is likely to result in any First Wind Entity or any of their respective Principal Persons or members, parents or subsidiaries becoming a Prohibited Person.

 

(e)           To the Borrower’s Knowledge, no Person that Controls any First Wind Entity or Major Project Participant is a Prohibited Person.

 

(f)            None of the Collateral is traded or used, directly or indirectly, by a Prohibited Person or by a Person organized in a Prohibited Jurisdiction.

 

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(g)           Each First Wind Entity has established an anti-money laundering compliance program if and as required by the USA Patriot Act.

 

(h)           The First Wind Entities and their Principal Persons, members, parents, subsidiaries, employees and agents have complied with all applicable Corrupt Practices Laws in obtaining any consents, licenses, approvals, authorizations, rights, or privileges with respect to the Project and are otherwise conducting the Project and the business of the First Wind Entities in compliance with all applicable Corrupt Practices Laws.

 

(i)            The internal management and accounting practices and controls of the First Wind Entities are adequate for compliance with all Corrupt Practices Laws.

 

5.33.       Lobbying.

 

In accordance with 31 U.S.C. §1352, no proceeds of the Advances have been or will be expended by the Borrower or any of its Affiliates to pay any Person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress.

 

5.34.       Insolvency Proceedings.

 

The Borrower is not insolvent and is not the subject of any pending, or to the Borrower’s knowledge, threatened, Insolvency Proceedings.

 

5.35.       Use of Proceeds.

 

The Borrower has used and shall continue to use the proceeds of all Advances in accordance with the terms and conditions of all applicable Loan Documents.

 

5.36.       No Material Adverse Effect.

 

No Material Adverse Effect has occurred and is continuing, nor, to the Borrower’s Knowledge, does any fact or circumstance exist that could reasonably be expected to have a Material Adverse Effect.

 

5.37.       Certain Program Requirements.

 

(a)           Eligibility. In accordance with Section 609.10(d)(1) of the Applicable Regulations, the Project qualifies as an “Eligible Project” under Title XVII and is not a research, development, or demonstration project or a project that employs Commercial Technologies (as defined in the Applicable Regulations) in service in the United States. The Project does not involve the construction, alteration, maintenance, or repair of a “public building” or “public work” within

 

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the meaning of Section 1605 of the Recovery Act, 2 CFR §§176.140 and 176.160, and the OMB Implementing Guidance.

 

(b)           U.S. Nexus. In accordance with Section 609.10(d)(2) of the Applicable Regulations, the Project will be constructed and operated in the United States, the employment of the new or significantly improved technology in the Project has the potential to be replicated in other commercial projects in the United States, and this technology is or is likely to be available in the United States for further commercial application.

 

(c)           Useful Life. In accordance with Section 609.10(d)(6) of the Applicable Regulations, the Maturity Date occurs prior to the end of ninety percent (90%) of the projected useful life of the Project’s major physical assets.

 

(d)           No Tax-Exempt Indebtedness. In accordance with Section 609.10(d)(7) of the Applicable Regulations, the DOE Guaranteed Loan does not finance, either directly or indirectly, tax-exempt indebtedness obligations, consistent with the requirements of Section 149(b) of the Internal Revenue Code.

 

5.38.       Davis-Bacon Act.

 

The Borrower has taken all steps necessary to comply with, and in all material respects is in compliance with, Section 6.30 and Exhibit A4 relating to the Davis-Bacon Act.

 

5.39.       Buy American Provisions.

 

The Project does not involve the construction, alteration, maintenance, or repair of a “public building” or “public work” within the meaning of the Buy American Provisions.

 

5.40.       Compliance with Governmental Rules; Environmental Laws; Governmental Approvals.

 

The Borrower and, to the Borrower’s Knowledge, each of Kahuku Holdings and Sponsor, are in compliance with all Governmental Rules applicable to each such entity, the noncompliance with which could reasonably be expected to have a Material Adverse Effect.

 

5.41.       Full Disclosure.

 

(a)           The statements and information contained in any Borrower Certificate or DOE Credit Facility Document, taken together with all documents, reports or other written information pertaining to the Project, together with all updates of such information from time to time, that have been furnished by or on behalf of the Borrower to any Credit Party or any Independent Consultant, are

 

49


 

true and correct in all material respects and do not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading in light of the circumstances in which they were made.

 

(b)           There is no fact known to the Borrower that has not been disclosed to the Credit Parties in writing that would reasonably be expected to be material to the DOE’s decision to enter into this Common Agreement or the DOE Guarantee or to any Credit Party’s decision to authorize any Advance or that could otherwise reasonably be expected to have a Material Adverse Effect.

 

(c)           There are in existence no documents or agreements that have not been disclosed or described to the Credit Parties that are material in the context of the Transaction Documents or that have the effect of varying any of the Transaction Documents or the Project.

 

(d)           Each of the Project Milestone Schedule, the Construction Budget, the Operating Forecast, Operating Plan and the Base Case Projections, as amended and supplemented by Approved Construction Changes, has been prepared in good faith based on assumptions believed to be reasonable by the Borrower at the time of their preparation or update.

 

5.42.       Domestic Procurement Consideration.

 

Borrower represents and warrants it gave due consideration to procuring from its suppliers for the Project equipment and components manufactured in the United States, taking into account availability, cost, technical performance, reliability, efficiency, warranty coverage and related commercial terms.

 

ARTICLE 6
AFFIRMATIVE COVENANTS

 

The Borrower covenants and agrees that until the date all Secured Obligations (other than inchoate indemnity obligations) are paid in full and the DOE Credit Facility Commitment has terminated, unless DOE waives compliance in writing:

 

6.1.         Information Covenants.

 

At its own expense the Borrower shall furnish or cause to be furnished to DOE, in each case (x) in unalterable electronic format (except for the financial model, which shall be furnished in Excel file format) with a reproduction of the signatures where required, and (y) upon request by DOE, in soft electronic format, the following items:

 

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(a)           Monthly Reporting Package.

 

(i)            Within twenty (20) days after the end of each month prior to the Project Completion Date, the Borrower shall deliver to DOE and the Lender’s Engineer a Construction Progress Report certified by an Authorized Official of the Borrower; provided, that the Borrower acknowledges that within thirty (30) days after the end of each month prior to the Project Completion Date, the Lender’s Engineer will deliver to DOE its comments on the Borrower’s report on construction progress or, if requested by the DOE, its separate report;

 

(ii)           Within twenty-five (25) days after the end of each month falling after the Project Completion Date, the Borrower shall deliver to DOE an Operations Report covering such monthly period and certified by an Authorized Official of the Borrower; and

 

(iii)          In addition to each other item indicated in this Section 6.1(a) as being part of the Monthly Reporting Package, the Borrower shall deliver to DOE a completed Monthly Reporting Certificate;

 

(b)           Quarterly Financial Statements and Report. Within sixty (60) days after the end of each fiscal quarter (excluding, for purposes of clause (i) below, the fourth fiscal quarter) of each Fiscal Year:

 

(i)            unaudited Financial Statements of the Borrower as at the end of such quarterly period;

 

(ii)           a certificate by a Financial Officer of the Borrower providing (A) for each such quarter that includes all or a portion of the Construction Period, calculations showing the Debt-to-Equity Contribution Ratio of the Borrower; and (B) for each such quarter that includes all or a portion of the Operating Period, calculations showing compliance with the requirements of Section 7.14 (Debt Service Coverage Ratio), or if such certification cannot be made, an explanation therefor and what corrective action the Borrower has taken or proposes to take with respect thereto; and

 

(iii)          a report with an assessment and certification of compliance with the conservation measures described in the Kahuku Wind Power Habitat Conservation Plan and a disclosure of any “incidental take” (as defined in the Endangered Species Act) of the species listed in the Biological Opinion incurred by the Project. The disclosure of incidental take should include the amount of take for the reporting quarter, as well as the total amount of incidental take.

 

(c)           Annual Financial Statements and Reports. As soon as available, but in any event within one hundred twenty (120) days after the end of each Fiscal Year:

 

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(i)            Financial Statements of the Borrower as at the end of such Fiscal Year, certified by the Borrower’s Accountant and accompanied by any management letter delivered by the Borrower’s Accountant; and

 

(ii)           a report from the Borrower’s Accountant for each such Fiscal Year that includes any portion of the Construction Period, calculating and comparing the actual Debt-to-Equity Contribution Ratio to the Debt-to-Equity Contribution Ratio required by the Loan Documents;

 

(d)           Certification by Financial Officer. Each time Financial Statements of the Borrower are delivered pursuant to Sections 6.1(b)(i) (as part of the Quarterly Reporting Package), or 6.1(c)(i) such Financial Statements shall be certified by a Financial Officer of the Borrower as having been prepared in accordance with GAAP on a consistent basis and as fairly presenting in all material respects the financial condition of the Borrower as of the date thereof and the results of operations and cash flows of the Borrower for the periods presented. Such certification shall also include a certification that the Person has made or caused to be made a review of the transactions and financial condition of the Borrower during the relevant fiscal period and (i) that other than as set out in such Financial Statements, there are no liabilities or obligations of the Borrower that are required to be presented in such Financial Statements in accordance with GAAP, and (ii) that no Event of Default or Potential Default exists, or if such certification cannot be made, the nature and period of existence of such Event of Default or Potential Default and what corrective action the Borrower has taken or proposes to take with respect thereto;

 

(e)           Financial Statements of Kahuku Holdings, Sponsor. Promptly after the same become available, and in accordance with the time periods applicable to the Borrower set forth in Sections 6.1(b) (as part of the Quarterly Reporting Package) and 6.1(c), unaudited quarterly Financial Statements of the Sponsor and Kahuku Holdings, and audited annual Financial Statements of the Sponsor, all prepared in accordance with GAAP certified by a Financial Officer of the Sponsor and Kahuku Holdings, as applicable, as having been prepared in accordance with GAAP on a consistent basis and as fairly presenting in all material respects the financial condition of the Sponsor and Kahuku, Holdings, as applicable, as of the date thereof and the results of operations and cash flows of the Sponsor and Kahuku Holdings, as applicable, for the periods presented, and, if the same are audited annual Financial Statements, certified by the Sponsor’s and Hawaii Holding’s Accountant, as applicable; provided, that with respect to the Sponsor, this obligation shall end on the Project Completion Date;

 

(f)            Management Letters. Promptly after the Borrower’s receipt thereof, a copy of any management letter and all other material communications received by the Borrower from the Borrower’s Accountant in relation to its financial, accounting and other systems, management or accounts or the Project;

 

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(g)           Reporting Obligations. Promptly, but in any event within five (5) Business Days, after any Authorized Official of the Borrower or the Project Operator obtains knowledge thereof or information pertaining thereto, notice of:

 

(i)            any event that constitutes an Event of Default or Potential Default, specifying the nature thereof, together with a Borrower Certificate indicating any steps the Borrower has taken or proposes to take to remedy the same;

 

(ii)           (A) any pending or threatened (in writing) Action (1) against the Borrower or any of its property, (2) respecting the Project or any Transaction Document or any transaction contemplated thereby, or (3) against any other Major Project Participant; (B) any material dispute between the Borrower and/or Sponsor, on the one hand, and any other Major Project Participant, on the other hand; and (C) any material development in any of the foregoing;

 

(iii)         any proceeding or legislation by any Governmental Authority specifically affecting (A) the Project, the Borrower, any of its property or its equity capital or (B) a Project Participant that, in each case, could reasonably be expected to have a Material Adverse Effect, including any material developments with respect to any of the foregoing;

 

(iv)          any change in the Authorized Officials of the Borrower who are responsible to deliver any certificate under any Loan Document, including certified specimen signatures of any new Person so appointed and satisfactory evidence of the authority of such Person, or any change in the Borrower’s Accountant and the reason therefor;

 

(v)           any actual or proposed termination, rescission, discharge (otherwise than by performance), amendment, supplement, modification, waiver or indulgence or breach in any material respect of any Transaction Document, Governmental Approval or other Required Consent that is not otherwise approved, consented to or accepted pursuant to the terms of the Transaction Documents;

 

(vi)          any notice received or initiated by the Borrower relating to the Project or any Transaction Document or any notice received or initiated by the Borrower relating to any Governmental Approval, but excluding notices received or initiated that are (i) in the ordinary course of business or otherwise previously delivered pursuant to any Transaction Document; or (ii) not reasonably suggestive of a possible Material Adverse Effect;

 

(vii)         any Lien (other than a Permitted Lien) being granted or established or becoming enforceable over any of the Borrower’s assets;

 

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(viii)       any proposed material change in the nature or scope of the Project or the business or operations of the Borrower;

 

(ix)          any casualty damage or loss to the Project in excess of $250,000;

 

(x)           any notice of a delinquent payment owed by the Borrower to, or to the Borrower by (A) any Major Project Participant (other than the Project Construction Contractor) if such payment is more than thirty (30) days delinquent, or (B) any other party under the Project Documents if such payment is more than ninety (90) days delinquent, in either case, if the amount of any such delinquent payment is in excess of $100,000, in each case together with a copy of all correspondence received or sent by the Borrower with respect to such delinquent payment;

 

(xi)          any material or substantive correspondence from any Construction Contractor, the Turbine Supplier, the Battery Supplier or any Operator relating to, (A) any material delay in the completion of the Project, or (B) any event that could reasonably be expected to interrupt the operation of the Project for more than fifteen (15) consecutive days;

 

(xii)         any notice of interruption of the ability of the Output Purchaser to receive deliveries under the Power Purchase Agreement or any event that could reasonably be expected to interrupt the ability of the Output Purchaser to receive deliveries under the Power Purchase Agreement for more than fifteen (15) consecutive days;

 

(xiii)        any notice from the Output Purchaser regarding the payment of an invoice submitted to the Output Purchaser by the Borrower other than in the ordinary course of business;

 

(xiv)        any one or more events, conditions or circumstances (including government action) that exist or have occurred or in the reasonable judgment of the Borrower are expected as imminent that could reasonably be expected to have a Material Adverse Effect;

 

(xv)         any non-compliance of a Reserve Letter of Credit with the criteria established with respect thereto and any event, condition or circumstance that represents or could reasonably be expected to lead to non-compliance by a bank providing a Reserve Letter of Credit with the required criteria with respect thereto or the renewal thereof;

 

(xvi)        any Event of Force Majeure affecting, or that either the Borrower or any other Major Project Participant claims would affect, the performance by such Person of any obligation under any Transaction Document,

 

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together with copies of all notices, calculations, data and other correspondence between such Major Project Participant and the Borrower in respect of any such event, circumstance or condition;

 

(xvii)       any material dispute between (a) the Borrower and any Major Project Participant, or (b) between the Borrower or any Major Project Participant and any Governmental Authority, in each case relating to the Project;

 

(xviii)      upon reasonable request by DOE, copies of any data relating to the performance of tests under any Project Document;

 

(xix)        any event that could reasonably be expected to cause a reduction in the Operating Revenues of the Borrower for any Fiscal Year by more than 10% of the amount estimated therefor in the Operating Forecast;

 

(xx)         any proposed cancellation or change in any Required Insurance maintained by the Borrower or by any other Person for the benefit of the Borrower with respect to the Project, notice shall be provided according to Schedule 6.3(b);

 

(xxi)        any periodic reports submitted by the Borrower to the Output Purchaser pursuant to the Power Purchase Agreement, together with a copy of any such report;

 

(xxii)       any other material report filed by any Major Project Participant with any Governmental Authority relating to the Project, together with a copy of any such report, if and to the extent that the Borrower is aware of such filing and has reasonable access to a copy of such report;

 

(xxiii)      (a) an ERISA Event, (b) the adoption of any new Pension Plan by the Borrower or any ERISA Affiliate, (iii) the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA) (c) the commencement of contributions by the Borrower or any ERISA Affiliate to any Pension Plan or Multiemployer Plan, or (d) the receipt by the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan sponsor concerning an ERISA Event; and

 

(xxiv)     any material non-compliance with any Governmental Approval or Environmental Law.

 

(h)           Governmental and Environmental Reports. As soon as available, but in any event:

 

(i)            within ten (10) days after any such report is submitted, a copy of any report required to be filed by the Borrower (or on behalf of the

 

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Borrower) with any Governmental Authority other than in the ordinary course of business;

 

(ii)           within twenty-four (24) hours after the Borrower obtains knowledge, or reasonably should have obtained knowledge, of any accident related to the Project having a material and adverse impact on the environment or on human health (including any accident resulting in the loss of life), verbal notice thereof, and within ten (10) days thereafter a report describing such accident, the impact of such accident and the remedial efforts required and (as and when taken) implemented with respect thereto;

 

(iii)          within thirty (30) days after the close of each Fiscal Year, a report, satisfactory to DOE in its reasonable discretion, summarizing any violations of Environmental Laws in connection with the Project over the preceding year, with sufficient information (as determined by DOE acting in consultation with the Lender’s Engineer) to allow the Credit Parties (including DOE) to monitor the Project’s performance with respect to the environment and its compliance with Environmental Laws and including a narrative summary of (A) the results of environmental monitoring or sampling activity, (B) any violations of Environmental Laws identified by any environmental Governmental Authority and any remedial action taken with respect thereto;

 

(iv)          within ten (10) days after an Authorized Official of the Borrower obtains knowledge thereof, any Environmental Claim by any Governmental Authority or any assertion of an Environmental Claim or claims involving an amount in excess of $250,000 individually or $500,000 in the aggregate by any other Person or Persons together with a copy of any correspondence relating thereto and a description of any steps the Borrower is taking and proposes to take with respect thereto; and

 

(v)           within ten (10) days after it is submitted, a copy of any report filed by the Borrower with the U.S. Fish and Wildlife Service required in Section 8.2.2 of the Kahuku Wind Power Habitat Conservation Plan;

 

(i)            Updates to Project Milestone Schedule, Construction Budget, Operating Plan, Operating Forecast, and Base Case Projections. As part of the Quarterly Reporting Package, in each case certified by an Authorized Official of the Borrower:

 

(i)            for each fiscal quarter that includes all or a portion of the Construction Period, an updated Project Milestone Schedule and Construction Budget; and

 

(ii)           upon the request of DOE, the Borrower shall schedule a date to discuss with DOE any updated Operating Plan, updated Operating

 

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Forecast, updated Base Case Projections, and such other matters relating to the Project as DOE may reasonably request;

 

(j)            Annual Safety Audit. Within thirty (30) days after its completion, a copy of the report regarding the required annual safety audit pursuant to Section 6.18;

 

(k)           Additional Project Documents and Governmental Approvals. As soon as available, but in no event later than ten (10) Business Days after the receipt thereof by the Borrower, copies of (i) all Additional Project Documents, (ii) any Third-Party Materials Supply Agreement entered into by the Borrower after the Financial Closing Date, if such Third-Party Materials Supply Agreement has a term longer than two years and a committed payment greater than $250,000 in any year or $2,000,000 in aggregate, and (iii) any Governmental Approvals and other Required Consents obtained or entered into by the Borrower after the Financial Closing Date;

 

(1)           Additional Audit Reports. As soon as available, but in any event within ten (10) Business Days after the receipt thereof by the Borrower, copies of all other material annual or interim reports submitted to the Borrower by the Borrower’s Accountant;

 

(m)          Other Reports and Filings. Promptly upon transmission thereof, notice (or, if not available on-line, then copies) of all financial information, statutory audits, proxy materials and other information and reports, if any, which the Borrower has delivered to the Securities and Exchange Commission or any successor regulatory authority;

 

(n)           Insurance Certificate. Certificates with respect to Required Insurance conforming to the insurance requirements of Schedule 6.3(b) at the times required by such Schedule;

 

(o)           Information Pertaining to Banks Providing Reserve Letters of Credit. As soon as available, but in any event, no later than thirty (30) days after any reduction in the credit rating of any bank providing a Reserve Letter of Credit to (i) “A-” by S&P or “A3” by Moody’s, in either case with a “negative outlook,” or (ii) a level below “A-” by S&P or “A3” by Moody’s;

 

(p)           Other Information. Promptly upon request, such other information or documents as any Credit Party or any Independent Consultant may reasonably request;

 

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(q)           Information Made Available.

 

(i)            In accordance with Section 609.10(d)(19) of the Applicable Regulations, (A) the information that will be made available to DOE is as set forth in the Loan Documents, and (B) any information may be made publicly available to the extent required by applicable federal law; and

 

(ii)           Without limiting the generality of clause (i) of this subsection, all correspondence, books, documents, papers and records relating to the structuring, negotiation and execution of this Common Agreement and the transactions contemplated herein, including this Common Agreement, the Loan Documents, the pre-application, the Application, the term sheet and all supporting documentation, financial statements, audit reports of independent accounting firms, permits and regulatory approvals furnished or otherwise made available to DOE, will be handled in accordance with all applicable federal laws, rules, or regulations, including the Trade Secrets Act, 18 U.S.C. §1905, and the Freedom of Information Act (FOIA), 5 U.S.C. §552, and DOE’s implementing regulations at 10 CFR 1004.

 

(r)            Annual Updates to Operating Plan, Operating Forecast, Base Case Projections. Annually prior to the end of each calendar year once the Operating Period has commenced, an updated annual Operating Plan, an updated annual Operating Forecast; and updated Base Case Projections in form and substance satisfactory to DOE.

 

(s)            Prohibited Persons. Borrower shall provide immediate written notice (including a brief description) to DOE if at any time it learns that the representations made by Borrower with respect to Prohibited Persons (including the Debarment Regulations) were erroneous when made or have become erroneous by reason of changed circumstances.

 

6.2.         Books, Records and Inspections; Accounting and Auditing Matters.

 

(a)           The Borrower shall keep proper records and books of account, maintain adequate management information and cost control systems, and make arrangements reasonably satisfactory to the Credit Parties for overseeing the financial operations of the Borrower, including its cash management, accounting and financial reporting, for overseeing the Borrower’s relationship with the Credit Parties and the Borrower’s Accountant and, in accordance with Section 609.10(f)(1) of the Applicable Regulations, for facilitating the effective and accurate audit and performance evaluation of the Project pursuant to the Applicable Regulations and Program Requirements;

 

(b)           Each set of Financial Statements the Borrower delivers shall be prepared in accordance with GAAP consistently applied except to the extent that there have been any changes to such accounting principles or the application

 

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thereof noted in such Financial Statements and all financial records of the Borrower shall be maintained at the principal executive office of the Borrower;

 

(c)                                  The Borrower (i) shall consult and cooperate with the Credit Parties regarding the Project upon their request, (ii) in accordance with Section 609.10(d)(18) of the Applicable Regulations, shall permit officers and designated representatives of the Credit Parties and the Independent Consultants to visit and inspect at all reasonable times the Project and any other facilities and properties of the Borrower, (iii) in accordance with Section 609.10(0(2) of the Applicable Regulations, shall provide to officers and designated representatives of the Credit Parties, the Comptroller General and the Independent Consultants access to any pertinent books, documents, papers and records of the Borrower for the purpose of audit, examination, inspection and monitoring upon reasonable notice and at reasonable times during normal business hours, to examine and discuss the affairs, finances and accounts of the Borrower with the representatives of the Borrower, (iv) shall afford proper facilities for such inspection, shall make copies (at Borrower’s expense) of any records that are subject to such inspection, shall make available all information related to the Project, including all patents, technology and proprietary rights owned or controlled by the Borrower and utilized in the construction, startup or operation of the Project, as may be reasonably necessary in order to determine the technical progress, soundness of financial condition, management stability, compliance with environmental requirements, adequacy of health and safety conditions, and all other matters with respect to the Project, and (v) shall exercise reasonable efforts to cause each Major Project Participant to make available to the Credit Parties, the Comptroller General and the Independent Consultants the same rights of inspection and access to its books and records that such Major Project Participant makes available to Borrower or to the Project Operator.

 

(d)                                 The Borrower shall upon the request of any Credit Party authorize the Borrower’s Accountant to communicate directly with the Credit Parties, the Comptroller General and the Independent Consultants and their representatives at any time regarding the Borrower’s accounts and operations;

 

(e)                                  In the event that the Borrower’s Accountant should cease to be the accountants of the Borrower for any reason, the Borrower shall appoint and maintain as the Borrower’s Accountant another firm of independent public accountants, which firm shall be nationally recognized or otherwise approved by DOE; and

 

(f)                                    The Borrower shall retain all records relating to expenditures with respect to which Advances were made for five (5) years after the Advance was made with respect to such expenditure.

 

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6.3.                            Maintenance of Property and Insurance.

 

(a)                                  The Borrower shall (1) keep all its property and assets in good working order and condition to the extent necessary to ensure that its business can be conducted properly at all times, (ii) operate, maintain and repair the Project or cause the Project to be operated, maintained and repaired in accordance with the standards set forth in the O&M Agreements, manufacturer’s requirements necessary to maintain warranties and insurance requirements, (iii) possess all equipment necessary for the operation of the Project and maintain such spare parts and inventory or renew and replace equipment, in each case as consistent with the Transaction Documents and the “reasonable and prudent operator” standard, and (iv) maintain at the Project Site a complete set of plans and specifications for the Project.

 

(b)                                 The Borrower shall keep its present and future properties and business insured as required by and in accordance with the terms and provisions described on Schedule 6.3(b). The Borrower shall obtain and maintain and shall pursue any contractual remedies to cause other Persons required to provide Required Insurance, including, but not limited to any Construction Contractor and Operator to obtain and maintain such Required Insurance or alternate coverage provided for on Schedule 6.3(b) or in their respective Project Documents, as the case may be.

 

6.4.                            Maintenance of Existence; Conduct of Business.

 

The Borrower shall (i) maintain and preserve its existence as a limited liability company organized and existing under the laws of Delaware and acquire, maintain, and renew all rights, licenses, contracts, powers, privileges, Leases, lands, sanctions, and franchises necessary in the normal conduct of its business and in the performance of its obligations hereunder and under the other Transaction Documents, (ii) observe all corporate formalities and (iii) engage only in the business contemplated by the Transaction Documents.

 

6.5.                            Compliance with Governmental Rules; Environmental Laws; Governmental Approvals.

 

The Borrower shall, with respect to work relating to the Project, using prudent business judgment in good faith, vigorously pursue all contractual remedies available to it to cause each Construction Contractor and Operator to (i) comply with, and shall conduct its business, operations, assets, equipment, property, leaseholds, and other facilities in compliance with all Environmental Laws and in compliance with all other Governmental Rules the noncompliance with which could reasonably be expected to have a Material Adverse Effect, and (ii) procure, maintain and comply with all Governmental Approvals required for the ownership, construction, financing, maintenance or operation of the Project or any part thereof as contemplated by the Transaction Documents at or prior to such time as

 

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such Governmental Approval is required or necessary, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

6.6.                            Compliance with Debarment Regulations.

 

The Borrower shall provide immediate written notice (including a brief description) to DOE if at any time it learns that the representations made with respect to Debarment Regulations were erroneous when made or have become erroneous by reason of changed circumstances.

 

6.7.                            Tax, Duties, Proper Legal Form.

 

The Borrower shall pay or arrange for the payment before they become overdue of all present and future (i) Taxes (including stamp taxes), duties, fees, Periodic Expenses, or other charges payable on or in connection with the execution, issue, delivery, registration, or notarization, or for the legality, validity, or enforceability, of this Common Agreement, any other Transaction Documents and any other documents related to this Common Agreement (other than any Tax that it is contesting in good faith and by appropriate proceedings for which reserves have been established to the extent required by GAAP) (ii) claims, levies, or liabilities (including claims for labor, services, materials and supplies), for sums that have become due and payable and that have or, if unpaid, might become a Lien (other than a Permitted Lien) upon the property of the Borrower (or any part thereof) and (iii) Taxes payable by it or imposed upon its income or property. The Borrower shall take all action to ensure that each of the Transaction Documents is in proper legal form under the respective governing laws selected in such Transaction Document, without any further action required with respect to such legal form for the enforcement of such Transaction Documents.

 

6.8.                            Construction and Approved Construction Changes.

 

(a)                                  The Borrower shall apply the proceeds of the Advances exclusively to Eligible Base Project Costs and shall use its best efforts to cause: Physical Completion to be achieved on or prior to the Anticipated Physical Completion Date and in any event within the Construction Budget (together with the resources available to the Borrower from the Overrun Equity Commitment and, with DOE’s consent, as provided in the Sponsor Guarantee); Operational Completion to be achieved on or prior to the Anticipated Operational Completion Date and in any event within the Construction Budget (together with the resources available to the Borrower from the Overrun Equity Commitment and, with DOE’s consent, as provided in the Sponsor Guarantee); Financial Completion to be achieved on or prior to the Anticipated Financial Completion Date; and Project Completion to be achieved on or prior to the Anticipated Project Completion Date.

 

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(b)                                 The Borrower shall not change, reallocate, amend, modify, or supplement or permit or consent to any changes, reallocations, amendments, modifications, or supplements (each a “Construction Change”) of any of the provisions of the Project Milestone Schedule or the Construction Budget, except for the following changes (“Approved Construction Changes”):

 

(i)                                     any Construction Change that (x) has been submitted in writing by the Borrower to DOE (including an explanation in reasonable detail of the reasons for such Construction Change) and (y) has received a written approval from DOE in consultation with the Lender’s Engineer (which approval may be provided by electronic mail);

 

(ii)                                  any increase of any of the line items in the Construction Budget if such increase (x) is not individually in excess of $1,500,000, and (y) when aggregated with all other changes to the Construction Budget in accordance with this Section 6.8(b)(ii) since the Financial Closing Date, would not result in a cumulative net decrease, since the Financial Closing Date, of Contingencies of more than $4,000,000;

 

(iii)                               any payments for Overrun Project Costs made with the proceeds of the Overrun Equity Commitment or, with DOE’s consent, as provided in the Sponsor Guarantee; and

 

(iv)                              any revision to the Project Milestone Schedule determined by the Borrower and confirmed by the Lender’s Engineer to DOE (x) not to impair or delay achievement of the Guaranteed Operational Completion Date, (y) could not reasonably be expected to have a Material Adverse Effect, or (z) not to increase any cost in the Construction Budget other than as allowed under Section 6.8(b)(ii).

 

(c)                                  All Approved Construction Changes shall be reflected in a revised Project Milestone Schedule, Construction Budget and/or Advance Schedule, as the case may be, delivered as part of the next Quarterly Reporting Package.

 

6.9.                            Operating Forecasts.

 

From and after the Project Completion Date, the Borrower shall or shall cause the Project to operate in all material respects pursuant to the Operating Plan then in effect.

 

6.10.                     Diligent Construction of Project and Operations.

 

The Borrower shall construct the Project diligently in accordance with the Construction Contracts and the other Transaction Documents, Governmental Approvals, the Project Milestone Schedule and the Construction Budget. The

 

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Borrower shall conduct, and shall cause each Operator to conduct, the operations of the Project on the basis of customary commercial practice and arm’s-length arrangements, or as otherwise set forth in the Project Documents, with due diligence and efficiency and under the supervision of qualified and experienced management.

 

6.11.                     Ineligible and Overrun Project Costs.

 

All Ineligible Project Costs and Overrun Project Costs shall be funded in accordance with the Equity Funding Agreement.

 

6.12.                     Cost Overruns and Contingencies.

 

Any Cost Overrun shall be funded as a Project Cost, first, from Contingencies (to the extent of available funds), next, from Overrun Equity in accordance with Section 2.4.2 and the Equity Funding Agreement, and next, but only upon DOE consent in its sole discretion, from the Sponsor Guarantee pursuant to the terms thereunder.

 

6.13.                     Use of Proceeds; Repayment of Indebtedness.

 

(a)                                  Proceeds.  The Borrower shall use the proceeds of all Equity Contributions and all Advances in accordance with the terms and conditions of all applicable Loan Documents.

 

(b)                                 Repayment of Indebtedness.  The Borrower shall repay in accordance with its terms all Indebtedness due under the Loan Documents.

 

6.14.                     Performance of Obligations.

 

The Borrower shall maintain in full force and effect each of the DOE Credit Facility Documents and each of the other Loan Documents to which it is a party in accordance with the respective terms thereof, except for those Loan Documents that shall by their terms terminate after the indefeasible payment in full of all Secured Obligations owed thereunder. The Borrower shall comply with the provisions of and perform all of its obligations under each Loan Document in accordance with the terms thereof. The Borrower shall maintain in full force and effect each of the Accounts in accordance with the Collateral Agency Agreement.

 

6.15.                     Project Documents.

 

The Borrower shall (i) maintain all the Project Documents to which it is a party in full force and effect in accordance with their terms, (ii) comply with the material provisions of and perform all of its material obligations under such Project Documents, and (iii) diligently pursue all of its rights and remedies under such

 

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Project Documents where the failure to do so could reasonably be expected to have a Material Adverse Effect.

 

6.16.                     Cash Deposits.

 

The Borrower shall instruct each Person remitting cash to or for the account of the. Borrower to deposit such cash in accordance with the terms of the Collateral Agency Agreement and shall otherwise comply with the Collateral Agency Agreement. The Borrower shall remit any amounts received by it or received by third parties on its behalf to the Collateral Agent for deposit in accordance with the Collateral Agency Agreement.

 

6.17.                     Reserve Accounts.

 

(a)                                  The Borrower shall establish and maintain in accordance with the Collateral Agency Agreement a reserve for Debt Service (the “Debt Service Reserve”). The Debt Service Reserve shall consist of any combination of cash and Reserve Letters of Credit.

 

(b)                                 The Borrower shall establish and maintain in accordance with the Collateral Agency Agreement the Major Maintenance Reserve in the Major Maintenance Reserve Account.

 

(c)                                  The Borrower shall establish and maintain in accordance with the Collateral Agency Agreement the Battery Replacement Reserve in the Battery Replacement Reserve Account.

 

6.18.                     Safety Audit.

 

Not less frequently than once each calendar year, the Borrower shall conduct, or cause the Operators to conduct, a safety audit of the Project in a manner reasonably satisfactory to DOE (in consultation with the Lender’s Engineer), each in its sole discretion, including an analysis of whether the Project is in compliance with all Governmental Rules and Environmental Laws and each such safety audit shall result in the prompt preparation of a written report with respect thereto which shall be delivered to DOE and the Lender’s Engineer for review and approval by DOE, in consultation with the Lender’s Engineer. The Borrower shall provide for the prompt correction of any deficiencies identified in such safety audit and for the operation and maintenance of the Project in accordance with any recommendations set forth therein.

 

6.19.                     Replacement of Certain Project Participants.

 

The Borrower shall, at the request of DOE (after consultation with the Borrower), exercise its right (if any) to terminate for cause (i) any Operator in accordance with and as permitted by the applicable O&M Agreement, (ii) each Construction

 

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Contractor in accordance with and as permitted by the Construction Contracts (other than Harris Stratex Networks Operating Corporation in respect of the Equipment Purchase Agreement), or (iii) any Person party to any other Project Document in accordance with and as permitted by such Project Document, in each case either if the relevant counterparty is a First Wind Entity or an Affiliate thereof or, otherwise, if the failure to do so could reasonably be expected to have a Material Adverse Effect. Promptly after any termination, the Borrower shall enter into a replacement agreement with a new operator, Construction Contractor or other Person, as the case may be, on terms and conditions satisfactory to DOE.

 

6.20.                     Security Interest in Newly Acquired Property; Additional Project Documents.

 

If the Borrower shall at any time acquire any interest in property not covered by the Security Documents or enter into any Additional Project Document, the Borrower shall promptly (i) execute, deliver and record a supplement to the Security Documents, satisfactory in form and substance to DOE, (ii) ensure that the security interest shall be valid and effective and (iii) deliver to the Collateral Agent, a consent to assignment for each such Additional Project Document in an agreed form; provided, however, that the obligation in this paragraph shall not apply to vehicles or other minor assets.

 

6.21.                     Title; Rights to Land.

 

The Borrower shall preserve and maintain good and valid title to the Project and such rights to use the Project Site as are necessary to construct, operate and maintain the Project in accordance with the requirements of the Transaction Documents.

 

6.22.                     Independent Consultants.

 

The Borrower (i) shall cooperate in all respects with each Independent Consultant and (ii) shall ensure that each Independent Consultant is provided with all information reasonably requested by such Independent Consultant in fulfilling its duties to the Credit Parties and ensure that any information that it may supply to such Independent Consultant is accurate and not, by omission of information or otherwise, misleading in any material respect at the time such information is provided.

 

6.23.                     Additional Documents; Filings and Recordings.

 

(a)                                  The Borrower shall execute and deliver, from time to time as reasonably requested by DOE or the Collateral Agent at the Borrower’s expense, such other documents as shall be necessary or advisable in connection with the rights and remedies of the Credit Parties and the Collateral Agent granted or

 

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provided for by the Transaction Documents, and to consummate the transactions contemplated therein.

 

(b)                                 (i) The Borrower shall, at its own expense, take all actions that have been or shall be reasonably requested by DOE or the Collateral Agent, or that the Borrower knows are necessary, to establish, maintain, protect, perfect and continue the perfection of the first priority (subject to Permitted Liens) security interests of the Secured Parties created by the Security Documents and shall furnish timely notice of the necessity of any such action, together with such instruments, in execution form, and such other information as may be required or reasonably requested to enable any appropriate Secured Party to effect any such action. Without limiting the generality of the foregoing, the Borrower shall, at its own expense, (A) execute or cause to be executed and shall file or cause to be filed or register or cause to be registered such financing statements, continuation statements, fixture filings and mortgages or deeds of trust in all places necessary or advisable (in the opinion of counsel for the DOE or the Collateral Agent) to establish, maintain and perfect such security interests and in all other places that DOE or the Collateral Agent shall reasonably request, (B) discharge all other Liens (other than Permitted Liens) or other claims adversely affecting the rights of the Secured Parties in the Collateral Security and (C) deliver or publish all notices to third parties that may be required to establish or maintain the validity, perfection or priority of any Lien created pursuant to the Security Documents.

 

(ii)                                  The Borrower shall do everything necessary in the reasonable judgment of DOE or the Collateral Agent (including filing, registering and recording all necessary documents and paying all fees, taxes, levies, imposts and Periodic Expenses in connection therewith) to (A) create security arrangements, including, if applicable, the establishment of a pledge or the perfection of any Lien or, as applicable, the enforceability of a Lien as against the Borrower and any subsequent lienor (including a judgment lienor), holder of a charge, or transferee for or not for value, in bulk, by operation of law, or otherwise, in each case granted, with respect to future assets in accordance with the requirements of all Governmental Rules, or the law of any other jurisdiction, as applicable, subject only to Permitted Liens (B) maintain the security and pledges created by the Security Documents in full force and effect at all times (including, as applicable, the priority thereof), subject only to Permitted Liens, and (C) preserve and protect the Collateral Security and protect and enforce its rights and title, and the rights and title of the Credit Parties, to the security created by the Security Documents. Furthermore, the Borrower shall cause to be delivered to DOE such opinions of counsel and other related documents as may be reasonably requested by DOE or the Collateral Agent to assure compliance with this Section 6.23. Additionally, when requested by DOE, the Borrower shall cause any Person party to a Project Document (other than a Third Party Materials Supply Agreement) executed subsequent to the Financial Closing Date to enter into a Direct Agreement with

 

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the Collateral Agent in form and substance satisfactory to DOE and the Collateral Agent.

 

6.24.                     Compliance with Governmental Rules.

 

The Borrower at all times shall comply with Section 609.10(d)(20) of the Applicable Regulations, and shall conduct its business, operations, assets, equipment, property, leaseholds, and other facilities in compliance with all Environmental Laws and in compliance with all other Governmental Rules the noncompliance with which could reasonably be expected to have a Material Adverse Effect.

 

6.25.                     Event of Loss.

 

If any material Event of Loss shall occur with respect to the Project or any part thereof, the Borrower shall (i) diligently pursue all its rights to compensation against all relevant insurers, reinsurers and Governmental Authorities, as applicable, in respect of such event, (ii) not, without the written consent of DOE, compromise or settle any claim (A) with respect to any Event of Loss involving an amount in excess of $1,000,000 per claim; and (iv) pay or apply all Loss Proceeds stemming from such event in accordance with Section 3.4.3(a)(ii) and Section 6.26.

 

6.26.                     Application of Loss Proceeds.

 

(a)                                  All Loss Proceeds shall be applied as provided in this Section 6.26. All Loss Proceeds shall be paid by the relevant insurers, reinsurers and Governmental Authorities, as applicable, directly to the Collateral Agent as loss payee and, if paid to the Borrower, such Loss Proceeds shall be received in trust and for the benefit of the Collateral Agent segregated from other funds of the Borrower, and shall be forthwith paid over to the Collateral Agent in the same form as received (with any necessary endorsement). The Collateral Agent as directed by DOE shall apply all such Loss Proceeds in accordance with the provisions of this Section 6.26.

 

(b)                                 Upon the occurrence of a Event of Loss with respect to which Loss Proceeds are payable in respect of a single loss in an amount not in excess of $2,000,000, the Borrower shall apply such Loss Proceeds to the payment of the costs of repair or restoration of the portion of the Project lost or damaged, and disbursement of such funds by the Collateral Agent shall be made in accordance with the Collateral Agency Agreement.

 

(c)                                  Upon the occurrence of any Event of Loss with respect to which Loss Proceeds are payable in respect of a single loss in an amount in excess of $2,000,000, disbursement of funds by the Collateral Agent to the Borrower shall

 

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be permitted if, and only if, DOE after consultation with the Lender’s Engineer shall have determined that:

 

(i)                                             repair or replacement of the relevant portion of the Project is technically and economically feasible and would not result in a breach of the Debt Service Coverage Ratio requirements set forth in Section 7.14 (taking into account the expected time period of the repair or replacement process and anticipated Operating Revenues during such period); and

 

(ii)                                          the Borrower is in compliance with such other conditions and requirements as DOE shall consider appropriate in the circumstances.

 

(d)                                 All Loss Proceeds not otherwise applied in accordance with clauses (b) or (c) of this Section 6.26, including, without limitation, due to the absence of required approval by the Lender’s Engineer or DOE, as applicable, shall be applied by the Collateral Agent to the prepayment of the DOE Guaranteed Loan in accordance with Section 3.4.3(a)(ii).

 

6.27.                     Acceptance and Startup Testing.

 

The Borrower shall consult with and provide reasonable notice to DOE and Lender’s Engineer regarding provisions related to startup and testing of facility and equipment pursuant to the Construction Contracts and the O&M Agreement.

 

6.28.                     Debt-to-Equity Contribution Ratio.

 

At all times until the Project Completion Date, the Borrower shall ensure that the Debt-to-Equity Contribution Ratio is not greater than 79:21.

 

6.29.                     Compliance With Certain U.S. Government Requirements.

 

(a)                                  Recovery Act.  The Borrower shall timely comply with the reporting requirements set out in Section 1512(c) of Title XV of Division A of the Recovery Act. Such reporting shall be made in accordance with the procedures set out or otherwise referenced in 2 C.F.R. Section 176.50 and the OMB Implementing Guidance, and, in each case, any amendment, supplement or successor thereto. DOE may require in its notice that such reporting relate back to the date hereof. Accordingly, Borrower shall at all times maintain such records as may be necessary, in the event DOE issues such notice, to undertake such reporting obligations.

 

(b)                                 Lobbying Requirements.  The Borrower shall comply with all requirements of 31 U.S.C. §1352, including if any funds have been paid or will be paid to any Person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress in connection with the

 

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Advances, the Borrower shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.

 

(c)                                  Use of United States Government Funds.  The Borrower shall comply with Section 609.10(c) of the Applicable Regulations regarding the prohibition on the use of funds obtained from the United States Government, or from a loan or other instrument guaranteed by the United States Government, for the payment of Credit Subsidy Costs, administrative fees, or other fees charged by or paid to DOE relating to the Applicable Regulations, except to the extent explicitly authorized by an act of the United States Congress.

 

(d)                                 Foreign Assets Control Regulations, Prohibited Persons, Etc.

 

(i)                                     The Borrower shall ensure that the making of any Advances and the use of the proceeds thereof will not violate any Governmental Rule, including the Foreign Asset Control Regulations.

 

(ii)                                  The Borrower shall ensure that it and its Principal Persons shall, at all times, comply with all applicable orders, rules and regulations of OFAC and all applicable Corrupt Practices Laws.

 

(iii)                               The Borrower shall ensure that it never becomes a Prohibited Person.

 

(iv)                              The Borrower shall ensure that none of the Collateral is traded or used, directly or indirectly, by a Prohibited Person or by a Person organized in a Prohibited Jurisdiction.

 

(v)                                 The Borrower shall establish and maintain an anti-money laundering compliance program if and as required by the USA Patriot Act.

 

(vi)                              The Borrower shall ensure that its internal management and accounting practices and controls are adequate for compliance with all Corrupt Practices Laws.

 

6.30.                     Davis-Bacon Act.

 

(a)                                  In accordance with Section 1705(c) of Title XVII, beginning on the date hereof, all laborers and mechanics employed in the performance of the Project, including those employed by contractors and subcontractors, shall be paid wages at rates not less than those prevailing on similar work in the relevant locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act. In furtherance of this requirement, the contract clauses set out in 29 CFR 5.5(a)(1) through (10) are attached as Exhibit A4 (as modified therein) and are hereby incorporated herein as though set out in their entirety in this Section

 

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6.30 and as provided therein shall be incorporated into all other Davis-Bacon Act Covered Contracts (as defined in Exhibit A4), in each case.

 

(b)                                 The Borrower, on DOE’s behalf, shall systematically review the certified payroll records that it maintains for its own laborers and mechanics pursuant to subparagraph (b)(3)(i) of Exhibit A4 and those that it receives for the laborers and mechanics of any Contract Party (as defined in Exhibit A4) pursuant to subparagraph (b)(3)(ii)(A) of Exhibit A4. The Borrower shall promptly notify the DOE contracting officer in writing when it receives any complaint related to non-compliance with the Davis-Bacon Act, or discovers in the course of its systematic review of the certified payroll records an incident that the Borrower reasonably believes to be a case of such non-compliance and which, in each case, the Borrower cannot resolve on its own and shall forward to the DOE contracting officer (1) the complaint or a written summary of the non-compliant incident, (2) a summary of the Borrower’s investigation into such complaint or such incident, and (3) the relevant certified payroll records. Certified payroll records maintained by the Borrower shall be preserved for three (3) years after completion of work. Notwithstanding anything to the contrary in subparagraph (b)(3)(ii)(A) of Exhibit A4, the Borrower shall maintain such certified payroll records at a site designated by the Borrower and shall make such records available to DOE and the U.S. Department of Labor when necessary, and upon request, for purposes of an investigation or audit of compliance with prevailing wage requirements. Certified payroll records maintained by the Borrower shall be considered federal government records for the purposes of the Freedom of Information Act, 42 U.S.C. 552. The Borrower shall provide such records to DOE within five (5) days of receipt of any request for such records from DOE.

 

(c)                                  If the DOE Credit Facility Commitment terminates as a consequence of the Borrower’s failure to deliver on or before September 30, 2011, a written certification to DOE that Commencement of Construction has occurred, such termination (and any corresponding Event of Default under this Common Agreement) shall not be deemed to release the Borrower or any other Contract Party (as defined in Exhibit A4) from their respective obligations under this Section 6.30 and Exhibit A4, nor from any liability for any breach by any such party of the terms and provisions of this Section 6.30 and Exhibit A4, in each case, as required to be performed during the period prior to such termination.

 

6.31.                     ERISA Covenants.

 

(a)                                  The Borrower shall do, and shall cause each ERISA Affiliate to do, each of the following: (i) maintain each Employee Benefit Plan in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code or other Federal or state law; (ii) cause each Qualified Plan to maintain its qualified status under Section 401(a) of the Internal Revenue Code; (iii) timely make all required contributions to any Employee Benefit Plan; (iv)

 

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not become a party to any Multiemployer Plan; (v) ensure that all liabilities under each Pension Plan are either (A) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing such Pension Plan; (B) insured with a reputable insurance company; or (C) provided for or recognized in the Financial Statements most recently delivered to DOE under Section 6.1 hereof); and (vi) ensure that the contributions or premium payments to or in respect of each Pension Plan is and continues to be promptly paid at no less than the rates required under the rules of such Pension Plan and in accordance with the most recent actuarial advice received in relation to such Pension Plan and applicable law.

 

(b)                                 The Borrower shall not, nor shall it permit any of ERISA Affiliate to, (i) terminate any Pension Plan so as to result in any material (in the opinion of DOE) liability to the Borrower or any ERISA Affiliate, (ii) permit to exist any ERISA Event, or any other event or condition, which presents the risk of a material (in the opinion of DOE) liability to any ERISA Affiliate, (iii) make a complete or partial withdrawal (within the meaning of Section 4201 of ERISA) from any Multiemployer Plan so as to result in any material (in the opinion of DOE) liability to the Borrower or any ERISA Affiliate, (iv) enter into any new Pension Plan or modify any existing Pension Plan so as to increase its obligations thereunder which could result in any material (in the opinion of DOE) liability to the Borrower or any ERISA Affiliate, or (v) permit the present value of all nonforfeitable accrued benefits under any Pension Plan (using the actuarial assumptions utilized by the PBGC upon termination of an employee pension benefit plan subject to Title IV of ERISA) materially (in the opinion of DOE) to exceed the fair market value of the Pension Plan’s assets allocable to such benefits, all determined as of the most recent valuation date for each such Pension Plan.

 

6.32.                     Domestic Procurement Consideration.

 

In respect of the operation and maintenance of the Project, Borrower shall give full consideration to procuring from its suppliers for the Project equipment and components manufactured in the United States, taking into account availability, cost, technical performance, reliability, efficiency, warranty coverage and related commercial terms.

 

6.33.                     Initial Advance Date.

 

Borrower shall request the initial Advance and satisfy all conditions precedent to such Advance under the DOE Credit Facility Documents pursuant to the submission of the Master Advance Notice, in accordance with Section 2.3.1, within ten (10) Business Days after the Financial Closing Date.

 

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6.34.                     Separateness Provisions.

 

Borrower shall comply with the separateness provisions set forth on Schedule 6.34.

 

ARTICLE 7
NEGATIVE COVENANTS

 

The Borrower covenants and agrees that until the date all Secured Obligations (other than inchoate indemnity obligations) are paid in full and the DOE Credit Facility Commitment has terminated, unless DOE waives compliance in writing:

 

7.1.                            Indebtedness.

 

The Borrower shall not, and shall not agree to, incur, create, guarantee, assume, permit to exist or otherwise become liable for any Indebtedness, except for:

 

(a)                                  Indebtedness incurred under the Loan Documents;

 

(b)                                 Contingent Obligations under the Project Documents all of which are subordinated to the Secured Obligations, but excluding any amounts payable by the Borrower to any Affiliate other than payments in the ordinary course of business under the Project O&M Agreement and the Administrative Services Agreement;

 

(c)                                  Permitted Subordinated Loans;

 

(d)                                 Indebtedness in respect of amounts due to trade creditors and accrued expenses, in each case arising in the ordinary course of business, to the extent such amounts and expenses are not unpaid more than ninety (90) days past the due date therefor;

 

(e)                                  Indebtedness for the acquisition of equipment or property incurred in connection with the construction or operation of the Project as explicitly contemplated under a Principal Project Document; and

 

(f)                                    Permitted Leases.

 

7.2.                            Liens.

 

The Borrower shall not, and shall not agree to, create, assume or otherwise permit to exist any Lien upon any of the Collateral Security or any of its other property, whether now owned or hereafter acquired, or in any proceeds or income therefrom, other than Permitted Liens.

 

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7.3.                            Leases.

 

The Borrower shall not enter into any agreement or arrangement to acquire by Lease the use of any property or equipment of any kind (including by sale-leaseback or otherwise), except for Permitted Leases in an amount not in excess of the amount budgeted therefor in the Construction Budget or forecast therefor in the Operating Forecast, as applicable.

 

7.4.                            Loans, Advances and Investments.

 

The Borrower shall not make or permit to remain outstanding any loans, extensions of credit or advances by the Borrower to or investments by the Borrower in (whether by acquisition of any stocks, notes or other securities or obligations) any Person, except for Permitted Investments or as expressly provided in the Transaction Documents as in effect on the Financial Closing Date.

 

7.5.                            Capital Expenditures.

 

The Borrower shall not make any Capital Expenditure in any year except for (a) expenditures contemplated by the Construction Budget, (b) expenditures made from the proceeds of insurance to the extent permitted by the Loan Documents, (c) expenditures pursuant to periodic budgets previously approved by DOE, (d) in amounts that are available and could have been paid as a Restricted Payment under Section 7.10, and (e) other Capital Expenditures in an aggregate in any Fiscal Year not in excess of $250,000, provided that the Borrower shall be authorized to make such expenditures as are necessary to address health or safety emergencies (but not to exceed in any instance $500,000).

 

7.6.                            Subsidiaries; Partnerships.