Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
  
FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 20, 2018
  
PATTERN ENERGY GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware
001-36087
90-0893251
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification Number)
   
1088 Sansome Street
San Francisco, CA 94111
(Address and zip code of principal executive offices)
(415) 283-4000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 1.01 Entry into a Material Definitive Agreement.
Stillwater Purchase and Sale Agreement
On November 20, 2018, Pattern Energy Group Inc. (“Pattern Energy”) and Vertuous Energy LLC (“Vertuous”), a wholly owned subsidiary of the Public Sector Pension Investment Board (“PSP Investments”), entered into and consummated a Purchase and Sale Agreement (the “Stillwater PSA”) with Pattern Energy Group 2 LP to purchase certain indirect ownership interests in Stillwater Wind, LLC. Stillwater Wind, LLC owns an approximate 80 megawatt (“MW”) wind project (the “Wind Project”) located in Stillwater County, Montana which achieved commercial operations in late October. Pattern Energy indirectly owns 51% of the membership interests in a holding company which holding company owns all of the Class B membership interests in an underlying project holding company for the Wind Project, entitling Pattern Energy to a 43% initial interest in the distributable cash flows produced by the Wind Project. Immediately after the closing, the Company's owned interest with respect to the Wind Project was approximately 35 MW.
Pattern Energy’s purchase consideration under the Stillwater PSA was approximately $23 million which was funded using available liquidity.
The Stillwater PSA included customary representations by the parties thereto, including as to due authorization, non-contravention, governmental consents and approvals, enforceability, ownership and title, no litigation or adverse claims, tax and holding company matters and, in the case of the seller, certain matters with respect to the project companies and underlying Wind Project. The Stillwater PSA provides for customary indemnification by the parties thereto, for breaches of representations or covenants, which indemnification is subject to customary limitations including, among other things, a cap and time limits.
The Stillwater PSA was previously recommended by the Conflicts Committee of Pattern Energy’s board of directors (the “Pattern Energy Board of Directors”), which is comprised solely of independent directors, for approval by the Pattern Energy Board of Directors, and was approved by the Pattern Energy Board of Directors.
Arrangements between Pattern Energy, Vertuous and PSP Investments relating to the Stillwater PSA
Pursuant to the Stillwater PSA, Vertuous purchased the remaining 49% of the membership interests in the holding company that owns the Class B membership interests in the underlying project holding company for the Wind Project. In connection with the consummation of the Stillwater PSA, on November 20, 2018, the limited liability company agreement of the holding company was amended and restated (the “A&R LLC Agreement”). The A&R LLC Agreement sets forth provisions relating to governing the affairs of the holding company, including with respect to (among other things) the disposition of interests by a member, the capital accounts of members, distributions and allocations among members, the management of such LLC, and consents required for certain actions.
In addition, pursuant to a Reimbursement Agreement, Pattern Energy and PSP Investments agreed to allocations of certain payments between each other which might become payable under certain guaranties relating to the Wind Project.
PSP Investments holds approximately 9.5% of Pattern Energy’s outstanding Class A common stock.
The foregoing descriptions of each of such agreements under this Item 1.01 do not purport to be complete and are qualified in their entirety by reference to each of such agreements which are included as exhibits to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On November 26, 2018, the Company issued a press release relating to the consummation of the agreement to purchase the Wind Project. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.1 hereto) is being “furnished” and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing. The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.1 hereto) will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.





Item 9.01. Financial Statements and Exhibits.
d. Exhibits
Exhibit Number
 
Description
10.1
 
 
 
 
10.2
 
 
 
 
10.3
 
 
 
 
99.1
 






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Pattern Energy Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 27, 2018
 
 
 
 
 
 
PATTERN ENERGY GROUP INC.
 
 
 
 
 
 
By:
/s/ Kim H. Liou
 
 
 
Name: Kim H. Liou
 
 
 
Title:   General Counsel and Secretary
 



Exhibit
EXHIBIT 10.1
EXECUTION VERSION




PURCHASE AND SALE AGREEMENT

by and among
PATTERN ENERGY GROUP INC.,

VERTUOUS ENERGY LLC,
each, a Purchaser

and
PATTERN ENERGY GROUP 2 LP,
Seller

Dated as of
November 20, 2018


Indirect Interests
in
STILLWATER WIND, LLC








 





LIST OF APPENDICES
Appendix A-1        General Definitions

Appendix A-2        Rules of Construction

Appendix B        Transaction Terms and Conditions

Appendix C        Acquired Interests; Ownership Structure; and Wind Project Information

Appendix D        Documents and Key Counterparties

Appendix E        Affiliate Transactions

LIST OF SCHEDULES
Schedule 2.5
Seller Consents and Approvals

Schedule 3.5
Purchaser Consents and Approvals

Schedule 6.4(b)    Control of Defense of Third Party Claims

LIST OF EXHIBITS
Exhibit A
Form of New B Member LLC Agreement

Exhibit B
Form of Reimbursement Agreement


    





PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of November 20, 2018, is made by and among Pattern Energy Group Inc., a Delaware corporation (“PEGI”), Vertuous Energy LLC, a Delaware limited liability company (“PSP,” each of PSP and PEGI, a “Purchaser,” and together, “Purchasers”), and Pattern Energy Group 2 LP, a Delaware limited partnership (“Seller”). Capitalized terms used in this Agreement shall have the respective meanings specified in Appendix A-1 attached hereto.
RECITALS
WHEREAS, Seller owns, directly or indirectly through one or more of its Affiliates (each such Affiliate, a “Seller Affiliate”), some or all of the membership interests in the project company which owns the wind project (herein referred to as the “Project Company”, as described on Part I of Appendix C attached hereto; and the “Wind Project”, as described on Part II of Appendix C); and
WHEREAS, Seller desires to sell to Purchasers, and Purchasers desire to purchase from Seller, the Acquired Interests defined and described in Part I of Appendix C attached hereto (herein referred to as the “Acquired Interests”), with each Purchaser severally purchasing the percentage of the Acquired Interests set forth opposite its name in Part I of Appendix C (such Purchaser’s “Percentage Portion”).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual terms, conditions and agreements set forth herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE ACQUIRED INTERESTS
1.1    Agreement to Sell and Purchase. Subject to the satisfaction or waiver (by the party for whose benefit such condition exists) of the conditions set forth in Article 5 and the other terms and conditions of this Agreement, at the Closing (a) Seller shall sell, assign, transfer and convey (or, if applicable, cause the Subsidiary Transferor to sell, assign, transfer and convey) the Acquired Interests to Purchasers, and (b) each Purchaser shall severally purchase its Percentage Portion of the Acquired Interests from Seller (or, if applicable, the Subsidiary Transferor), for its pro rata portion of the Purchase Price set forth opposite its name in Part I of Appendix B (such Purchaser’s “Separate Purchase Price”, and collectively, the “Aggregate Purchase Price”).
1.2    Signing Date Deliverables. On or prior to the date of this Agreement, Seller has delivered or is delivering to Purchasers the Financial Model for the Project Company as of the date hereof. On the date of this Agreement each of Seller and Purchasers shall deliver to the other party the deliverables set forth in Part II of Appendix B.


    




1.3    Purchase Price. The purchase price payable by each Purchaser to Seller (or, if applicable, the Subsidiary Transferor) for the Acquired Interests at Closing shall be such Purchaser’s Separate Purchase Price set forth in Part I of Appendix B. The Aggregate Purchase Price shall be subject to adjustment by the Purchase Price Adjustment (if any) set forth in Part I of Appendix B. All payments of the Aggregate Purchase Price and any Purchase Price Adjustment shall be paid by wire transfer of same day funds in the applicable Currency to the applicable accounts set forth in Part I of Appendix B. The Post-Closing Adjustment (if any) shall be paid as set forth in Part I of Appendix B.
1.4    The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place on the date and at the location specified in Part III of Appendix B or such other time and place as the parties hereto shall mutually agree (including Closing by facsimile or “PDF” electronic mail transmission exchange of executed documents or signature pages followed by the exchange of originals as soon thereafter as practicable), and will be effective as of 12:01 a.m. Eastern Time on the day the Closing occurs.
1.5    Conduct of Closing.
(a)    At or prior to the Closing, Seller shall deliver, or cause to be delivered, to each Purchaser:
(i)
Unexecuted forms of the ECCA Joinder, the Security Agreement Joinder, the ECCA Consent Joinder and the Grantor Supplement, which upon execution thereof by New B Member, New Holdings and the other parties thereto, will grant New Holdings the right and obligations to acquire the Project Company from Stillwater Energy (it being understood that such documents will be executed and delivered at the Closing by New B Member and New Holdings pursuant to Section 1.5(b)(ii) and Appendix B-2).
(ii)
a copy of the original membership interest certificate of the Project Company duly endorsed for transfer or with appropriate powers with respect thereto duly endorsed; provided, that if such interest is not in certificated form, Seller shall deliver a duly executed assignment agreement or other instrument conveying such interest to New Holdings in form and substance reasonably acceptable to each Purchaser (it being understood that the certificates and instruments under this clause (ii) are being held in escrow and will only be released following the Closing simultaneous with the purchase of the Project Company pursuant to the ECCA and the payment by New Holdings of the purchase price thereunder, a portion of which will be simultaneously paid to repay the construction loans under Financing Agreement as provided in the Flow of Funds Memorandum);

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(iii)
any other documents and certificates contemplated by Article 4 and Article 5 hereof to be delivered by or on behalf of Seller, including the certificate referred to in Section 5.2(d); and
(iv)
any other Closing deliverables set forth in Appendix B-1.
(b)    At or prior to the Closing, each Purchaser shall deliver to Seller and the other Purchaser:
(i)
the documents and certificates contemplated by Article 4 and Article 5 hereof to be delivered by or on behalf of such Purchaser, including the certificate referred to in Section 5.3(d); and
(ii)
any other Closing deliverables set forth in Appendix B-2.
(c)    At or prior to the Closing, PEGI shall deliver to PSP an original membership interest certificate of New B Member duly endorsed for transfer or with appropriate powers with respect thereto duly endorsed; provided, that if such interest is not in certificated form, PEGI shall deliver to PSP a duly executed assignment agreement or other instrument conveying such interests to PSP in form and substance reasonably acceptable to PSP.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in, or qualified by any matter set forth in, the Schedules attached hereto, Seller hereby represents and warrants to Purchasers as set forth in this Article 2 as of (a) the date hereof and (b) if the Closing Date is not the date of this Agreement, the Closing Date, in each case, unless otherwise specified in the representations and warranties below, in which case the representation and warranty is made as of such date. Whether or not a particular Section of this Article 2 refers to a specific, numbered Schedule, such Section shall, to the extent applicable, be subject to the exceptions, qualifications, and other matters set forth in the Schedules to the extent that the relevance of such exceptions, qualifications or other matters is reasonably apparent on the face thereof.
2.1    Organization and Status. Each of Seller and the Subsidiary Transferor (a) is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation as set forth in the preamble to this Agreement or Part I of Appendix C, as applicable, (b) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary, and (c) has all requisite power and authority to own or hold under lease the property it purports to own or hold under lease and to carry on its business as now being conducted. Seller has made available to Purchasers complete and correct copies of the Organization Documents for the Project Company, the Subsidiary Transferor and each of their respective Subsidiaries. The Project Company does not have and has never had any Subsidiaries. The Project Company is a legal entity duly formed, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite organizational power and authority to own, lease and operate its properties and to carry on its

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business as it is now being conducted, and is duly qualified, registered or licensed to do business as a foreign entity and is in good standing in each jurisdiction in which the property owned, leased or operated by such Person or the nature of the business conducted by such Person makes such qualification necessary, except where the failure to be so duly qualified, registered or licensed and in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
2.2    Power; Authority; Enforceability. Each of Seller and the Subsidiary Transferor has the legal capacity and power to enter into, deliver and perform its obligations under this Agreement and has been duly authorized, in accordance with its Organization Documents, to enter into, deliver and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by Seller and constitutes the legal valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law.
2.3    No Violation. The execution, delivery and performance by Seller of its obligations under this Agreement, and the performance by the Subsidiary Transferor of this Agreement, in each case including without limitation the sale of the Acquired Interests to the Purchasers, do not, and will not, (a) violate any Governmental Rule to which Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries is subject or the Organization Documents of Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries, (b) result in the creation or imposition of any Lien (other than a Permitted Lien) upon the Acquired Interests or the Project Company, (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Seller or the Subsidiary Transferor is a party or by which such Person is bound, (d) other than as set forth in Schedule 2.5, conflict with, result in a breach of, constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate, modify or cancel or require any Consent under any Material Contract or (e) other than as set forth in Schedule 2.5, require any notice under any Material Contract, except in the case of this clause (e), as would not reasonably be expected to be material in the context of the Wind Project or otherwise prevent or materially impair or materially delay the consummation of the transactions contemplated by this Agreement.
2.4    No Litigation.
(a)    None of Seller, the Subsidiary Transferor or their respective Affiliates is a party to or has received written notice of any pending or, to the Knowledge of Seller, threatened litigation, action, suit, proceeding or governmental investigation against Seller, the Subsidiary Transferor or their respective Affiliates which would reasonably be expected to be material to the ownership of the Acquired Interests or which seeks the issuance of an order restraining, enjoining, altering or materially delaying the consummation of the transactions contemplated by this Agreement.

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(b)    The Project Company is not a party to nor has it received written notice of any pending or, to the Knowledge of Seller, threatened litigation, action, suit, proceeding or governmental investigation which would reasonably be expected to be material to the Project Company or the Wind Project or which seeks the issuance of an order restraining, enjoining, altering or materially delaying the consummation of the transactions contemplated by this Agreement.
(c)    There are no material disputes with any counterparty to a Material Contract, nor has the Subsidiary Transferor or the Project Company made any material warranty claim under any Material Contract.
2.5    Consents and Approvals. Except as set forth in Schedule 2.5, no Consent of any Governmental Authority is required by or with respect to Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries in connection with the execution and delivery of this Agreement by Seller, or the consummation by Seller or the Subsidiary Transferor of the transaction contemplated hereby, except for any Consents which if not obtained or made prior to the Closing would not reasonably be expected to prevent or impair or delay the consummation of the transactions contemplated by this Agreement and which can be reasonably expected to be obtained or made in the ordinary course after the Closing.
2.6    Acquired Interests. Seller owns, directly or indirectly through one or more Seller Affiliates, of record and beneficially one hundred percent (100%) of the Acquired Interests. Part I of Appendix C sets forth the equity capitalization of the Project Company. All of the interests described in Part I of Appendix C have been duly authorized, validly issued and are fully-paid and non-assessable and, except as set forth on Part I of Appendix C, there are no outstanding (i) equity interests or voting securities of the Project Company, (ii) securities of the Project Company convertible into or exchangeable for any equity interests or voting securities of the Project Company or (iii) options or other rights to acquire from the Project Company, or other obligation of the Project Company to issue, any equity interests or voting securities or securities convertible into or exchangeable for equity interests or voting securities of the Project Company, or any obligations of the Project Company to repurchase, redeem or otherwise acquire any of the foregoing. The Seller (or, if applicable, the Subsidiary Transferor) has good and valid title to, and has, or will have, full power and authority to convey, the Acquired Interests, as of the Closing Date. The Acquired Interests have been, or will be, validly issued, and are, or will be, fully paid and non-assessable. No Person other than Purchasers has any written or oral agreement or option or any right or privilege, whether by law, pre-emptive or contractual, capable of becoming an agreement or option for the purchase or acquisition from Seller or the Subsidiary Transferor of any of the Acquired Interests. On the Closing Date, Seller (or, if applicable, the Subsidiary Transferor) will convey to Purchasers good and valid title to the Acquired Interests free and clear of all Liens other than (i) any Liens granted to the financing parties pursuant to the LC Reimbursement Agreement and (ii) any obligations imposed under the Organization Documents of the Project Company or restrictions arising under applicable securities laws.
2.7    Solvency. There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by or, to the Knowledge of Seller, threatened against, Seller or the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries. None of

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Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries (a) has had a receiver, receiver and manager, liquidator, sequestrator, trustee or other officer with similar powers appointed over all or part of its business or its assets, and to the Knowledge of Seller, no application therefor is pending or threatened, (b) is insolvent or presumed to be insolvent under any law or is unable to pay its debts as and when they fall due, (c) has made a general assignment for the benefit of its creditors, or (d) has taken any action to approve any of the foregoing.
2.8    Compliance with Law.
(a)    There has been no actual violation by Seller or the Subsidiary Transferor of or failure by Seller or the Subsidiary Transferor to comply with any Governmental Rule that is applicable to it, or allegation by any Governmental Authority of such a violation, that would reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement.
(b)    To the Knowledge of Seller, there has been no actual violation by the Project Company of or failure by the Project Company to comply with any Governmental Rule that is applicable to it, or allegation by any Governmental Authority of such a violation, that would reasonably be expected to be material and relates to the Wind Project or would otherwise reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement.
2.9    Taxes.
(a)    The Project Company has been, at all times since its formation, a partnership or a disregarded entity for U.S. federal income tax purposes.
(b)    No jurisdiction or authority in or with which the Project Company does not file Tax Returns has alleged that it is required to file such Tax Returns.
(c)    The Project Company has timely filed all Tax Returns that it is required to file, has timely paid or has caused to be timely paid all Taxes it is required to pay to the extent due (other than those Taxes that it is contesting in good faith and by appropriate proceedings, with adequate, segregated reserves established for such Taxes) and, to the extent such Taxes are not due, has established or caused to be established reserves that are adequate for the payment thereof as required by GAAP.
(d)    The Project Company has withheld from each payment made to any Person, all amounts required by applicable law to be withheld, and has remitted such withheld amounts within the prescribed periods to the appropriate Governmental Authorities.
(e)    The Project Company has charged, collected and remitted on a timely basis all Taxes as required under applicable laws on any sale, supply or delivery whatsoever, made by it.

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(f)    The Project Company has maintained and continues to maintain at its place of business all records and books of account required to be maintained under applicable Law, including laws relating to sales and use Taxes.
(g)    No reassessments of the Taxes of the Project Company have been issued and are outstanding. None of the Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries has received any indication from any Governmental Authority that an assessment or reassessment of the Project Company is proposed in respect of any Taxes, regardless of its merits. The Project Company has not executed or filed with any Governmental Authority any agreement or waiver extending the period for assessment, reassessment or collection of any Taxes.
2.10    Unregistered Securities. Assuming the accuracy of the representations made by the Purchasers in Section 3.8 and Section 3.9, (i) it is not necessary in connection with the sale or issuance of the Acquired Interests, under the circumstances contemplated by this Agreement, to register such Acquired Interests under the Securities Act of 1933 (the “Securities Act”) and (ii) no filings are required pursuant to the securities laws of any province or territory of Canada or under any other applicable securities laws.
2.11    Broker’s Fees. None of Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries has any liability or obligation for any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.
2.12    Material Contracts. Parts I, III, IV and V of Appendix D collectively set forth a list of all Material Contracts. At or prior to the date hereof (or, in the case of Material Contracts included in any Updated Disclosure Schedules, at or prior to the date such Updated Disclosure Schedules are delivered) Seller has provided Purchasers with, or access to, copies of all Material Contracts. Each Material Contract is in full force and effect and constitutes the legal, valid, binding and enforceable obligation of the Project Company and, to the Knowledge of Seller, each other party thereto, in accordance with its terms, except as such terms may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity, whether considered in a proceeding in equity or at law. None of the Project Company or, to the Knowledge of Seller, any other party thereto (A) is in breach of or default in any material respect under a Material Contract and, to the Knowledge of Seller, no event has occurred and continuing which, with notice or the lapse of time or both, would constitute a material breach of or default under a Material Contract or would give rise to any right of termination, cancellation, acceleration, amendment, suspension or revocation of a Material Contract, or (B) has received any written notice of termination or suspension of any Material Contract, and to the Knowledge of Seller, no action is being taken by any Person to terminate or suspend any Material Contract.
2.13    Real Property.
(a)    The interests of the Project Company in all Project Company Real Property are insured under the Title Policy identified in Part II of Appendix D. Except as set forth in Part II of Appendix C, the Project Company does not own any real property. To the Knowledge of Seller, no Governmental Authority has commenced the exercise of any eminent domain or similar power

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with respect to any Project Company Real Property owned by the Project Company, and there are no pending or, to the Knowledge of Seller, threatened condemnation or eminent domain proceedings that affect any such Project Company Real Property.
(b)    The Project Company has good and marketable title to or, subject to the terms and conditions of the Material Leases, a valid leasehold interest or the right to use all Project Company Real Property, free and clear of all Liens other than Permitted Liens. With respect to the Project Company Real Property it leases or on which it was granted easements, servitudes or superficies pursuant to the Material Leases, the Project Company has peaceful and undisturbed exclusive or nonexclusive possession under all Material Leases, easements, servitudes or superficies under which they are leasing or occupying property in accordance with the terms and conditions of the relevant Material Leases, easement, servitude or superficies and subject to the Permitted Liens. All rents and other payments under the Material Leases have been paid in full to the extent due.
(c)    The Project Company Real Property is sufficient to provide the Project Company with continuous, uninterrupted and, together with public roads, contiguous access to the Wind Project sufficient for the operation and maintenance of the Wind Project as currently conducted. All utility services necessary for the construction and operation of the Wind Project for its intended purposes are available or are reasonably expected to be so available as and when required upon commercially reasonable terms.
2.14    Permits. Part II of Appendix C sets forth a list of all material Permits acquired or held by the Project Company in connection with the operation of the Wind Project. The Project Company holds in full force and effect all Permits required for the operation of the Wind Project as presently conducted, other than those Permits required in connection with certain construction and maintenance activities which are ministerial in nature and can reasonably be expected to be obtained in due course on commercially reasonable terms and conditions as and when needed. The Project Company is not in material default or material violation, and, to the Knowledge of Seller, no event has occurred and continuing which, with notice or the lapse of time or both, would constitute a material default or material violation of, or would give rise to any right of termination, cancellation, acceleration, amendment, suspension or revocation under, any of the terms, conditions or provisions of any Permits held by the Project Company. There are no legal proceedings pending or, to the Knowledge of Seller, threatened in writing, relating to the suspension, revocation or modification of any Permits held by the Project Company.
2.15    Environmental Matters. Except as set forth in Part II of Appendix D, (i) the Project Company, the Project Company Real Property and the Wind Project are in material compliance with all Environmental Laws, (ii) the Project Company has not caused or contributed to the release of any Hazardous Substances in any material respect, and (iii) none of Seller, any of its Subsidiaries or the Project Company has received written notice from any Governmental Authority of any material Environmental Claim, or any written notice of any investigation, or any written request for information, in each case, under any Environmental Law. Except as set forth in the Material Contracts and Real Property Documents, none of Seller, any of its Subsidiaries or the Project Company has given any release or waiver of liability that would waive or impair any material claim

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based on the presence of Hazardous Substances in, on or under any real property, against a previous owner of any real property or against any Person who may be potentially responsible for the presence of Hazardous Substances in, on or under any such real property.
2.16    Insurance. Part II of Appendix D sets forth a list of all material insurance maintained by or on behalf of the Project Company (the “Insurance Policies”). All Insurance Policies are now in full force and effect. All premiums with respect to the Insurance Policies covering all periods to and including the date hereof have been paid and, with respect to premiums due and payable prior to Closing, will be so paid. None of these Insurance Policies have lapsed and, to the Knowledge of Seller, there are no circumstances that have rendered such insurance unenforceable, void or voidable. None of Seller, the Subsidiary Transferor, the Project Company or any of their respective Subsidiaries has received any written notice in the past 12 months from the insurer under any Insurance Policies disclaiming coverage, reserving rights with respect to a particular claim or such Insurance Policy in general or canceling or materially amending any such Insurance Policy. The Project Company’s assets and properties are insured in amounts no less than as required by applicable Law, applicable Permits or any Material Contract to which the Project Company is a party or by which its assets or properties are bound.
2.17    Financial Model. The Financial Model has been prepared in good faith based on reasonable assumptions as to the estimates set forth therein and is consistent in all material respects with the provisions of the Material Contracts.
2.18    Financial Statements; No Undisclosed Liabilities; No Material Adverse Effect. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis with prior periods, are correct and complete in all material respects and present fairly in accordance with GAAP the assets, liabilities, financial condition and results of operations of the Project Company as at their respective dates for the periods covered by the respective Financial Statements. The Project Company does not have any Indebtedness other than (a) as disclosed in the Financial Statements or pursuant to the Material Contracts, (b) incurred since the date of the Financial Statements and disclosed on Appendix D, (c) incurred after the date hereof in accordance with this Agreement, including Section 4.1(a), and (d) interest and fees accrued on any Indebtedness referred to in clause (a) after the date of the Financial Statements. Except as set forth in the Financial Statements, the Project Company does not have any liabilities that would be required to be disclosed on a balance sheet prepared in accordance with GAAP, other than any liabilities incurred in the ordinary course of business since the date of the most recent balance sheet included in the Financial Statements and any liabilities contained in the Material Contracts, other than liabilities thereunder arising from contractual breach. Since the date of the most recent balance sheet included in the Financial Statements, no Material Adverse Effect has occurred.
2.19    Personal Property. The Project Company has good and valid title to (or a valid leasehold interest in) the Personal Property currently owned or used by the Project Company in the operation of the Wind Project (other than Personal Property that individually and in the aggregate are immaterial to such operations), and such title or leasehold interests are free and clear of Liens other than Permitted Liens. All Personal Property that is material to the operation of the Wind

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Project is in good operating condition and repair, subject to normal wear and maintenance, and is usable in the ordinary course of business.
2.20    Employees. The Project Company does not have, and has never had, any employees.
2.21    Employee Benefits. The Project Company does not have, and has never had, any “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended).
2.22    Labor Matters. The Project Company is not a party to any collective bargaining agreement with a labor union or organization or any other Contract with any labor union or other employee representative of a group of employees.
2.23    Intellectual Property. The Project Company owns, licenses or can acquire on reasonable terms the Intellectual Property necessary to operate the Wind Project. To the Knowledge of Seller, no Intellectual Property required to operate the Wind Project infringes upon or otherwise violates any intellectual property rights of any third party. There are no unresolved pending or, to the Knowledge of Seller, threatened actions or claims that allege that the Project Company has infringed or otherwise violated any material intellectual property rights of any third party. To the Knowledge of Seller, no third party is infringing, misappropriating or otherwise violating rights in any material respect any Intellectual Property of the Project Company.
2.24    Affiliate Transactions. Except as disclosed on Appendix E, there are no transactions, contracts or liabilities between or among (a) the Project Company on the one hand, and (b) Seller, any of its Affiliates or, to the Knowledge of Seller, any current representative of the Project Company, Seller or its Affiliates, or any member of the immediate family of any such representative, on the other hand.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Except as set forth in, or qualified by any matter set forth in, the Schedules attached hereto, each Purchaser hereby severally represents and warrants to Seller (and in the case of the representations and warranties of PEGI set forth in Appendix B-6, to Seller and PSP) as set forth in this Article 3 and in Appendix B-6 as of (A) the date hereof and (B) if the Closing Date is not the date of this Agreement, the Closing Date, in each case, unless otherwise specified in the representations and warranties below, in which case the representation and warranty is made as of such date; provided, that with respect to Section 3.11(b), such representation and warranty is made solely by PSP and with respect to Appendix B-6, such representations and warranties are made solely by PEGI. Whether or not a particular Section of this Article 3 refers to a specific, numbered Schedule, such Section shall, to the extent applicable, be subject to the exceptions, qualifications, and other matters set forth in the Schedules to the extent that the relevance of such exceptions, qualifications or other matters is reasonably apparent on the face thereof.
3.1    Organization and Status. Such Purchaser (a) is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation as set forth in the preamble to this

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Agreement, (b) is duly qualified, authorized to do business and in good standing in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary, and (c) has all requisite power and authority to own or hold under lease the property it purports to own or hold under lease and to carry on its business as now being conducted. Such Purchaser has made available to Seller complete and correct copies of the Organization Documents for such Purchaser.
3.2    Power; Authority; Enforceability. Such Purchaser has the legal capacity and power to enter into and perform its obligations under this Agreement and has been duly authorized, in accordance with its Organization Documents, to enter into and perform its obligations under this Agreement. This Agreement has been duly executed and delivered by such Purchaser and constitutes the legal valid and binding obligation of such Purchaser, severally enforceable against such Purchaser in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law.
3.3    No Violation. The execution, delivery and performance by such Purchaser of its obligations under this Agreement, including without limitation the purchase of the Acquired Interests from Seller or the Subsidiary Transferor, do not, and will not, (a) violate any Governmental Rule to which such Purchaser is subject or the Organization Documents of such Purchaser, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which such Purchaser is a party or by which such Purchaser is bound.
3.4    No Litigation. Such Purchaser is not a party to and has not received written notice of any pending or, to the Knowledge of such Purchaser, threatened litigation, action, suit, proceeding or governmental investigation against such Purchaser, which, in either case, would reasonably be expected to materially impair or delay the ability of such Purchaser to perform its obligations under this Agreement or which seeks the issuance of an order restraining, enjoining, altering or materially delaying the consummation of the transactions contemplated by this Agreement.
3.5    Consents and Approvals. Except as set forth in Schedule 3.5, no Consent of any Governmental Authority or any other Person, is required by or with respect to such Purchaser in connection with the execution and delivery of this Agreement by such Purchaser, or the consummation by such Purchaser of the transaction contemplated hereby, except for any consents which if not obtained would not reasonably be expected to materially impair or delay the ability of such Purchaser to perform its obligations under this Agreement.
3.6    Solvency. There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by or, to the Knowledge of such Purchaser, threatened against such Purchaser. Such Purchaser (a) has not had a receiver, receiver and manager, liquidator, sequestrator, trustee or other officer with similar powers appointed over all or part of its business or assets, and to the Knowledge of such Purchaser, no application therefor is pending or threatened, (b) is not insolvent or presumed to be insolvent under any Law and is able to pay its debts as and

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when they fall due, (c) has not made a general assignment for the benefit of its creditors, and (d) has not taken any action to approve any of the foregoing.
3.7    Compliance with Law. To the Knowledge of such Purchaser, there has been no actual violation by such Purchaser of or failure of such Purchaser to comply with any Governmental Rule that is applicable to it, or allegation by any Governmental Authority of such a violation, that would reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement.
3.8    Accredited Investor. Such Purchaser is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3), (7) or (8) of Regulation D, promulgated by the Securities and Exchange Commission under the Securities Act (provided that, upon reasonable request of the Seller at any time, such Purchaser shall provide a written certificate to such effect to the Seller).
3.9    Purchase Entirely for Own Account. The Acquired Interests to be acquired by such Purchaser will be acquired for investment for such Purchaser’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and such Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, such Purchaser further represents that such Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Acquired Interests.
3.10    Broker’s Fee. Such Purchaser has no liability or obligation for any fees or commissions payable to any broker, finder or agent with respect to the transactions contemplated by this Agreement.
3.11    Taxes.
(a)    Such Purchaser is treated at all times since its formation (pursuant to a valid election under Treasury Regulation Section 301.7701-3 or otherwise) as a domestic corporation for U.S. federal income tax purposes that is subject to U.S. federal income taxation as a regular C-corporation.
(b)    PSP is a direct or indirect wholly owned subsidiary of the Public Sector Pension Investment Board, a Canadian crown corporation (“PSP Parent”). Distributions or payments made by PSP to PSP Parent (or, if applicable, to any Canadian intermediate parent that is a subsidiary of PSP Parent) that are treated as dividends or interest for U.S. federal income tax purposes will not be entitled to a full exemption from U.S. federal income taxation under the Code of Article XXI of the United States Canada Income Tax Convention.
ARTICLE 4
COVENANTS; OTHER OBLIGATIONS
4.1    Covenants Between Signing and Closing. If the Closing Date is not the date of this Agreement, the provisions of this Section 4.1 shall apply during the period from the date hereof to the earlier of the Closing Date and the termination of this Agreement pursuant to Section 5.4:

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(a)    Project Specific Pre-Closing Covenants of Seller. Seller shall use commercially reasonable efforts to conduct the business, operations and affairs of the Project Company only in the ordinary and normal course of business, subject to the following provisions with respect to any proposed entry into any Material Contract or any proposed amendment, termination or waiver (in whole or in part) of any Material Contract (each such proposal, a “Material Contract Change”):
(i)
Seller shall give prior written notice to Purchasers of, and shall to the extent practicable consult in good faith with Purchasers regarding, any Material Contract Change that would reasonably be expected to materially and adversely affect the Operating Period; and
(ii)
Seller may, but shall not be obligated to, seek by written notice the approval of each Purchaser to any Material Contract Change. During the twenty calendar-day period following delivery of any such notice, Seller shall provide to each Purchaser promptly any information within Seller’s possession regarding such Material Contract Change as such Purchaser reasonably requests. Each Purchaser shall, by the end of such twenty calendar-day period, notify Seller whether it approves (acting reasonably) such Material Contract Change. If neither Purchaser approves such Material Contract Change, Seller may (A) abstain from proceeding with such Material Contract Change, (B) proceed with such Material Contract Change (in which case each Purchaser retains its right to assert a failure of a condition precedent to Closing, if applicable), or (C) terminate this Agreement. If either Purchaser approves such Material Contract Change while the other Purchaser does not, Seller may nonetheless proceed with such Material Contract Change and the non-approving Purchaser shall be deemed to have refused to waive a condition precedent to Closing under Section 5.2. If either Purchaser fails to complete the Closing as a result of a proposed Material Contract Change, then the Seller must proceed with such Material Contract Change, or notify the non-approving Purchaser and provide such non-approving Purchaser with the opportunity to complete the Closing.
(b)    Access, Information and Documents. Subject to the next sentence, Seller will give to each Purchaser and to such Purchaser’s counsel, accountants and other representatives reasonable access during normal business hours to all material Books and Records and the Wind Project (subject to all applicable safety and insurance requirements and any limitations on Seller’s rights to, or right to provide others with, access) and will furnish to such Purchaser all such documents and copies of documents and all information, including operational reports, with respect to the affairs of the Project Company, the Seller Affiliates, and the Wind Project as such Purchaser may reasonably request. If, by reason of any confidentiality obligations imposed on Seller by any counterparty to a Contract who deals at arm’s length with Seller, Seller is unable to comply with the foregoing covenant, Seller and such Purchaser shall use commercially reasonable efforts to

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obtain all necessary consents or waivers required to make the disclosure (which, in the case of such Purchaser, may include the requirement to enter into a reasonable confidentiality or non-disclosure agreement). Each Purchaser agrees to comply with any confidentiality obligations which would be applicable to it under any such Contracts received from Seller hereunder.
(c)    Updating of Disclosure Schedules. Seller shall notify Purchasers in writing of any material changes, additions, or events occurring after the date of this Agreement which require a representation and warranty of Seller (other than any representations or warranties in Sections 2.6, 2.7 and 2.11, which, for clarity, may not be updated by Seller) to be supplemented with a new Schedule or cause any material change in or addition to a Schedule promptly after Seller becomes aware of the same by delivery of such new Schedule or appropriate updates to any such Schedule (each, an “Updated Disclosure Schedule”) to each Purchaser. Each Updated Disclosure Schedule shall (i) expressly state that it is being made pursuant to this Section 4.1(c), (ii) specify the representations and warranties to which it applies and (iii) describe in reasonable detail the changes, additions or events to which it relates. No Updated Disclosure Schedule delivered pursuant to this Section 4.1(c) shall be deemed to cure any breach of any representation or warranty made to any Purchaser unless such Purchaser specifically agrees thereto in writing or, as provided in and subject to Article 5, consummates the Closing under this Agreement after receipt of such written notification, nor shall any such Updated Disclosure Schedule be considered to constitute or give rise to a waiver by either of the Purchasers of any condition set forth in this Agreement, unless such Purchaser specifically agrees thereto in writing or consummates the Closing under this Agreement after receipt of such written notification.
(d)    Further Assurances. Each of the parties hereto shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated hereby as soon as practicable, including as set forth on Appendix B-7.
4.2    Other Covenants
(a)    Costs, Expenses. Except as may be specified elsewhere in this Agreement, such Purchaser shall pay all costs and expenses, including legal fees and the fees of any broker, environmental consultant, insurance consultant, independent engineer, and title company retained by such Purchaser for its due diligence and its negotiation, performance of and compliance with this Agreement. Seller shall pay all costs and expenses (including in connection with any reports, studies or other documents listed in Part II of Appendix D, unless specifically noted in Part II of Appendix D), including legal fees and the fees of any broker of Seller or its Affiliates, relating to or resulting from the negotiation, performance of and compliance with this Agreement by Seller.
(b)    Public Announcement; Confidentiality. No party hereto shall make or issue, or cause to be made or issued, any public announcement or written statement concerning this Agreement or the transactions contemplated hereby without the prior written consent of the other parties, except to the extent required by law (including any disclosure which, in the reasonable judgment of the disclosing party, is necessary or appropriate to comply with Governmental Rules and standards governing disclosures to investors) or in accordance with the rules, regulations and orders of any stock exchange. Seller shall not, and shall cause its Affiliates and directors, officers,

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employees, agents, consultants advisors and partners not to, disclose any confidential information in or relating to this Agreement other than (i) to its Affiliates and its and their directors, officers, employees, agents, consultants, advisors and partners, provided in each case that such recipient is bound by reasonable confidentiality obligations, (ii) as required by applicable law or regulation or (iii) with the prior consent of Purchasers. Seller shall not use, and shall not enable any third party to use, any confidential information in or relating to this Agreement that constitutes material non-public information regarding Purchasers in a manner that is prohibited by the U.S. securities laws.
(c)    Regulatory Approvals. Each party shall use its commercially reasonable efforts to obtain all required regulatory approvals (including the required Governmental Approvals set forth in Part VII of Appendix B) as promptly as possible and, in any event, prior to the Closing Date. To that end, each of the parties shall make, or cause to be made, all other filings and submissions, and submit all other documentation and information that in the reasonable opinion of any Purchaser is required or advisable, to obtain the regulatory approvals, and will use its commercially reasonable efforts to satisfy all requests for additional information and documentation received under or pursuant to those filings, submissions and the applicable legislation and any orders or requests made by any Governmental Authority. Notwithstanding any other provision of this Agreement, no Purchaser will be required to (i) propose or agree to accept any undertaking or condition, enter into any consent agreement, make any divestiture or accept any operational restriction or other behavioral remedy, (ii) take any action that, in the reasonable judgment of such Purchaser, could be expected to limit the right of such Purchaser to indirectly own or operate all or any portion of the business or assets of the Project Company, or of such Purchaser or any of its Affiliates, or to conduct their respective affairs in a manner consistent with how they each conduct their affairs as of the date of this Agreement, or (iii) contest or defend any judicial or administrative proceeding brought by any Governmental Authority seeking to prohibit, prevent, restrict or unwind the consummation of all or a part of the transaction contemplated herein.
(d)    Consents. Except in respect of regulatory approvals, which shall be governed by Section 4.2(c), as promptly as possible and, in any event, prior to the Closing Date, Seller shall use commercially reasonable efforts to (i) make or cause to be made all filings required by Law to be made by it in order to consummate the transaction contemplated hereby; and (ii) seek and obtain all Consents required pursuant to Section 2.5.
(e)    Other Obligations of Seller and Purchasers. The parties mutually covenant as follows:
(i)
to use all reasonable efforts in good faith to obtain promptly the satisfaction of the conditions to Closing of the transactions contemplated herein;
(ii)
to furnish to the other parties and to the other parties’ counsel all such information as may be reasonably required in order to effectuate the foregoing actions, including draft regulatory filings and submissions, provided that such information may be redacted to render illegible any commercially sensitive portions thereof, and in such event the parties will meet in good faith to agree on protective measures to

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allow disclosure of such redacted information to counsel in a manner that affords the maximum protection to such commercially sensitive information as is reasonable in the circumstances; and
(iii)
to advise the other parties promptly if any party determines that any condition precedent to its obligations hereunder will not be satisfied in a timely manner.
(f)    Allocation of Aggregate Purchase Price.
(i)
Upon the acquisition of the Project Company from Stillwater Energy, unless otherwise agreed by the parties, the Aggregate Purchase Price shall be allocated in accordance with the Cost Segregation Consultant Report delivered to the Class A Equity Investor pursuant to Section 5.3(cc)(i) of the ECCA, to the extent permitted by applicable regulations, and the parties agree to report the transactions contemplated in this Agreement in a manner consistent with such allocation in the preparation, filing and audit of any Tax Return.
(ii)
For the portion of the Aggregate Purchase Price that is allocated to the interest in the Project Company pursuant to Section 4.2(f)(i), Purchasers shall jointly deliver to Seller, within 60 days of the Closing, a statement (the “U.S. Allocation Statement”) allocating such portion (plus any applicable liabilities) among the Project Company’s assets in a manner consistent with the Cost Segregation Consultant Report and sections 755 and 1060 of the Code. The U.S. Allocation Statement shall be considered final and binding on Purchasers and Seller.
(iii)
Each of Seller and each Purchaser agrees to (x) be bound by the U.S. Allocation Statement and (y) act, and cause its Affiliates to act, in accordance with the U.S. Allocation Statement in the preparation, filing and audit of any U.S. federal income Tax Return (including filing Form 8594 with any U.S. federal income Tax Return that it may be required to file for the taxable year that includes the date of the Closing).
(iv)
If an adjustment is made with respect to the Aggregate Purchase Price pursuant to Section 1.3 or otherwise, the U.S. Allocation Statement shall be adjusted in accordance with Section 1060 of the Code and as mutually agreed by Seller and Purchasers. Seller and Purchasers agree to file, and to cause their respective Affiliates to file, any additional information return required to be filed pursuant to Section 1060 of the Code and to treat the U.S. Allocation Statement as adjusted in the manner described in this Section 4.2(f)(iv).

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(v)
Seller, Purchasers and their respective Affiliates shall use the Canadian dollar equivalent on the Closing Date (based on the exchange rate published by the Bank of Canada on the Business Day immediately preceding the Closing Date) of the portion of the Aggregate Purchase Price so allocated to each Acquired Interest for all Canadian income Tax purposes and shall not file any Canadian income Tax Returns inconsistent therewith.
(g)    Allocation of Income and Loss.
(i)
To the extent not otherwise provided in the Organization Documents of the Project Company, to the extent permitted by applicable regulations, all Profits, Losses and associated PTCs (each as defined in the Organization Documents of the Project Company during the calendar month in which the Closing occurs shall be allocated between Seller and Purchasers using the calendar day convention as set forth in Treasury Regulations Section 1.706-4(c)(1)(i).
(ii)
Seller and Purchasers shall cause Pattern Energy Group Holdings 2 LP (“PEG Holdings”) to have an election under Section 754 of the Code and any corresponding election for U.S. state or local tax purposes (collectively, a “754 Election”) in effect for the taxable year of PEG Holdings in which the Closing takes place. Seller and Purchaser shall cause each direct and indirect Subsidiary of PEG Holdings that is classified as a partnership for U.S. federal tax purposes to have a 754 Election in effect for the taxable year of such Subsidiary in which the Closing takes place.
(h)    Partnership Representative. Purchasers agree that, in accordance with Section 7.01(a) of the New B Member LLC Agreement, Pattern Finance or an Affiliate of Pattern Finance shall be the “partnership representative” (as defined in Section 6223(a) of the Code) of New B Member for the taxable years that includes the Closing Date and for each taxable year thereafter.
ARTICLE 5
CONDITIONS TO CLOSING; TERMINATION
5.1    Conditions Precedent to Each Party’s Obligations to Close. The obligations of the parties to proceed with the Closing under this Agreement are subject to the fulfillment prior to or at Closing of the following conditions (any one or more of which may be waived in whole or in part by all parties in their sole discretion):
(a)    No Violations. The consummation of the transactions contemplated hereby shall not violate any applicable Governmental Rule.

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(b)    No Adverse Proceeding. No order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated hereby, and there shall not have been threatened, nor shall there be pending, any action or proceeding by or before any court or Governmental Authority challenging any of the transactions contemplated by this Agreement or seeking monetary relief by reason of the consummation of such transactions.
(c)    No Termination. This Agreement shall not have been terminated pursuant to Section 5.4.
(d)    Other Conditions Precedent to Closing to Each Party’s Obligations. The conditions precedent, if any, set forth on Appendix B-3 shall have been satisfied (any one or more of which may be waived in whole or in part by all parties in their sole discretion).
5.2    Conditions Precedent to Obligations of Purchasers to Close. The obligations of each Purchaser to proceed with the Closing under this Agreement with respect to the purchase of the Acquired Interests are subject to the fulfillment prior to or at Closing of the following conditions (any one or more of which may be waived in whole or in part by such Purchaser in its sole discretion):
(a)    Representations and Warranties. The representations and warranties of Seller set forth in Sections 2.1 to 2.7 (inclusive) and 2.11, and, solely with respect to the obligations of PSP, the representations and warranties of PEGI with respect to New B Member and New Holdings set forth in Appendix B-6 (inclusive), shall be true and correct as of the Closing Date as if made at and as of such date. All other representations and warranties of Seller set forth in Article 2, shall be true and correct at and as of the Closing Date as if made at and as of such date as though such representations and warranties were made on and as of the Closing Date, except to the extent that (i) such representations and warranties expressly relate to an earlier date, in which case as of such earlier date and (ii) the failure of such representations and warranties to be true and correct, taken in the aggregate, would not have a Material Adverse Effect (other than any representations or warranties that are qualified by materiality, including by reference to Material Adverse Effect, which shall be true in all respects).
(b)    Performance and Compliance. Seller shall have performed, in all material respects, all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by it on or before the Closing.
(c)    Consents. All necessary Consents shall have been obtained, including those set forth in Schedules 2.5 and 3.5.
(d)    Certificate of Seller. Such Purchaser shall have received a certificate of Seller dated the date of the Closing confirming the matters set forth in Sections 5.2(a) and (b) in a form reasonably acceptable to such Purchaser.
(e)    Good Standing Certificate. Such Purchaser shall have received a good standing certificate of Seller, the Subsidiary Transferor, New B Member, New Holdings, the Project Company and each of their respective Subsidiaries, in each case issued by the secretary of state of the state of its formation.

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(f)    Satisfactory Instruments. All instruments and documents reasonably required on the part of Seller to effectuate and consummate the transactions contemplated hereby shall be delivered to such Purchaser and shall be in form and substance reasonably satisfactory to such Purchaser.
(g)    LC Documents. Absence of any material amendment to, or any default under, any LC Document (as defined in the LC Reimbursement Agreement).
(h)    Funding Date. The Class A Equity Investor shall have made, or shall simultaneously make, its Class A Capital Contribution (as defined in the ECCA), pursuant to Section 2.1 of the ECCA.
(i)    Material Contracts. Absence of any amendment to, entry into, termination or waiver (in whole or in part) of any Material Contract, except any such amendment, termination or waiver that has been approved by each Purchaser, that would reasonably be expected to materially and adversely affect the Operating Period.
(j)    Other Conditions Precedent to Purchasers’ Obligation to Close. The conditions precedent, if any, set forth in Appendix B-4 shall have been satisfied or waived in whole or in part by each Purchaser in such Purchaser’s sole discretion.
5.3    Conditions Precedent to the Obligations of Seller to Close. Subject to Section 5.5, the obligations of Seller to proceed with the Closing hereunder with respect to Seller’s sale of the Acquired Interests are subject to the fulfillment prior to or at Closing of the following conditions (any one or more of which may be waived in whole or in part by Seller in its sole discretion):
(a)    Purchase Price. Purchasers shall have transferred in immediately available funds the Aggregate Purchase Price pursuant to, in accordance with and into the account or accounts designated in, Part I of Appendix B.
(b)    Representations and Warranties. The representations and warranties set forth in Article 3 and in Appendix B-6 shall be true and correct at and as of the Closing Date as if made at and as of such date (other than any representations or warranties that are made as of a specific date, which shall be true and correct as of such date).
(c)    Performance and Compliance. Purchasers shall have performed all of the covenants and complied, in all material respects, with all the provisions required by this Agreement to be performed or complied with by it on or before the Closing.
(d)    Certificate of Purchaser. Seller shall have received a certificate of each Purchaser dated the date of the Closing confirming the matters set forth in Sections 5.3(b) and (c) in a form reasonably acceptable to Seller.
(e)    Satisfactory Instruments. All instruments and documents required on the part of each Purchaser to effectuate and consummate the transactions contemplated hereby shall be delivered to Seller and shall be in form and substance reasonably satisfactory to Seller.

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(f)    Other Conditions Precedent to Seller’s Obligation to Close. The conditions precedent, if any, set forth in Appendix B-5 shall have been satisfied or waived in whole or in part by Seller in Seller’s sole discretion.
5.4    Termination. If the Closing Date is not the date of this Agreement, the following termination provisions shall be applicable:
(a)    By the Parties. This Agreement may be terminated at any time by mutual written consent of Purchasers and Seller.
(b)    By Any Party. This Agreement may be terminated at any time prior to the Closing by either Seller or either of the Purchasers, if (i) a Governmental Approval required to be obtained as set forth on Part VII of Appendix B shall have been denied and all appeals of such denial have been taken and have been unsuccessful, (ii) one or more courts of competent jurisdiction in the United States, any state, or any other applicable jurisdiction has issued an order permanently restraining, enjoining, or otherwise prohibiting the Closing, and such order has become final and non-appealable, or (iii) the Closing has not occurred by the Outside Closing Date, but if such failure to close by the Outside Closing Date is due to any breach of this Agreement by any party, such party shall not have any right to terminate this Agreement pursuant to this clause (iii).
(c)    Other Termination Rights. This Agreement may be terminated at any time prior to the Closing by the applicable party if and to the extent permitted in Part V of Appendix B.
(d)    Termination Procedure. In the event of termination of this Agreement by any or all parties pursuant to this Section 5.4, written notice thereof will forthwith be given by the terminating party to the other parties and this Agreement will terminate and the transactions contemplated hereby will be abandoned, without further action by any party. If this Agreement is terminated as permitted by this Section 5.4, such termination shall be without liability of any party (or any stockholder, shareholder, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement; provided that (i) the foregoing will not relieve any party for any liability for willful and intentional material breaches of its obligations hereunder occurring prior to such termination and (ii) except as specifically set forth herein, nothing in this Agreement shall derogate from the provisions of the Purchase Rights Agreements, which agreements shall remain in full force and effect after termination of this Agreement.
5.5    Purchaser Default or Waiver. Not applicable.
ARTICLE 6
REMEDIES FOR BREACHES OF THIS AGREEMENT
6.1    Indemnification.
(a)    By Seller. Subject to the limitations set forth in this Article 6 and Section 7.14, from and after the Closing, Seller agrees to indemnify and hold harmless each Purchaser and its Affiliates together with their respective directors, officers, managers, employees and agents (each

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a “Purchaser Indemnified Party”) from and against any and all Losses that any Purchaser Indemnified Party incurs by reason of or in connection with any of the following circumstances:
(i)
any breach by Seller of any representation or warranty made by it in Article 2 (subject to any Updated Disclosure Schedules delivered pursuant to Section 4.1(c) that are deemed to cure a breach of any representation or warranty in accordance with the last sentence of Section 4.1(c)) or any breach or violation of any covenant, agreement or obligation of Seller contained herein; and
(ii)
as set forth in Part VI of Appendix B.
(b)    By Purchasers. Subject to the limitations set forth in this Article 6 and Section 7.14, from and after the Closing, each Purchaser agrees to indemnify and hold harmless Seller and Seller’s Affiliates together with their respective directors, officers, managers, employees and agents (each a “Seller Indemnified Party”) from and against any and all Losses that any Seller Indemnified Party incurs by reason of or in connection with any of the following circumstances:
(i)
any breach by such Purchaser of any representation or warranty made by it in Article 3 or any breach or violation of any covenant, agreement or obligation of such Purchaser contained herein; and
(ii)
as set forth in Part VI of Appendix B.
(c)    By PEGI. Subject to the limitations set forth in this Article 6 and Section 7.14, from and after the Closing, PEGI agrees to indemnify and hold harmless PSP and PSP’s Affiliates together with their respective directors, officers, managers, employees and agents (each a “PSP Indemnified Party”) from and against any and all Losses that any PSP Indemnified Party incurs by reason of or in connection with any breach by PEGI of any representation or warranty made by it in Appendix B-6.
6.2    Limitations on Seller’s or Purchasers’ Indemnification.
(a)    Minimum Limit on Claims. A party required to provide indemnification under this Article 6 (an “Indemnifying Party”) shall not be liable under this Article 6 to an Indemnified Party for any Claim for breach of any representation or warranty unless and until the aggregate amount of all Claims for which it would, in the absence of this provision, be liable exceeds: (i) in the event that Seller is the Indemnifying Party, the Basket Amount, and (ii) in the event that a Purchaser is the Indemnifying Party, such Purchaser’s pro rata portion (based on its Percentage Portion) of the Basket Amount, and in each such event the Indemnified Party will be liable for the amount of all Claims, including the Basket Amount; provided that the foregoing limitation shall not apply in the case of actual fraud or willful misrepresentation by the Indemnifying Party.

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(b)    Maximum Limit on Claims.
(i)
Limitation on Seller’s Liability. Seller’s maximum aggregate liability for Claims for breaches of representations and warranties under this Agreement is limited to Seller’s Maximum Liability set forth in Part VI of Appendix B; provided that the Seller’s Maximum Liability will not apply to any Claim based on (A) actual fraud or willful misrepresentation or (B) any breach of the representations and warranties set forth in Sections 2.1, 2.2, 2.3, 2.5, 2.6, 2.9, 2.11 and 2.18 (solely with respect to the Indebtedness of the Project Company).
(ii)
Limitation on Purchasers’ Liability. Purchasers’ maximum aggregate liability for Claims for breaches of representations and warranties under this Agreement is limited to Purchaser’s Maximum Liability set forth in Part VI of Appendix B; provided that the Purchaser’s Maximum Liability will not apply to any Claim based on (A) actual fraud or willful misrepresentation, (B) any breach of the representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.5 and 3.10, and (C) solely with respect to PEGI, paragraphs 1, 2, 3, 5, 6, 9 and 10 of Appendix B-6.
(c)    Time Limit for Claims. No Indemnified Party may make a Claim for indemnification under Section 6.1 in respect of any Claim unless notice in writing of the Claim, incorporating a statement setting out in reasonable detail the grounds on which the Claim is based, has been given by the Indemnified Party prior to the expiration of the applicable Survival Period as set forth in Part VI of Appendix B.
(d)    No Double Recovery. For the avoidance of doubt, PSP shall not be entitled to receive indemnification by Seller or PEGI for breach of a representation or warranty by Seller and PEGI (solely with respect to the representations and warranties of PEGI in Appendix B-6) in respect of all or any portion of any Loss more than once and if the same fact, matter, event or circumstance gives rise to claims against Seller and PEGI by PSP for breach of a representation or warranty, PSP shall only be entitled to recover once the amount of the same Losses arising in connection with such fact, matter, event or circumstance and shall not be entitled to double recovery from each of Seller and PEGI.
6.3    Reimbursements; Refunds.
(a)    Right of Reimbursement. The amount of Losses payable under Section 6.1 by an Indemnifying Party shall be net of any amounts recovered by the Indemnified Party under applicable insurance policies or from any other Person responsible therefor. If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person responsible for any Losses subsequent to an indemnification payment by the Indemnifying Party and such amounts would result in a duplicative recovery, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount received by the

22




Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount.
(b)    Other Refund Obligations. In addition to the obligations set forth in Section 6.3(a), the applicable Indemnified Party shall be obligated to reimburse or refund to the Indemnifying Party for payments made by it to such Indemnified Party under this Article 6 as set forth in Part VI of Appendix B.
6.4    Right to Control Proceedings for Third Party Claims.
(a)    If a third party shall notify any party with respect to any matter that may give rise to a Claim (a “Third Party Claim”), the Indemnified Party must give notice to the Indemnifying Party of the Third Party Claim (a “Third Party Claim Notice”) within twenty (20) Business Days after it becomes aware of the existence of the Third Party Claim and that it may constitute a Third Party Claim. The Indemnified Party’s failure to give a Third Party Claim Notice in compliance with this Section 6.4(a) of any Third Party Claim which may give rise to a right of indemnification hereunder shall not relieve the Indemnifying Party of any liability which it may have to the Indemnified Party unless, and solely to the extent that, the failure to give such notice materially and adversely prejudiced the Indemnifying Party.
(b)    The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume control of the defense of any Third Party Claim with the Indemnifying Party’s own counsel, in each case at the Indemnifying Party’s own cost and expense (provided that prior to assuming control of such defense, the Indemnifying Party must acknowledge its indemnity obligations under this Article 6), and the Indemnified Party shall cooperate in good faith in such defense. The Indemnified Party shall have the right, at its own cost and expense, to participate in the defense of any Third Party Claim with separate counsel selected by it, subject to the Indemnifying Party’s right to control the defense thereof; provided that in such event the Indemnifying Party shall pay the fees and expenses of such separate counsel (i) incurred by the Indemnified Party prior to the date the Indemnifying Party assumes control of the defense of the Third Party Claim, (ii) if such Third Party Claim would reasonably be expected to be materially detrimental to the business, reputation or future prospects of any Indemnified Party or (iii) if representation of both the Indemnifying Party and the Indemnified Party by the same counsel would create a conflict of interest. If the Indemnifying Party (i) fails to promptly notify the Indemnified Party in writing of its election to defend or fails to acknowledge its indemnity obligations under this Article 6 as provided in this Agreement, (ii) elects not to defend (or compromise at its sole cost and expense) such Third Party Claim, (iii) has elected to defend such Third Party Claim but fails to promptly and diligently pursue the defense such Third Party Claim, (iv) otherwise breaches any of its obligations under this Article 6 or (v) as set forth on Schedule 6.4(b) hereto, or if the Third Party Claim is reasonably expected by the Indemnified Party to result in a payment obligation on the Indemnified Party in an amount that exceeds the maximum indemnification then available to the Indemnified Party pursuant to this Article 6, then the Indemnifying Party shall not be entitled to assume or maintain control of the defense of such Third Party Claim and the Indemnified Party may (by written notice to the Indemnifying Party) assume control of such defense (in which case the Indemnifying Party shall pay the fees and expenses of counsel retained by the Indemnified

23




Party) and/or compromise such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. The parties shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim.
(c)    Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into any settlement of any Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed), except as provided in this Section 6.4(c). If a firm offer is made to settle a Third Party Claim that (i) does not (A) result in any liability or create any financial or other obligation on the part of the Indemnified Party and (B) result in the loss of any right or benefit on the part of any Indemnified Party, (ii) does not impose injunctive or other equitable relief against any Indemnified Party, and (iii) provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim, and the Indemnifying Party desires to accept and agree to such firm offer, then the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within twenty (20) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer within such twenty (20) day period and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 6.4(b), it may settle the Third Party Claim; provided that if the settlement is made without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed), the Indemnifying Party shall have no indemnity obligation pursuant to this Article 6 with respect to such Third Party Claim.
6.5    Mitigation; Treatment of Indemnification.
(a)    The Indemnified Party shall use commercially reasonable efforts to mitigate all Losses relating to a Claim for which indemnification is sought under this Article 6.
(b)    All indemnification payments under this Article 6 shall be deemed adjustments to the Aggregate Purchase Price.
6.6    Exclusive Remedy. Seller and Purchasers acknowledge and agree that, should the Closing occur, and excluding liability for actual fraud or willful misrepresentation, the foregoing indemnification provisions of this Article 6 and the provisions of Section 7.15 shall be the sole and exclusive remedy of Seller and Purchasers with respect to any misrepresentation, breach of warranty, covenant or other agreement (other than any Purchase Price Adjustment set forth in Part I of Appendix B) or other claim arising out of this Agreement or the transactions contemplated hereby. Without limiting the generality of the foregoing, effective as of the Closing each of the Purchasers and Seller covenants to the other party that in respect of any matters under or contemplated in this Agreement, it will not make any Claim whatsoever against any Affiliate of the other party or the directors, officers, managers, shareholders, member, controlling persons, employees and agents of any of the foregoing, in each case in their capacities as such, and its rights in respect of any such

24




Claim for breach of any provision of this Agreement are limited solely to such rights as it may have against Seller or Purchasers, as the case may be, under this Agreement.
6.7    Purchaser Indemnification Decisions. Each Purchaser may bring a Claim for indemnification pursuant to this Article 6. If both Purchasers initiate substantially the same Claim (a “Joint Claim”), PEGI shall have the right to assume control of the prosecution of such Joint Claim but may not enter into any settlement with the Indemnifying Party that purports to bind PSP with respect to such Joint Claim without the prior written consent of PSP (such consent not to be unreasonably withheld, conditioned or delayed). If PEGI has elected to prosecute such Joint Claim but fails to promptly and diligently pursue the same, then PSP may (by written notice to PEGI) assume control of the prosecution of such Joint Claim but may not enter into any settlement with the Indemnifying Party with respect to such Joint Claim that purports to bind PEGI without the prior written consent of PEGI (such consent not to be unreasonably withheld, conditioned or delayed). Neither Purchaser may enter into any settlement with respect to any Joint Claim solely for itself (i.e., any settlement that does not purport to bind the other Purchaser) without first notifying the other Purchaser and giving the other Purchaser a reasonable opportunity to participate in such settlement. The expenses of the prosecution of any Joint Claim shall be borne by both Purchasers pro rata in accordance with their Percentage Portion.
ARTICLE 7
MISCELLANEOUS
7.1    Entire Agreement. This Agreement and the Schedules and Appendices hereto, each of which is hereby incorporated herein, set forth all of the promises, covenants, agreements, conditions, undertakings, representations and warranties between the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written.
7.2    Notices. All notices, requests, demands and other communications hereunder shall be in writing (including facsimile transmission and electronic mail (“email”) transmission and shall be deemed to have been duly given if personally delivered, telefaxed (with confirmation of transmission), e-mailed (so long as confirmation of receipt is requested and received) or, if mailed, when mailed by United States first-class or Canadian Lettermail or Letter-post (as the case may be), certified or registered mail, postage prepaid, or by any international or national overnight delivery service, to the other party at the addresses as set forth in Part VII of Appendix B (or at such other address as shall be given in writing by any party to the other). All such notices, requests, demands and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.
7.3    Successors and Assigns.
(a)    No party shall assign this Agreement or any of its rights or obligations herein without the prior written consent of the other parties, in their sole discretion, except as provided herein and except that any party may assign this Agreement or any of its rights or obligations herein

25




to an Affiliate of such party but the assigning party shall continue to be liable for all of its obligations hereunder following any such assignment. Subject to the foregoing, this Agreement, and all rights and powers granted hereby, will bind and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
(b)    Notwithstanding Section 7.3(a), each of Seller and each Purchaser may assign this Agreement without the consent of the other parties as specified in Part VII of Appendix B.
7.4    Jurisdiction; Service of Process; Waiver of Jury Trial.
(a)    EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b)    Any and all claims, counterclaims, demands, causes of action, disputes, controversies, and other matters in question arising out of or relating to this Agreement, or the alleged breach hereof, or in any way relating to the subject matter of this Agreement or the relationship between the parties created by this Agreement (hereafter, a “Dispute”), except for any claims for specific performance as set forth in Section 7.15, shall be finally resolved by binding arbitration administered by the American Arbitration Association (“AAA”) under the AAA Commercial Arbitration Rules, including the Procedures for Large, Complex Commercial Disputes (the “Rules”) then in force to the extent such Rules are not inconsistent with the provisions of this Agreement. The party or parties commencing arbitration shall deliver to the other party or parties a written notice of intent to arbitrate (a “Demand”) in accordance with Rule R-4. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§1 et seq.
(i)
Selection of Arbitrators. Disputes shall be resolved by a panel of three independent and impartial arbitrators, (the “Arbitrators”). The party or parties initiating the arbitration shall appoint an arbitrator in its or their Demand; the responding party or parties shall appoint an arbitrator in its or their answering statement, which is due thirty (30) days after receipt of the Demand. If any party fails or refuses to timely nominate an arbitrator within the time permitted, such arbitrator shall be appointed by the AAA from individuals with significant experience in renewable energy projects from its Large, Complex Commercial Case Panel. Within thirty (30) days of the appointment of the second arbitrator, the two party-appointed arbitrators shall appoint the third arbitrator, who shall act as the chair of the arbitration panel. If the two party-appointed arbitrators fail or refuse to appoint the third arbitrator within such thirty (30)-day period, the third arbitrator shall be appointed by the AAA from individuals with significant experience in renewable energy projects from its Large, Complex Commercial Case Panel in accordance with Rule R-12. The Arbitrators, acting by majority vote, shall resolve all Disputes.

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(ii)
Confidentiality. To the fullest extent permitted by law, the arbitration proceedings and award shall be maintained in confidence by the parties.
(iii)
Place of Arbitration. The place of arbitration shall be New York, New York. Any action in connection therewith shall be brought in the United States District Court for the Southern District of New York or, if that court does not have jurisdiction, any New York state court in New York County. Each party consents to the exclusive jurisdiction of such courts in any such suit, action or proceeding, and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Each party further agrees to accept service of process out of any of the before mentioned courts in any such dispute by registered or certified mail addressed to the party at the address set forth in Part VII of Appendix B.
(iv)
Conduct of the Arbitration. The arbitration shall be conducted in accordance with the Rules and in a manner that effectuates the parties’ intent that Disputes be resolved expeditiously and with minimal expense. The Arbitrators shall endeavor to commence the arbitration hearing within one hundred and eighty (180) days of the third arbitrator’s appointment.
(v)
Interim Relief. Any party may apply to the Arbitrators seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Any party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the Arbitrators’ determination of the merits of the controversy).
(vi)
Discovery. The Arbitrators, upon a showing of good cause, may require and facilitate such limited discovery as it shall determine is appropriate in the circumstances, taking into account the needs of the parties, the burden on the parties, and the desirability of making discovery limited, expeditious, and cost-effective. The Arbitrators shall issue orders to protect the confidentiality of proprietary information, trade secrets and other sensitive information disclosed in discovery.
(vii)
Arbitration Award. The Arbitrators shall endeavor to issue a reasoned, written award within thirty (30) days of the conclusion of

27




the arbitration hearing. The Arbitrators shall have the authority to assess some or all of the costs and expenses of the arbitration proceeding (including the Arbitrators’ fees and expenses) against any party. The Arbitrators shall also have the authority to award attorneys’ fees and expenses to the prevailing party or parties. In assessing the costs and expenses of the arbitration and/or awarding attorneys’ fee and expenses, the Arbitrators shall consider the relative extent to which each party has prevailed on the disputed issues and the relative importance of those issues. The limitations of Section 7.14 shall apply to any award by the Arbitrators.
7.5    Headings; Construction; and Interpretation. The headings preceding the text of the sections and subsections hereof are inserted solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect. Except as otherwise expressly provided, the rules of construction set forth in Appendix A-2 shall apply to this Agreement. The parties agree that any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived.
7.6    Further Assurances. Each party shall cooperate and take such action as may be reasonably requested by the other party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.
7.7    Amendment and Waiver. The parties may by mutual agreement amend this Agreement in any respect, and any party, as to such party, may (a) extend the time for the performance of any of the obligations of any other party, (b) waive any inaccuracies in representations by any other party, (c) waive compliance by any other party with any of the agreements contained herein and performance of any obligations by such other party, and (d) waive the fulfillment of any condition that is precedent to the performance by such party of any of its obligations under this Agreement. To be effective, any such amendment or waiver must be in writing and be signed by the party against whom enforcement of the same is sought.
7.8    No Other Beneficiaries. This Agreement is being made and entered into solely for the benefit of Purchasers and Seller, and neither Purchasers nor Seller intends hereby to create any rights in favor of any other Person as a third party beneficiary of this Agreement or otherwise.
7.9    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction specified in Part VII of Appendix B.
7.10    Schedules. References to a Schedule shall include any disclosure expressly set forth on the face of any other Schedule even if not specifically cross-referenced to such other Schedule to the extent that the relevance of such matter is reasonably apparent on the face thereof. The fact that any item of information is contained in a disclosure schedule shall not be construed as an admission of liability under any Governmental Rule, or to mean that such information is material. Such information shall not be used as the basis for interpreting the term “material”, “materially,” or any similar qualification in this Agreement.

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7.11    Limitation of Representations and Warranties. Purchasers acknowledge that except as expressly provided in Article 2 of this Agreement, Seller has not made, and Seller hereby expressly disclaims and negates, and each of the Purchasers hereby expressly waive, any other representation or warranty, express, implied, at Law or otherwise relating to the Acquired Interests, Seller or Seller Affiliates, the Project Company, the Wind Project or this Agreement.
7.12    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument. A facsimile or electronically imaged version of this Agreement may be executed by one or more parties hereto and an executed copy of this Agreement may be delivered by one or more parties hereto by facsimile or “PDF” electronic mail pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes.
7.13    Severability. If any provision of this Agreement or any other agreement entered into pursuant hereto is contrary to, prohibited by or deemed invalid under applicable law or regulation, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
7.14    Limit on Damages. Each party hereto acknowledges and agrees that neither party shall be liable to the other party for any punitive damages (except to the extent paid to a third party in respect of a Third Party Claim) or damages that were not reasonably foreseeable.
7.15    Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court of competent jurisdiction, in addition to any other remedy to which they are entitled at law or in equity.
[SIGNATURE PAGE FOLLOWS]


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IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of the day and year first above written.



PATTERN ENERGY GROUP INC.

     
By: /s/ Dyann Blaine 
Its:
Vice President



 

[Signature Page to Stillwater Purchase and Sale Agreement]





VERTUOUS ENERGY LLC


By:  /s/ Jean Daigneault 
Its:
Jean Daigneault, Authorized Signatory      

        /s/ Michael Larkin 
Its:
Michael Larkin, Authorized Signatory      


 



[Signature Page to Stillwater Purchase and Sale Agreement]





PATTERN ENERGY GROUP 2 LP


By:  /s/ Dyann Blaine 
Its:
Vice President

 



[Signature Page to Stillwater Purchase and Sale Agreement]




APPENDIX A-1:

GENERAL DEFINITIONS

AAA” shall have the meaning set forth in Section 7.4(b).
Acquired Interests” shall have the meaning set forth in the recitals, as more fully described in Part I of Appendix C.
Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified, or who holds or beneficially owns 50% or more of the equity interest in the Person specified or 50% or more of any class of voting securities of the Person specified; provided that notwithstanding the foregoing (a) Purchasers and their respective Subsidiaries shall not be deemed to be Affiliates of Seller and (b) Seller and its Affiliates (other than Purchasers and their respective Subsidiaries) shall not be deemed to be Affiliates of any Purchaser.
Aggregate Purchase Price” shall have the meaning set forth in Section 1.1, and is more particularly described in Part I of Appendix B.
Agreement” shall have the meaning set forth in the preamble to this Agreement.
Arbitrators” shall have the meaning set forth in Section 7.4(b).
Basket Amount” shall have the meaning set forth in Part VI of Appendix B.
Books and Records” means books, Tax Returns, contracts, commitments, and records of a Person.
Business Day means any day other than a Saturday, a Sunday or any other day on which banks are authorized to be closed in New York, New York or Montreal, Québec.
CFIUS” shall have the meaning set forth in Schedule 3.5.
Claim” means a claim by an Indemnified Party for indemnification pursuant to Section 6.1.
Class A Equity Investor” shall have the meaning set forth in Part IV of Appendix D.
Closing” shall have the meaning set forth in Section 1.4.
Closing Date” shall mean the date a Closing occurs.
Code” shall mean the United States Internal Revenue Code of 1986, as amended.
Consent” means any consent, approval, order or Permit of or from, or registration, declaration or filing with or exemption by any Person, including a Governmental Authority.

App. A-1 - 1




Contract” means any agreement, lease, license, obligation, plan, arrangement, purchase order, commitment, evidence of indebtedness, mortgage, indenture, security agreement or other contract (whether written or oral) entered into by a Person or by which a Person or any of its assets are bound.
Demand” shall have the meaning set forth in Section 7.4(b).
Dispute” shall have the meaning set forth in Section 7.4(b).
Dollars” or “$” means the lawful currency of the United States of America.
ECCA” shall have the meaning set forth in Part IV of Appendix D.
ECCA Consent Joinder” shall have the meaning set forth in Appendix B-2.
ECCA Joinder” shall have the meaning set forth in Appendix B-2.
Environmental Claim” means any suit, action, demand, directive, claim, Lien, written notice of noncompliance or violation, allegation of liability or potential liability, or proceeding made or brought by any Person in each case (a) alleging any liability under or violation of or noncompliance with any applicable Environmental Law, (b) with respect to the release of or exposure to Hazardous Substances, or (c) with respect to noise pollution or visual impacts, including shadow flicker.
Environmental Law” means any Law pertaining to the environment, natural resources, human health and safety in connection with exposure to Hazardous Substances, and physical and biological natural resources, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), and the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), and the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald and Golden Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq.), and any similar or analogous state, local and municipal Laws, in effect as of the date hereof or the Closing Date, as applicable.
ERISA” means the Employment Retirement Income Security Act of 1974, as amended.
Expected Closing Date” shall have the meaning set forth in Part III of Appendix B.
Financial Model” means the financial model for the Wind Project.
Financial Statements” means (a) the balance sheet of the Project Company as at December 31, 2017; and (b) the unaudited statements of income of the Project Company for the most recent three-month period for which such unaudited statements of income are available and for the period from

App. A-1 - 2




the beginning of the respective fiscal year to the end of such quarterly fiscal period, and the related balance sheets, members’ equity and cash flows as at the end of such period, in each case setting forth (to the extent applicable) in comparative form the corresponding figures for the period from the beginning of the respective fiscal year to the end of such quarterly fiscal period and for the period from the beginning of the respective fiscal year to the end of such quarterly fiscal period in the preceding fiscal year, in each case prepared in accordance with GAAP.
Financing Agreement” shall have the meaning described in Part III of Appendix D.
Flow of Funds Memorandum” means the funding memorandum delivered to the Class A Equity Investor pursuant to Section 5.3(jj) of the ECCA.
GAAP” means generally accepted accounting principles used by the Project Company to prepare the Financial Statements, consistently applied throughout the specified period and in the immediately prior comparable period.
Governmental Authority” means any federal or national, state, county, municipal or local government or regulatory or supervisory department, body, political subdivision, commission, agency, instrumentality, ministry, court, judicial or administrative body, taxing authority, or other authority thereof (including any corporation or other entity owned or controlled by any of the foregoing) having jurisdiction over the matter or Person in question, including the North American Electric Reliability Corporation, the Montana Public Service Commission, and each of their respective successors.
Governmental Rule” means, with respect to any Person, any applicable law, statute, treaty, rule, regulation, ordinance, order, code, judgment, decree, injunction or writ issued by any Governmental Authority.
Grantor Supplement” shall have the meaning set forth in Appendix B-2.
Hazardous Substances” means all substances, materials, chemicals, wastes or pollutants that are defined, regulated, listed or prohibited under Environmental Law, including without limitation, (i) asbestos or asbestos containing materials, radioactive materials, lead, and polychlorinated biphenyls, any petroleum or petroleum product, solid waste, mold, mycotoxin, urea formaldehyde foam insulation and radon gas; (ii) any waste or substance that is listed, defined, designated or classified as, or otherwise determined by any Environmental Law to be, ignitable, corrosive, radioactive, dangerous, toxic, explosive, infectious, radioactive, mutagenic or otherwise hazardous; (iii) any pollutant, contaminant, waste, chemical, deleterious substances or other material or substance (whether solid, liquid or gas) that is defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance,” or a word, term, or phrase of similar meaning or regulatory effect under any Environmental Law.
Indebtedness” means all obligations of a Person (a) for borrowed money (including principal, accrued and unpaid interest, fees due, and any other amounts due), whether or not contingent, (b) evidenced by notes, bonds, debentures, mortgages or similar instruments or debt securities,

App. A-1 - 3




(c) for the deferred purchase price of property, goods or services (other than trade payables or accruals incurred in the ordinary course of business and not past due), including all seller notes and “earn out” payments, (d) under capital leases, (e) secured by a Lien on the assets of such Person, whether or not such obligation has been assumed by such Person, (f) with respect to reimbursement obligations for letters of credit, performance bonds and other similar instruments (whether or not drawn), (g) under any interest rate, currency or other hedging agreement (including collars) or commitment therefor, (h) to repay deposits or other amounts advanced by and owing to third parties, (i) under conditional sale or other title retention agreements relating to property purchased by such Person, (j) in the nature of guaranties of the obligations described in clauses (a) through (i) above of any other Person or as to which such Person has an obligation substantially the economic equivalent of a guaranty, or (k) in respect of any other amount properly characterized as indebtedness in accordance with GAAP.
Indemnified Party means either a Purchaser Indemnified Party, a Seller Indemnified Party or a PSP Indemnified Party, as the case may be.
Indemnifying Party shall have the meaning set forth in Section 6.2(c).
Intellectual Property” means all intellectual property rights, including, without limitation, (a) patents, patent applications, patent disclosures and inventions, (b) Internet domain names, trademarks, trade names, service marks, trade dress, trade names, logos and corporate names and registration and applications for registration of any item listed in clause (b), together with all of the goodwill associated therewith, (c) copyrights (registered or unregistered), works of authorship and copyrightable works, and registrations and applications for registration of any item in this clause (c), (d) computer software (whether in source code, object code or other form), data, databases and any documentation related to any item listed in this clause, (e) trade secrets and other confidential information (including confidential and proprietary know how, ideas, formulas, compositions, recipes, inventions (whether patentable or unpatentable and whether or not reduced to practice), manufacturing and production processes, procedures and techniques, research and development information, drawings, blueprints, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information), (f) all rights of privacy and publicity, (g) other intellectual property rights and (h) copies and tangible embodiments thereof (in whatever form or medium).
Joint Claim” shall have the meaning set forth in Section 6.7.
Knowledge” means (a) with respect to Seller, the actual knowledge of the persons identified in Part VII of Appendix B, which shall include at a minimum (i) the senior developer responsible for the Wind Project, (ii) the construction manager responsible for the Wind Project, (iii) the transaction counsel responsible for the financing of the Wind Project and (iv) the finance manager responsible for the financing of the Wind Project and (b) with respect to each Purchaser, the actual knowledge of the persons identified in Part VII of Appendix B opposite the name of such Purchaser.
Laws” means all common law, laws, by-laws, statutes, treaties, rules, Orders, rulings, decisions, judgments, injunctions, awards, decrees, codes, ordinances, standards, regulations, restrictions,

App. A-1 - 4




official guidelines, policies, directives, interpretations, Permits or like action having the effect of law of any Governmental Authority.
LC Reimbursement Agreement” shall have the meaning described in Part III of Appendix D.
Lease” means a lease, ground lease, sublease, license, concession, easement, servitude, right of way, encroachment agreement, municipal right of way agreements, and road user agreements or other written agreement, including any option relating thereto, in each case, governing real property, to which the Project Company is a party.
Lien” on any asset means any mortgage, deed of trust, lien, hypothec, pledge, charge, security interest, restrictive covenant, right of first refusal, right of first offer, easement or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected or effective under applicable law, as well as the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.
Loss means any and all losses (including loss of profit and loss of expected profit), claims, actions, liabilities, damages, expenses, diminution in value or deficiencies of any kind or character including all interest and other amounts payable to third parties, all liabilities on account of Taxes and all reasonable legal fees and expenses and other expenses reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability.
Material Adverse Effect” means any circumstance, matter, condition, development, change, event, occurrence, state of affairs, or effect that, individually or in the aggregate, is or would reasonably be expected to have a material adverse effect on (a) the business, results of operations, assets or liabilities, financial condition or properties of the Project Company, taken as a whole, or (b) the ability of Seller to consummate the transactions contemplated by this Agreement or otherwise perform any of its obligations under this Agreement; provided, however, none of the following shall be deemed (either alone or in combination) to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect:
(a)    any change in general economic, political or business conditions;
(b)    changes resulting from acts of war or terrorism or any escalation or worsening of any such acts of war or terrorism threatened or underway as of the date of this Agreement;
(c)    changes or developments generally affecting the power services industry;
(d)    any changes in accounting requirements or principles imposed by GAAP after the date of this Agreement;
(e)    any changes in applicable Law after the date of this Agreement;
(f)    changes in the wind power industry that, in each case, generally affect companies in such industry;

App. A-1 - 5




provided that the incremental extent of any disproportionate change, event, occurrence, development, effect, condition, circumstance or matter described in clauses (a) through (f) with respect to the Project Company, taken as a whole, relative to other similarly situated businesses in the wind power industry may be considered and taken into account in determining whether there has been a Material Adverse Effect.
Material Contract” means (i) any Material Lease, (ii) the Contracts set forth in Part I of Appendix D, (iii) the LC Reimbursement Agreement, and (iv) any other Contract not otherwise set forth in Part I of Appendix D that affects the Operating Period to which the Project Company, is a party or by which the Project Company or any of its assets, is bound (A) providing for past or future payments by or to the Project Company in excess of $250,000 annually or $500,000 in the aggregate, (B) relating to any partnership, joint venture or other similar arrangement, (C) relating to any Indebtedness, (D) limiting the freedom of the Project Company to compete in any line of business or with any Person or in any area or granting “most favored nation” or similar status, (E) with Seller or any of its Affiliates, (F) with either Purchaser or any of its Affiliates, (G) relating to the acquisition or disposition of any business or material portion thereof (whether by merger, sale of stock, sale of assets or otherwise), (H) that was not entered into in the ordinary course of business of the Project Company; or (I) the loss of which would result in a Material Adverse Effect.
Material Contract Change” shall have the meaning set forth in Section 4.1(a).
Material Leases” means all Leases related to the Wind Project (i) the loss of which would result in a reduction in production of the Wind Project or in its ability to deliver energy to the point of interconnection or would otherwise result in a Material Adverse Effect, or (ii) that are otherwise material to the operations of the Wind Project.
Mortgage” shall have the meaning described in Part V of Appendix D.
New B Member” shall have the meaning set forth in Part I of Appendix C.
New B Member LLC Agreement” means the amended and restated limited liability company agreement of New B Member to be entered into by PSP and Pattern Finance, substantially in the form attached hereto as Exhibit A.
New Holdings” shall have the meaning set forth in Part I of Appendix C.
New Holdings Interest” shall have the meaning set forth in Part I of Appendix C.
New Member Agreements” shall have the meaning set forth in Appendix B-6.
Operating Period” means, in respect of the Wind Project, the period commencing on the Commercial Operation Date (however titled) under any power purchase agreement to which the Project Company is a party.
Order” means any writ, judgment, injunction, ruling, decision, order or similar direction of any Governmental Authority, whether preliminary or final.

App. A-1 - 6




Organization Documents means, with respect to (a) any corporation, its articles or certificate of incorporation and by-laws, (b) any limited partnership, its certificate or declaration of limited partnership and its partnership agreement, (c) any limited liability company, its articles or certificate of organization or formation and its operating agreement or limited liability company agreement, or (d) any other Person, documents of similar substance.
Outside Closing Date” shall have the meaning set forth in Part III of Appendix B.
Pattern Finance” means Pattern US Finance Company LLC, a Delaware limited liability company.
Pattern Funding Date Guaranty” means the Guaranty made by Pattern for the benefit of Allianz Renewable Energy Partners of America, LLC, a Delaware limited liability company, pursuant to the ECCA.
PEG Holdings” has the meaning set forth in Section 4.2(g)(ii).
Percentage Portion” shall have the meaning set forth in the recitals to this Agreement, and is more particularly described in Part I of Appendix C.
Permitted Lien” means any of the following: (a) Liens for Taxes either not yet due and payable or being contested in good faith through appropriate proceedings and for which adequate reserves have been established in the Project Company’s balance sheet in accordance with GAAP; (b) inchoate mechanics’ and materialmen’s Liens for work in progress and workmen’s, repairmen’s, warehousemen’s and carrier’s Liens arising in the ordinary course of business either for amounts not yet due or which have not been perfected, filed or registered in accordance with applicable Law against the Project Company, the Wind Project or the Project Company Real Property; (c) as to any Project Company Real Property, title defects, easements, rights of first refusal, restrictions, irregularities, encumbrances (other than for borrowed money), encroachments, servitudes, rights of way and statutory Liens that do not or would not reasonably be expected to materially impair the value or use by the Project Company of the Project Company Real Property; (d) reservations, limitations, provisos and conditions expressed in grants of real or immovable property that do not or would not reasonably be expected to materially impair the value or use by the Project Company of such real or immovable property; (e) security given to a public utility or any Governmental Authority when required by such utility or authority in connection with the operations of the Project Company in the ordinary course of business; (f) Liens granted pursuant to the Financing Agreement (prior to the Discharge Date (as defined in the Financing Agreement) and to be discharged promptly following Closing) or the LC Reimbursement Agreement; and (g) Liens in respect of which the Project Company is insured against loss or damage pursuant to the Title Policy identified in Part II of Appendix D.
Permit” means filings, registrations, licenses, permits, notices, technical assistance letters, decrees, certificates, approvals, consents, waivers, Orders, authorizations, agreements, directions, instructions, grants, easements, exemptions, exceptions, variances and authorizations to or from any Governmental Authority.

App. A-1 - 7




Person” means any individual, corporation, partnership, limited partnership, limited liability partnership, trust, business trust, estate, joint venture, unincorporated association, limited liability company, cooperative, Governmental Authority or other entity.
Personal Property” means all office equipment, machinery, equipment, supplies, vehicles, tractors, trailers, tools, spare parts, production supplies, furniture and fixtures and other items of tangible personal property owned by any of the Project Company used primarily in connection with ownership, maintenance or operation of the Wind Project.
Post-Closing Contingency Receipt” shall have the meaning set forth in Part I of Appendix B.
Power Purchase Agreement” shall have the meaning described in Part I of Appendix D.
Project Company” shall have the meaning set forth in the recitals to this Agreement, and is more particularly described in Part I of Appendix C of the Agreement.
Project Company Interest” shall have the meaning set forth in Part I of Appendix C.
Project Company Real Property” means all real property of the Project Company, together with all buildings, structures, improvements and fixtures of the Wind Project thereon, (i) held pursuant to a Material Lease or (ii) required to be set forth on Part II of Appendix C.
Project Completion Account” has the meaning set forth in the ECCA.
Project LLC Agreement” shall have the meaning set forth in Part IV of Appendix D.
PSP Indemnified Party” shall have the meaning set forth in Section 6.1(c).
PSP Parent” shall have the meaning set forth in Section 3.11.
Purchase Price Adjustment” shall have the meaning set forth in Part I of Appendix B.
Purchase Rights Agreements” means, collectively, (a) that certain Amended and Restated Purchase Rights Agreement dated as of June 16, 2017 by and among Seller, Pattern Energy Group Inc. and, solely with respect to Article IV thereof, Pattern Energy Group Holdings LP and Pattern Energy GP LLC, as such agreement is amended, modified or supplemented in accordance with its terms and (b) that certain Amended and Restated Purchase Rights Agreement dated as of June 16, 2017 by and among Pattern Energy Group 2 LP, Pattern Energy Group Inc. and, solely with respect to Article III thereof, Pattern Energy Group Holdings 2 LP and Pattern Energy Group Holdings 2 GP LLC, as such agreement is amended, modified or supplemented in accordance with its terms.
Purchaser” shall have the meaning set forth in the preamble to this Agreement.
Purchaser Indemnified Party shall have the meaning set forth in Section 6.1(a).
Purchaser’s Maximum Liability” shall have the meaning set forth in Part VI of Appendix B.

App. A-1 - 8




Reimbursement Agreement” means the letter agreement between by and among the Purchasers, substantially in the form attached hereto as Exhibit B.
Rules” shall have the meaning set forth in Section 7.4(b).
Securities Act” shall have the meaning set forth in Section 2.10.
Security Agreement Joinder” shall have the meaning set forth in Appendix B-2.
Seller” shall have the meaning set forth in the preamble to this Agreement.
Seller Affiliate” shall have the meaning set forth in the recitals to this Agreement.
Seller Indemnified Party shall have the meaning set forth in Section 6.1(b).
Seller’s Maximum Liability” shall have the meaning set forth in Part VI of Appendix B.
Separate Purchase Price” shall have the meaning set forth in Section 1.1, and is more particularly described in Part I of Appendix B.
Stillwater Energy” shall have the meaning set forth in Part I of Appendix C.
Stillwater Member” shall have the meaning set forth in Part I of Appendix C.
Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.
Subsidiary Transferor” shall have the meaning set forth in Part I of Appendix C.
Survival Period” shall have the meaning set forth in Part VI of Appendix B.
Tax” or “Taxes” means, collectively all federal, provincial, territorial, state and local or foreign income, estimated, payroll, withholding, excise, sales, goods and services, harmonized, value-added, use, real and personal property, corporation, use and occupancy, business and occupation, mercantile, transfer, capital stock and franchise or other taxes, levies, duties, assessments, reassessments or other charges of any kind whatsoever (including interest, additions and penalties thereon), whether disputed or not.
Tax Returns” means any return, declaration, notice, form, report, claim for refund or information return or statement relating to the determination, assessment, collection or payment of Taxes or to the administration, implementation or enforcement of or compliance with any legal requirement pertaining to Taxes, including, for greater certainty, any schedule or attachment thereto.
Third Party Claim” shall have the meaning set forth in Section 6.5(a).
Third Party Claim Notice” shall have the meaning set forth in Section 6.5(a).

App. A-1 - 9




U.S. Allocation Statement” shall have the meaning set forth in Section 4.2(f).
Wind Project” shall have the meaning set forth in the recitals to this Agreement, and is more particularly described in Part II of Appendix C of the Agreement.


App. A-1 - 10




APPENDIX A-2:

RULES OF CONSTRUCTION

1.
The singular includes the plural and the plural includes the singular.
2.
The word “or” is not exclusive.
3.
A reference to a Governmental Rule includes any amendment or modification to such Governmental Rule, and all regulations, rulings and other Governmental Rules promulgated under such Governmental Rule.
4.
A reference to a Person includes its successors and permitted assigns.
5.
Accounting terms have the meanings assigned to them by GAAP, as applied by the accounting entity to which they refer.
6.
The words “include,” “includes” and “including” are not limiting and shall be deemed to mean “include, without limitation”, “includes, without limitation” or “including, without limitation”.
7.
A reference to an Article, Section, Exhibit, Schedule or Appendix is to the Article, Section, Exhibit, Schedule or Appendix of this Agreement unless otherwise indicated.
8.
Any reference to “this Agreement”, “hereof,” “herein” and “hereunder” and words of similar import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
9.
Any reference to another agreement or document shall be construed as a reference to that other agreement or document as the same may have been, or may from time to time be, varied, amended, supplemented, substituted, novated, assigned or otherwise transferred.
10.
References to “days” shall mean calendar days, unless the term “Business Days” shall be used. References to a time of day shall mean such time in New York, New York, unless otherwise specified.
11.
This Agreement is the result of negotiations among, and has been reviewed by, Seller, Purchaser, and their respective counsel. Accordingly, this Agreement shall be deemed to be the product of the parties thereto, and no ambiguity shall be construed in favor of or against either Seller or Purchaser.
12.
The words “will” and “shall” shall be construed to have the same meaning and effect.



App. A-2 - 1




APPENDIX B:
TRANSACTION TERMS AND CONDITIONS

Stillwater Transaction
I.    Purchase Price

Aggregate Purchase Price”:

$
45,000,000.00
 
Separate Purchase Price”:
PEGI: $22,950,000.00
 
PSP
: $22,050,000.00

Currency:
US Dollars

Purchase Price Adjustment”:

Not applicable.
Post-Closing Adjustment:

Not applicable
Deferred Purchase Price:

Not applicable

App. B - 1




Payment Mechanics and Payee Information:

Upon satisfaction of the conditions precedent to Closing, the Purchasers shall pay the Aggregate Purchase Price on the Closing Date in escrow subject to the terms and conditions of the side letter dated as of the date hereof between the Purchasers and Seller, which Aggregate Purchase Price will be used to make the Class B Capital Contribution. Contemporaneously with the payment of the Aggregate Purchase Price, the Class A Equity Investor shall make its Class A Capital Contribution and New B Member shall make its Class B Capital Contribution to New Holdings under the ECCA (together, the “Capital Contributions”) upon satisfaction of the other conditions precedent thereto on the Funding Date.

In accordance with the terms of the ECCA, immediately following the issuance of 49% of the membership interests in New B Member to PSP or its subsidiary, the conversion of the membership interest held by New B Member in New Holdings into the Class B Membership Interest and the issuance of the Class A Membership Interest to the Class A Equity Investor, the Capital Contributions shall be used by New Holdings to acquire the Project Company from Stillwater Energy. In accordance with Section 2.3 of the ECCA, the proceeds of the Capital Contributions shall be immediately applied to items (a) through (f) below:

(a) to pay in full all Transaction Expenses identified in the Flow of Funds Memorandum due and payable on the Funding Date;
(b) to pay in full any and all amounts then due and payable to the Financing Parties and the Secured Parties pursuant to the Financing Documents;
(c) to pay in full any and all amounts then due and payable to the BOP Contractors and the TSA Contractor;
(d) to pay any other amounts under the Principal Project Documents or other project documents due and payable on the Funding Date;
(e) to fund the Project Completion Account in an amount equal to the sum of (i) the Punchlist Amount, and (ii) any Transaction Expenses reasonably anticipated to be due and payable with respect to the Wind Farm after the Funding Date; and
(f) to fund working capital and any other reserves, if any, in each case, as set forth in the Base Case Model, into the accounts specified in the Flow of Funds Memorandum;
provided, that the proceeds of the Capital Contributions will be deemed to be paid to Stillwater Energy in satisfaction of the obligation to pay the purchase price for the membership interests in the Project Company and immediately applied to items (a)-(f) above. For purposes of this section, each term used in clauses (a)-(f) above or in the final paragraph below that is not otherwise defined herein shall have the applicable meaning set forth in the ECCA.



App. B - 2




 
The balance of the Aggregate Purchase Price, if any, will be paid to Seller in accordance with the Flow of Funds Memorandum:

Following the Funding Date, the amounts remaining in the Project Completion Account shall be applied to pay amounts due to the applicable BOP Contractor and the TSA Contractor, as and when due under the applicable BOP Contract and the Turbine Supply Agreement, respectively, and other amounts related to the construction of the Wind Farm, if any, due under the other Principal Project Documents, and any Transaction Expenses which become due and payable after the Funding Date. Pursuant to Section 5.02(f)(i) of the Project LLC Agreement, after satisfaction of all obligations described above to be paid from the funds on deposit in the Project Completion Account, the remaining funds on deposit in the Project Completion Account will be distributed by the Project Company to New Holdings, by New Holdings one hundred percent (100%) to New B Member and by New B Member to its members in accordance with Section 5.02 of the New B Member LLC Agreement.

II.    Signing Date Deliverables

Seller’s Signing Date Deliverables:

Not applicable
Purchaser’s Signing Date Deliverables:
Not applicable

III.    Closing

Closing Location:

At the offices of Seller:

1088 Sansome Street
San Francisco, CA 94111
Expected Closing Date:

November 20, 2018

 
Outside Closing Date:

December 13, 2018 (provided that if the Tax Equity Commitment Expiration Date (as defined in the ECCA) is extended pursuant to the terms of the ECCA, the Outside Closing Date hereunder shall automatically be extended by a period equal to such extension; provided, however, that in no event shall any such extension of the Outside Closing Date exceed ninety (90) days)
IV.    Closing Deliverables & Conditions Precedent to Closing

Additional Closing Deliverables of Seller:
In addition to the closing deliverables set forth in Section 1.5(a) of the Agreement, Seller shall deliver, or cause to be delivered, to Purchasers the additional closing deliverables set forth in Appendix B-1.

Additional Closing Deliverables of Purchasers:
In addition to the closing deliverables set forth in Section 1.5(b) of the Agreement, Purchasers shall deliver, or cause to be delivered, to Seller the additional closing deliverables set forth in Appendix B-2.

Additional Conditions Precedent to Each Party’s Obligations to Close:
In addition to the conditions precedent set forth in Section 5.1 of the Agreement, the obligation of Purchasers and Seller to Close is subject to the additional conditions precedent set forth in Appendix B-3.


App. B - 3




Additional Conditions Precedent to Purchasers’ Obligations to Close:
In addition to the conditions precedent set forth in Section 5.2 of the Agreement, the obligation of Purchasers to Close is subject to the additional conditions precedent set forth in Appendix B-4.

Additional Conditions Precedent to Seller’s Obligations to Close:
In addition to the conditions precedent set forth in Section 5.3 of the Agreement, the obligation of Seller to Close is subject to the additional conditions precedent set forth in Appendix B-5.

V.    Additional Termination Rights

By Either Party:

Not applicable

By Purchasers:

Not applicable

By Seller:

Not applicable

VI.    Indemnification Provisions

Additional Seller Indemnity Obligations:

Not applicable

Additional Purchasers Indemnity Obligations:

Not applicable

Survival Period:

Until the date that is 12 months after the Closing, except for (i) the representations and warranties in Sections 2.1, 2.2, 2.3(a), 2.6 and 2.11 of the Agreement, and paragraphs 1, 2, 3(a), 6 and 10 in Appendix B-6, and any claim for any breach of any representation or warranty involving actual fraud or willful misrepresentation, which shall survive until the expiration of the relevant statute of limitations, (ii) the representation and warranty in Section 2.18 with respect to the Indebtedness of the Project Company, which shall survive until the date that is the later of: (A) 6 months after the Closing; and (B) 3 months following the completion of New Holdings’ first annual audited financial statements presenting the consolidated position of New Holdings and the Project Company, and (iii) the representations and warranties in Section 2.9 of the Agreement and paragraph 9 in Appendix B-6 which shall survive until the date that is 60 days after the expiration of the period, if any, during which an assessment, reassessment or other form of recognized written demand assessing liability for Tax, interest or penalties under applicable Law in respect of any taxation year to which such representations and warranties relate could be issued to the Project Company (the “Survival Period”).

Limitation on Liability:
Basket Amount”:

1% of the Aggregate Purchase Price


Seller’s Maximum Liability”:
11% of the Aggregate Purchase Price

Purchaser’s Maximum Liability”:

11% of the Aggregate Purchase Price

App. B - 4




Additional Refund or Reimbursement Obligations:

By Purchasers or Purchaser Indemnified Party:
1.    None

By Seller or Seller Indemnified Party:
1.    None

VII.    Additional Transaction Terms

Required Governmental Approvals:
1.    Committee on Foreign Investment in the United States
2.    FERC - Order Granting Application for Authorization for Disposition of Jurisdictional Facilities and requests for Waivers, Confidential Treatment, and Expedited Consideration, filed by Stillwater Wind, LLC pursuant to Section 203 of the Federal Power Act
Persons with Knowledge:
Seller’s Persons with Knowledge: Daniel Elkort, Christian Hackett, Dianne Van Siclen, Graeme Agate, Michael Thompson, Blake Rasmussen, John Welch, Natalie McCue, Allan Wynn, Jeremy Rosenshine, Chris Shugart and Nelson Shim
PEGI’s Persons with Knowledge: Esben Pederson, Michael Lyon and Dyann Blaine

PSP’s Persons with Knowledge: Guthrie Stewart and Patrick Samson
Additional Assignment Rights:

Assignment Rights of Seller: None

Assignment Rights of Purchaser: None
Governing Law:
New York

App. B - 5




Notice Information:
To Seller:

c/o Pattern Energy Group 2 LP
1088 Sansome Street
San Francisco, CA 94111
Attention: General Counsel
Phone: 415-283-4000
Fax: 415-362-7900

To PEGI:
c/o Pattern Energy Group Inc.
1088 Sansome Street
San Francisco, CA 94111
Attention: General Counsel
Phone: 415-283-4000
Fax: 415-362-7900
To PSP:

c/o Public Sector Pension Investment Board
1250 René-Lévesque Blvd. West.
Suite 1400
Montréal, Québec
Canada H3B 5E9
Attention: Managing Director, Infrastructure Investments
Facsimile: (514) 937-0403
E-mail:
vertuousenergy@investpsp.ca and legalnotices@investpsp.ca

with a copy to:

Davies Ward Phillips & Vineberg LLP
1501, avenue McGill College
26
th Floor
Montreal, Québec
Canada H3A 3N9
Attention: Franziska Ruf
Facsimile: (514) 841-6499
E-mail:
fruf@dwpv.com



App. B - 6




APPENDIX B-1:
ADDITIONAL CLOSING DELIVERABLES OF SELLER
1.
Financial Statements
2.
A properly executed certificate from the Seller in accordance with the requirements of Treasury Regulation Section 1.1445-2(b)(2) certifying that Seller (or, as the case may be, the Subsidiary Transferor) is not a “foreign person” as defined in Section 1445 of the Code.



App. B-1 - 1




APPENDIX B-2:
ADDITIONAL CLOSING DELIVERABLES OF PURCHASERS
In the case of PEGI:
1.
A counterpart signature page to the New B Member LLC Agreement, executed by Pattern Finance
2.
A counterpart acknowledgment to the Reimbursement Agreement, executed by PEGI
3.
Copies or originals of the following fully executed documents:
a.
Certificate of Formation of New B Member
b.
Certificate of Formation of New Holdings
c.
a copy of the original membership interest certificate representing 100% of the membership interests in New Holdings in the name of New B Member
a.
the joinder to the ECCA (“ECCA Joinder”) executed by New B Member and New Holdings
b.
the Pattern Funding Date Guaranty, as contemplated by Section 5.3(b) of the ECCA
c.
a copy of the fully executed Project LLC Agreement, as contemplated by Section 5.3(a) of the ECCA
d.
the joinder to the Pledge and Security Agreement, dated as of March 9, 2018, by and among Stillwater Member, Stillwater Energy, the Project Company and Société Générale, in its capacity as the Collateral Agent (as defined therein) (the “Security Agreement Joinder”) executed by New B Member and New Holdings
e.
a joinder to the Consent and Agreement, dated as of March 9, 2018, by and among Stillwater Energy, Stillwater Member, Allianz Renewable Energy Partners of America LLC and Société Générale, in its capacity as the Collateral Agent (as defined therein) (the “ECCA Consent Joinder”) executed by New B Member and New Holdings
f.
the Grantor Supplement (as defined in the Collateral Agency and Intercreditor Agreement, dated as of March 9, 2018, by and among the Project Company, Stillwater Energy, Stillwater Member and Société Générale, in its capacities as the Administrative Agent, the Collateral Agent and the LC Administrative Agent (each as defined therein)) (the “Grantor Supplement”) executed by New B Member and New Holdings
4.
Copies of legal opinions, certificates and other closing deliverables required to be delivered by or on behalf of PEGI as the Pattern Guarantor (as defined in the ECCA) to the Class A Equity Investor on or prior to the Funding Date, pursuant to Section 5.3 of the ECCA
In the case of PSP:

App. B-2 - 1




1.
A counterpart signature page to the New B Member LLC Agreement, executed by PSP
2.
A counterpart signature page to the Reimbursement Agreement, executed by PSP Parent



App. B-2 - 2




APPENDIX B-3:
ADDITIONAL CONDITIONS PRECEDENT TO
EACH PARTY’S OBLIGATIONS TO CLOSE
1.
Receipt of the required Governmental Approval(s) identified in Part VII of Appendix B



App. B-3 - 1




APPENDIX B-4:
ADDITIONAL CONDITIONS PRECEDENT TO
PURCHASERS’ OBLIGATIONS TO CLOSE
1.
Receipt by Purchasers of a copy of each Tax Equity Document, each Principal Project Document and each legal opinion, certificate and other closing deliverables (solely with respect to PEGI, excluding any deliverables being provided by or on behalf of PEGI as the Pattern Guarantor) being delivered to the Class A Equity Investor on or prior to the Funding Date, pursuant to Section 5.3 of the ECCA (excluding (i) the bring-down of the tax opinion being delivered to the Class A Equity Investor pursuant to Section 5.3(i) of the ECCA, (ii) the Appraisal addressed and delivered solely to the Class A Equity Investor pursuant to Section 5.3(cc)(ii) of the ECCA and (iii) any other document, legal opinion, certificate or other closing deliverable that by its terms prohibits disclosure thereof to the Purchasers). For purposes of this paragraph 1, defined terms used but not otherwise defined herein shall have the applicable meaning set forth in the ECCA.
2.
Seller has provided to Purchasers satisfactory confirmation from NorthWestern Corporation that Project Company has paid, or has caused to be paid all delay liquidated damages owing under Section 7.4 of the Power Purchase Agreement, or that such delay liquidated damages shall be paid on the Funding Date (as contemplated by the Flow of Funds Memorandum), or from the Project Completion Account.
3.
Seller has provided to Purchasers satisfactory confirmation that Project Company has paid, or has caused to be paid, the “Final Installment” of the “Purchase Price”, or that such Final Installment shall be paid on the Funding Date (as contemplated by the Flow of Funds Memorandum), or from the Project Completion Account. For purposes of this paragraph 3, defined terms used but not otherwise defined herein shall have the applicable meaning set forth in the Membership Interest Purchase Agreement, dated as of May 24, 2017 (the “WKN MIPA”), as amended, between Pattern Renewables 2 LP, a Delaware limited partnership (“PRLP2”) and Windkraft Nord USA, Inc., a Nevada corporation (“WKN”)



App. B-4 - 1




APPENDIX B-5:
ADDITIONAL CONDITIONS PRECEDENT TO
SELLER’S OBLIGATIONS TO CLOSE
Seller shall have received the amount of the Aggregate Purchase Price necessary for New Holdings to acquire the membership interests in the Project Company in accordance with the terms and conditions of the ECCA.



App. B-5 - 1




APPENDIX B-6:
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF PEGI
Except as set forth in, or qualified by any matter set forth in, the Schedules attached to this Agreement, PEGI hereby represents and warrants to Seller and PSP as set forth in this Appendix B-6 as of (a) the date hereof and (b) if the Closing Date is not the date of this Agreement, the Closing Date, in each case, unless otherwise specified in the representations and warranties below, in which case the representation and warranty is made as of such date. Whether or not a particular Section of this Appendix B-6 refers to a specific, numbered Schedule, such Section shall, to the extent applicable, be subject to the exceptions, qualifications, and other matters set forth in the Schedules to the extent that the relevance of such exceptions, qualifications or other matters is reasonably apparent on the face thereof.
1.    Organization and Status. Each of New B Member and New Holdings is a legal entity duly formed, validly existing and in good standing under the Laws of the jurisdiction of its formation with all requisite organizational power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, and is duly qualified, registered or licensed to do business as a foreign entity and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so duly qualified, registered or licensed and in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
2.    Power; Authority; Enforceability. Each of New B Member and New Holdings has the legal capacity and power to enter into, deliver and perform its obligations under the ECCA Joinder, the Security Agreement Joinder, the ECCA Consent Joinder, the Grantor Supplement and, as of the Funding Date (as defined in the ECCA), the Project LLC Agreement and any other agreement referred to in this Agreement to which New B Member or New Holdings is a party (collectively, the “New Member Agreements”) and has been duly authorized, in accordance with its Organization Documents, to enter into, deliver and perform its obligations under each New Member Agreement. Each New Member Agreement has been duly executed and delivered by New B Member and New Holdings, as applicable, and constitutes the legal valid and binding obligation of New B Member and New Holdings, as applicable, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law.
3.    No Violation. The execution, delivery and performance by each of New B Member and New Holdings of its obligations under the New Member Agreements do not, and will not, (a) violate any Governmental Rule to which New B Member or New Holdings is subject or the Organization Documents of New B Member or New Holdings, (b) result in the creation or imposition of any Lien (other than a Permitted Lien) upon the Acquired Interests, New B Member or New Holdings, (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which New B Member or New Holdings is a party or by which such Person is bound, (d) other than as set forth in Schedule 2.5, conflict with, result in a breach of, constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate, modify or cancel or require any Consent under any Material Contract or (e) other than as set forth in Schedule 2.5, require any notice under any Material Contract, except in the case of this clause (e), as would not reasonably be expected

App. B-6 - 1




to be material in the context of the Wind Project or otherwise prevent or materially impair or materially delay the consummation of the transactions contemplated by this Agreement.
4.    No Litigation. Neither New B Member nor New Holdings is a party to nor has it received written notice of any pending or, to the Knowledge of PEGI, threatened litigation, action, suit, proceeding or governmental investigation which would reasonably be expected to be material to New B Member or New Holdings or which seeks the issuance of an order restraining, enjoining, altering or materially delaying the consummation of the transactions contemplated by the New Member Agreements.
5.    Consents and Approvals. Except as set forth in Schedule 2.5, no Consent of any Governmental Authority is required by or with respect to New B Member, New Holdings, or any of their respective Subsidiaries in connection with the execution and delivery of the New Member Agreements by New B Member or New Holdings, or the consummation by New B Member or New Holdings of the transaction contemplated thereby, except for any Consents which if not obtained or made prior to the Closing would not reasonably be expected to prevent or impair or delay the consummation of the transactions contemplated by this Agreement and which can be reasonably expected to be obtained or made in the ordinary course after the Closing.
6.    Acquired Interests. Part I of Appendix C sets forth the equity capitalization (or proposed equity capitalization) of New B Member and New Holdings. All of the interests in New B Member and New Holdings described in Part I of Appendix C have been duly authorized, validly issued and are fully-paid and non-assessable and, except as set forth on Part I of Appendix C, there are no outstanding (i) equity interests or voting securities of New B Member or New Holdings, (ii) securities of New B Member or New Holdings convertible into or exchangeable for any equity interests or voting securities of New B Member or New Holdings, (iii) options or other rights to acquire from New B Member or New Holdings, or other obligation of New B Member or New Holdings to issue, any equity interests or voting securities or securities convertible into or exchangeable for equity interests or voting securities of New B Member or New Holdings, or any obligations of New B Member or New Holdings to repurchase, redeem or otherwise acquire any of the foregoing.
7.    Solvency. There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by or, to the Knowledge of PEGI, threatened against, New B Member, New Holdings or any of their respective Subsidiaries. None of New B Member, New Holdings or any of their respective Subsidiaries (a) has had a receiver, receiver and manager, liquidator, sequestrator, trustee or other officer with similar powers appointed over all or part of its business or its assets, and to the Knowledge of PEGI, no application therefor is pending or threatened, (b) is insolvent or presumed to be insolvent under any law or is unable to pay its debts as and when they fall due, (c) has made a general assignment for the benefit of its creditors, or (d) has taken any action to approve any of the foregoing.
8.    Compliance with Law. To the Knowledge of PEGI, there has been no actual violation by New B Member or New Holdings of or failure by New B Member or New Holdings to comply with any Governmental Rule that is applicable to it, or allegation by any Governmental Authority of such a violation, that would reasonably be expected to be material and relates to the Wind Project or would otherwise reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement.
9.    Taxes.
(a)    Each of New B Member and New Holdings has been, at all times since its formation, a partnership or a disregarded entity for U.S. federal income tax purposes.

App. B-6 - 2




(b)    No jurisdiction or authority in or with which New B Member or New Holdings does not file Tax Returns has alleged that they are required to file such Tax Returns.
(c)    Each of New B Member and New Holdings has timely filed all Tax Returns that it is required to file, has timely paid or has caused to be timely paid all Taxes it is required to pay to the extent due (other than those Taxes that it is contesting in good faith and by appropriate proceedings, with adequate, segregated reserves established for such Taxes) and, to the extent such Taxes are not due, has established or caused to be established reserves that are adequate for the payment thereof as required by GAAP.
(d)    Each of New B Member and New Holdings has withheld from each payment made to any Person, all amounts required by applicable law to be withheld, and has remitted such withheld amounts within the prescribed periods to the appropriate Governmental Authorities.
(e)    Each of New B Member and New Holdings has charged, collected and remitted on a timely basis all Taxes as required under applicable laws on any sale, supply or delivery whatsoever, made by it.
(f)    Each of New B Member and New Holdings has maintained and continues to maintain at its place of business all records and books of account required to be maintained under applicable Law, including laws relating to sales and use Taxes.
(g)    No reassessments of the Taxes of New B Member or New Holdings have been issued and are outstanding. None of the New B Member, New Holdings or any of their respective Subsidiaries has received any indication from any Governmental Authority that an assessment or reassessment of New B Member or New Holdings is proposed in respect of any Taxes, regardless of its merits. None of New B Member or New Holdings has executed or filed with any Governmental Authority any agreement or waiver extending the period for assessment, reassessment or collection of any Taxes.
10.    Broker’s Fees. Except for any fees or commissions due to Evercore Group, L.L.C. as the financial advisor to the Conflicts Committee of the PEGI board of directors, none of New B Member, New Holdings or any of their respective Subsidiaries has any liability or obligation for any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.
11.    Real Property. Neither New B Member nor New Holdings owns any real property.
12.    Employees. Neither New B Member nor New Holdings has, and has ever had, any employees.
13.    Employee Benefits. Neither New B Member nor New Holdings has, and has ever had, any “employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended).
14.    Labor Matters. Neither New B Member nor New Holdings is a party to any collective bargaining agreement with a labor union or organization or any other Contract with any labor union or other employee representative of a group of employees.
15.    Affiliate Transactions. Except as disclosed on Appendix E, there are no transactions, contracts or liabilities between or among (a) New B Member or New Holdings on the one hand, and (b) PEGI, any of its Affiliates or, to the Knowledge of PEGI, any current representative of New B Member, New

App. B-6 - 3




Holdings, PEGI or its Affiliates, or any member of the immediate family of any such representative, on the other hand.
16.    New B Member and New Holdings. During the period from its formation through and including the Closing Date, New B Member has not had any assets or liabilities other than its ownership of the New Holdings Interest. During the period from its formation through and including the Closing Date, New Holdings has not had any assets or liabilities other than its ownership, as of the Closing Date, of the Project Company Interest.



App. B-6 - 4




APPENDIX B-7:
COVENANTS AND ACKNOWLEDGMENTS OF THE PARTIES

1.
On or prior to the Funding Date (as defined in the ECCA), PEGI will cause New B Member and New Holdings to execute each of the New Member Agreements, as applicable.
2.
On the Funding Date, Purchasers will execute (or cause their respective Affiliates or Subsidiaries to execute) the New B Member LLC Agreement.
3.
Seller acknowledges and agrees that, on or prior to the Funding Date, New B Member and New Holdings will execute (i) the ECCA Joinder; (ii) the Security Agreement Joinder; (iii) the ECCA Consent Joinder; and (iv) the Grantor Supplement.
4.
To the extent not paid on or prior to the Funding Date, within five (5) Business Days following the Closing Date, Seller will pay (or cause its Affiliates or Subsidiaries to pay) $250,000 to WKN with respect to the Phase 2 Project, as reflected in that certain letter agreement between PRLP2 and WKN. For purposes of this paragraph 4, defined terms used but not otherwise defined herein shall have the applicable meaning set forth in the WKN MIPA.



App. B-7 - 1




APPENDIX C:

ACQUIRED INTERESTS; OWNERSHIP STRUCTURE;
AND WIND PROJECT INFORMATION

STILLWATER TRANSACTION

I.    Acquired Interests & Ownership Structure

Project Company:

Stillwater Wind, LLC, a Delaware limited liability company
Subsidiaries of Project Company:
None.
Holding Company
Stillwater New Energy Holdings LLC, a newly formed Delaware limited liability company (“New Holdings”)
Class B Member
Stillwater New B Member LLC, a newly formed Delaware limited liability company (“New B Member”)
Purchasers:
PEGI (indirectly acquired through Pattern Finance) and PSP
Acquired Interests:

PEGI (indirectly acquired through Pattern Finance):

51% of the membership interests in New B Member (which owns 100% of the membership interests in New Holdings), together with the right to execute the ECCA Joinder and the other joinder documents, which will give New Holdings the right to acquire 100% of the Project Company upon satisfaction of the conditions in the ECCA.

PSP:

49% of the membership interests in New B Member (which owns 100% of the membership interests in New Holdings), together with the right to execute the ECCA Joinder and the other joinder documents, which will give New Holdings the right to acquire 100% of the Project Company upon satisfaction of the conditions in the ECCA.

Note: upon satisfaction of the funding conditions under the ECCA, the membership interests in New Holdings will be converted to the Class B Membership Interests and Class A Membership Interest will be issued to the tax equity investor as described in the ECCA.

Subsidiary Transferor(s)”:
Stillwater Energy Holdings LLC, a Delaware limited liability company (“Stillwater Energy”)

App. C - 1




Direct or Indirect Co-Owners of Project Company:

As of the date hereof, Seller indirectly owns 100% of the membership interests of Stillwater B Member LLC, a Delaware limited liability company (“Stillwater Member”), which in turn owns 100% of the membership interests of Stillwater Energy, which in turn owns 100% of the membership interests of the Project Company.
At the time of execution of this Agreement, New Holdings and New B Member will execute the ECCA Joinder, pursuant to which New B Member will have all the rights and obligations of the Class B Member under the ECCA (including, without limitation, the obligation to make the Class B Capital Contribution) and New Holdings will have all the rights and obligations of the Company under the ECCA (including, without limitation, the obligation to purchase the Project Company).
As further described in Appendix B above, on the Closing Date, the Purchasers shall pay the Aggregate Purchase Price in escrow subject to the terms and conditions of the side letter dated as of the date hereof between the Purchasers and the Seller, which Aggregate Purchase Price will be used to make the Class B Capital Contribution. On the Funding Date, upon satisfaction of the conditions precedent thereto set out in the ECCA, the Capital Contributions made by each of New B Member and the Class A Equity Investor to New Holdings will be used to acquire 100% of the membership interest of the Project Company from Stillwater Energy (the “Project Company Interest”) in accordance with the terms and conditions of the ECCA.

On the Funding Date under the ECCA (which will occur simultaneously with the Closing):

1.    PEGI will indirectly hold 51% of the membership interests in New B Member;

2.    PSP will hold 49% of the membership interests in New B Member;

3.    The Class A Equity Investor will hold 100% of the Class A Membership Interest (as defined in the ECCA) in New Holdings; and

4.    New B Member’s interest in New Holdings will be converted into the Class B Membership Interest and New B Member will hold 100% of such Class B Membership Interest (the “New Holdings Interest”).

Immediately following steps 1-4 above, New Holdings will acquire 100% of the membership interest of the Project Company.

II.    Wind Project Information

Wind Project:

Expected nameplate capacity: 79.75 MW

Location: Stillwater County, Montana

Turbine manufacturer: Siemens Gamesa Renewable Energy, Inc.

Number and type of turbines: 31 turbines (five SWT-2.3-108 wind turbine generators and twenty-six SWT-2.625-120 wind turbine generators)


App. C - 2




Commercial Operation Date of Wind Project:

October 26, 2018
Permits & Governmental Approvals:

See attached Appendix C-1 and Schedule 3.5.

Legal description of Wind Project site (i.e., real property description):
See attached Appendix C-2 and the meets-and-bounds description separately provided to Purchasers.




App. C - 3




APPENDIX C-1: PERMITS & GOVERNMENTAL APPROVALS

PART A: COMPLETED PERMITS

No.
Document
1.
Thirty-one (31) “Determination of No Hazard” letters, issued by the Federal Aviation Administration, which correspond to Aeronautical Study Numbers (“ASN”) as follows:
2017-WTW-9408-OE
2017-WTW-9421-OE
2017-WTW-9444-OE
2017-WTW-9409-OE
2017-WTW-9422-OE
2018-WTW-2163-OE
2017-WTW-9410-OE
2017-WTW-9423-OE
2018-WTW-5434-OE
2017-WTW-9411-OE
2017-WTW-9424-OE
2018-WTW-5435-OE
2017-WTW-9412-OE
2017-WTW-9426-OE
2018-WTW-7380-OE
2017-WTW-9413-OE
2017-WTW-9427-OE
 
2017-WTW-9414-OE
2017-WTW-9428-OE
 
2017-WTW-9415-OE
2017-WTW-9429-OE
 
2017-WTW-9416-OE
2017-WTW-9434-OE
 
2017-WTW-9417-OE
2017-WTW-9435-OE
 
2017-WTW-9418-OE
2017-WTW-9436-OE
 
2017-WTW-9419-OE
2017-WTW-9437-OE
 
2017-WTW-9420-OE
2017-WTW-9438-OE
 
2.
“Determination of No Hazard” letter for meteorological tower: ASN 2017-WTW-9445-OE
3.
Letter dated October 5, 2017 from the National Telecommunications and Information Administration re. Stillwater Project: Stillwater County, MT stating no federal agency identified any concerns regarding blockage of their radio frequency transmissions
4.
Stillwater County, Montana – Contract for Maintenance and Repair of Stillwater County Roads by Stillwater Wind, LLC.

Executed by Stillwater County on November 26, 2017.
5.
Stillwater County, Montana - Stillwater Wind Project Noxious Weed Management Plan dated November 9, 2017, as required under the Montana County Weed Control Act.

Plan accepted by Stillwater County on November 14, 2017.
6.
Montana Department of Environmental Quality (“MTDEQ”) - General Permit for Storm Water Discharges Associated with Construction Activity (SWC-GP) No. MTR107104 (re Notice of Intent dated November 14, 2017)
7.
MTDEQ – Montana Air Quality Permit for Concrete Batch Plant, decision dated February 9, 2018, Permit No. 5195-00
8.
State of Montana Department of Transportation (“MTDOT”) - Highway Encroachment Permit (I90). Permit No. 5951
9.
Federal Energy Regulatory Commission (“FERC”) – Docket No. QF17-1481 Qualifying Facility Application Form 556 and FERC Acceptance for Filing dated September 12, 2017 and amended on March 19, 2018

App. C-1 - 1




10.
FAA Form 7460-2, Notice of Actual Construction or Alteration, Part 2, filed by Stillwater Wind, LLC for the following ASNs:

ASN Number
Date Filed
2017-WTW-9408-OE
September 14, 2018
2017-WTW-9409-OE
September 7, 2018
2017-WTW-9410-OE
September 7, 2018
2017-WTW-9411-OE
August 31, 2018
2017-WTW-9412-OE
August 24, 2018
2017-WTW-9413-OE
August 17, 2018
2017-WTW-9414-OE
August 17, 2018
2017-WTW-9415-OE
August 10, 2018
2017-WTW-9416-OE
August 10, 2018
2017-WTW-9417-OE
August 10, 2018
2017-WTW-9418-OE
August 10, 2018
2017-WTW-9419-OE
August 24, 2018
2017-WTW-9420-OE
August 31, 2018
2017-WTW-9421-OE
August 31, 2018
2017-WTW-9422-OE
September 7, 2018
2017-WTW-9423-OE
September 7, 2018
2017-WTW-9424-OE
September 7, 2018
2017-WTW-9426-OE
August 3, 2018
2017-WTW-9427-OE
August 3, 2018
2017-WTW-9428-OE
August 3, 2018
2017-WTW-9429-OE
July 27, 2018
2017-WTW-9434-OE
July 27, 2018 (Refile)
2017-WTW-9435-OE
July 20, 2018
2017-WTW-9436-OE
July 21, 2018
2017-WTW-9437-OE
July 13, 2018
2017-WTW-9438-OE
July 9, 2018
2017-WTW-9444-OE
July 8, 2018
2018-WTW-2163-OE
September 14, 2018
2018-WTW-5434-OE
June 29, 2018
2018-WTW-5435-OE
July 27, 2018 (Refile)
2018-WTW-7380-OE
July 27, 2018
11.
FAA Form 7460-2, Notice of Actual Construction or Alteration, Part 2, filed by Stillwater Wind, LLC for the following met tower ASN:
ASN Number
Date Filed
2017-WTW-9445-OE
July 31, 2018
12.
Stillwater County On-Site Wastewater Treatment System Permit issued to Svenson Ranch Inc., Permit No. 18-17, issued September 10, 2018
13.
Building Permit issued to Dick Anderson Construction for Stillwater Wind, LLC, Permit No. 2018-BLDG-000330, dated June 11, 2018

App. C-1 - 2




14.
North American Electric Reliability Corporation (“NERC”) Notice of Generator Operator and Generator Owner and updates thereof issued to Pattern Operators LP (NERC Compliance Registry (“NCR”) number NCR11808) to add Stillwater Wind LLC to its footprint, accepted September 7, 2018 and effective as of October 15, 2018
15.
Montana Air Quality Permit No. 3368-01 issued to Century Companies, Inc., final on March 02, 2012 (Rock Crusher)
16.
Montana Department of Natural Resources & Conservation (“DNRC”) Notice of Completion of Groundwater Development (under 10 AC-FT per year) filed on November 7, 2018
17.
FERC - Notice of Self-Certification of Exempt Wholesale Generator Status submitted on August 7, 2018, Docket No. EG18-119-000; Notice of Effectiveness of Self-Certification of Exempt of Exempt Wholesale Generator Status, notice received November 16, 2018
18.
Order from FERC pursuant to Section 205 of the Federal Power Act granting Market-Based Rate Authority issued September 25, 2018, Docket No. ER18-2158-000
19.
FERC - Order Granting Application for Authorization for Disposition of Jurisdictional Facilities and requests for Waivers, Confidential Treatment, and Expedited Consideration, filed by Stillwater Wind, LLC pursuant to Section 203 of the Federal Power Act, dated November 16, 2018, Docket No. EC19-4-000


PART B: PERMITS TO BE OBTAINED

No.
Document
1.
Notice of Termination to MTDEQ pursuant to SWC-GP No. MTR107104
2.
MTDEQ Pollutant Discharge Elimination System (MPDES) Permit for Storm Water Discharges (if required for post construction operations)
3.
US Fish and Wildlife Service Incidental Take Permit (“ITP”) under the Bald and Golden Eagle Protection Act, together with National Environmental Policy Act approval (if ITP application made)
4.
“Determination of No Hazard” letter, to be issued by the FAA, for ASN 2018-WTW-14009-OE (WTG No T27). Prior ASN 2017-WTW-9434-OE




App. C-1 - 3




APPENDIX C-2: LEGAL DESCRIPTION OF WIND PROJECT SITE

Containing 10,253.03 Acres of Land, More or Less (Phase I)

Tract 1
Fee Owner: Kevin D. Halverson and Shirley D. Halverson, as Joint Tenants

Township 1 North, Range 18 East, P.M.M., Stillwater County, Montana
Section 5: Lots 1, 2, 3, 4 (N1/2N1/2), S1/2N1/2, S1/2 (All)

Tract 2
Fee Owner: Svenson Ranch, Inc., a Montana corporation

Township 1 North, Range 18 East, P.M.M., Stillwater County, Montana
Section 2:    SW¼SW¼
Section 3:    All
Section 4:
All, Less and Except Parcel A and Parcel B as shown on Certificate of Survey No. 351776
Section 8:    All
Section 9:    All
Section 10:    N½, SW¼
Section 11:    All
Section 14:    N½
Section 15:    All
Section 17:    All
Section 18:    E½
Section 22:    All
    
Township 2 North, Range 18 East, P.M.M., Stillwater County, Montana
Section 33:    All
Section 34:    All

Tract 3
Fee Owner: Mothershead Living Trust, Margaret Mothershead as Trustee

Township 2 North, Range 18 East, P.M.M., Stillwater County, Montana
Section 28:     All

[CONTINUED ON FOLLOWING PAGE]

App. C-2 - 1





Tract 4
Fee Owner: Stillwater Wind, LLC, a Delaware limited liability company

Township 1 North, Range 18 East, P.M.M., Stillwater County, Montana
Section 4:     
“Parcel A” of the Svenson Ranch Substation, depicted on Certificate of Survey No. 351776, filed on June 18, 2012 in the records of the Clerk and Recorder of Stillwater County, Montana, being described as a parcel of land located in the SW1/4SE1/4 and in the SE1/4SW1/4 of Section 4, Township 1 North, Range 18 East, P.M.M., County of Stillwater, State of Montana, being more fully described by metes and bounds as:

Commencing at the Southeast section corner of Section 4, T1N, R18E, P.M.M., thence N77deg58’50”W-2612.98 feet to the TRUE POINT OF BEGINNING, thence first course, N84deg45’36”W-350.00 feet, thence second course, N05deg14’24”E-300.00 feet, thence third course, S84deg45’36”E-350.00 feet, thence fourth and final course, S05deg14’24”W-300.00 feet to the point of the beginning.

Said “Parcel A” containing 105,000 square feet, being 2.41 acres of land, more or less.

Tract 5
Fee Owner: Clarence F. Phipps, III

Township 2 North, Range 18 East, P.M.M., Stillwater County, Montana
Sec 22:     All
Sec 27:     All



App. C-2 - 2




APPENDIX D: DOCUMENTS & KEY COUNTERPARTIES
Stillwater Transaction
I.    Material Project Agreements & Key Counterparties
Balance of Plant Agreement (Civil):
Engineering Procurement and Construction Agreement (Civil and Mechanical Work Scope), dated as of November 30, 2017, between the Project Company and Dick Anderson Construction, Inc.
Balance of Plant Contractor (Civil):
Dick Anderson Construction, Inc.
Balance of Plant Agreement (Electrical):
Engineering Procurement and Construction Agreement (Electrical Work Scope), dated as of November 30, 2017, between the Project Company and EPC Services Company.
Balance of Plant Contractor (Civil):
EPC Services Company
Interconnection Agreement:
Standard Large Generator Interconnection Agreement, dated as of July 20, 2017 and effective as of November 14, 2017, between the Project Company and NorthWestern Corporation.
Interconnection Provider:
NorthWestern Corporation
Management, Operation and Maintenance Agreement (MOMA):
Management, Operation and Maintenance Agreement, dated as of March 9, 2018, between the Project Company and Pattern Operators LP.
MOMA Operator:
Pattern Operators LP
Power Purchase Agreement:
Qualifying Facility Power Purchase Agreement, dated as of December 16, 2016, between WKN Montana II, LLC and NorthWestern Corporation, d/b/a NorthWestern Energy, as assigned to the Project Company pursuant to an Assignment and Assumption Agreement, dated as of June 30, 2017, between the Project Company and WKN Montana II, LLC, and as amended by that certain First Amendment to Power Purchase Agreement, dated as of June 30, 2017, between the Project Company and NorthWestern Corporation, d/b/a NorthWestern Energy, and as further amended by that certain Second Amendment to the Qualifying Facility Power Purchase Agreement, dated as of October 27, 2017, between the Project Company and NorthWestern Corporation, d/b/a NorthWestern Energy (the “Power Purchase Agreement”).
Power Purchaser:
NorthWestern Corporation, d/b/a NorthWestern Energy

App. D - 1




Project Administration Agreement:
Project Administration Agreement, dated as of March 9, 2018, between the Project Company and Pattern Operators LP.
Project Administrator:
Pattern Operators LP
Transformer Purchase Agreement
Main Power Transformer(s) Purchase Agreement, dated as of November 10, 2017, between the Project Company and HICO America Sales & Technology, Inc., as amended by that certain Amendment No. 1 to Main Power Transformer(s) Purchase Agreement, dated as of December 14, 2017, by and between the Project Company and HICO America Sales & Technology, Inc., as amended by that certain Amendment No. 2 to Main Power Transformer(s) Purchase Agreement, dated as of December 22, 2017, by and between the Project Company and HICO America Sales & Technology, Inc.
Transformer Supplier:
HICO America Sales & Technology, Inc.
Turbine O&M Agreement:
Service and Maintenance Agreement, dated as of March 9, 2018, between the Project Company and Siemens Gamesa Renewable Energy, Inc. (f/k/a Siemens Wind Power, Inc.).
Turbine O&M Provider:
Siemens Gamesa Renewable Energy, Inc. (f/k/a Siemens Wind Power, Inc.)
Turbine Supply Agreement:
Wind Turbine Generator and Tower Supply and Commissioning Agreement, dated as of February 15, 2018, by and between the Project Company and Siemens Gamesa Renewable Energy, Inc.
Turbine Supplier:
Siemens Gamesa Renewable Energy, Inc.
2017 WTG Assignment
Assignment and Assumption Agreement, dated as of March 9, 2018, between the Project Company and Pattern Renewables Development Company 2 LLC, a Delaware limited liability company
Pattern Western Development Bill of Sale:
Pattern Western Development Bill of Sale, dated as of March 9, 2018, between the Project Company and Pattern Western Development LLC.
Turbine Purchase and Sale Agreement:
Turbine Purchase and Sale Agreement, dated as of March 9, 2018, between the Project Company and Pattern Western Development LLC.
Turbine Purchase Order:
Turbine Purchase Order, dated as of March 9, 2018, by and between the Project Company, Pattern Western Development LLC and Siemens Gamesa Renewable Energy, Inc., as successor to Siemens Energy, Inc.

App. D - 2




Tax Abatement Agreement:
New or Expanding Industry Classification Application by the Project Company, as approved by the Board of Commissioners of Stillwater County, Montana on November 14, 2017, together with that certain Resolution 2017-52, dated as of November 14, 2017, by and between the Board of Commissioners of Stillwater County, Montana and the Project Company.
Certain other documents:

Not applicable

II.    Reports, Other Deliverables and Consultants
Environmental Consultant:
Tetra Tech, Inc.
Environmental Report:

Phase I Environmental Site Assessment of the Stillwater Wind Energy Project, Stillwater and Sweet Grass Counties, Montana, dated December 13, 2017, and the Final Phase I Environmental Site Assessment, Stillwater Wind Energy Project, Stillwater and Sweet Grass Counties, Montana, dated October 31, 2018, in each case, prepared for the Project Company by Tetra Tech, Inc.
Independent Engineer:
DNV GL
Independent Engineer’s Report:
Stillwater Wind Farm: Technical Due Diligence Report, Document No. 10060971-HOU-R-01, Issue F, Status: Final, dated March 6, 2018 and the “construction supplement” to such report.
Title Company:
Stewart Title Guaranty Company
Title Policy:

ALTA Owner’s Policy of Title Insurance, Policy No. O-9301-004292158, dated March 9, 2018, together with the Reissue Title Policy (as defined in the ECCA).
Wind Consultant:
AWS Truepower, LLC
Wind Energy and Resource Assessment Report:

Energy Production Report for the Proposed Stillwater Wind Project, dated December 5, 2017, prepared for the Project Company, together with the Energy Production Report for the Proposed Stillwater Wind Project, dated September 10, 2018.
Insurance Consultant:
Moore-McNeil, LLC
Insurance Consultant’s Report:

Insurance Report Stillwater Wind, LLC, dated February 27, 2018, prepared for the Lenders, Letter of Credit Issuers and Tax Equity Investors, together with the Bringdown Insurance Report Stillwater Wind, LLC, dated November 7, 2018, prepared for the Class A Equity Investor and LC issuer.
Local Content Consultant:
Not Applicable
Local Content Report:
Not Applicable
Transmission Consultant:
Not Applicable
Transmission Consultant’s Report:
Not Applicable
Cost Segregation Consultant:
Not Applicable

App. D - 3




Appraiser: 
Marshall & Stevens Inc.
III.    Financing Arrangements
Financing Agreement
Financing Agreement, dated as of March 9, 2018,
by and between the Project Company, Société
Générale, SG Americas Securities, LLC and the
lenders set forth therein. (the “Financing Agreement”), to be entirely reimbursed by the Project Company prior to Closing.

LC Reimbursement Agreement:

Letter of Credit Reimbursement and Loan Agreement, dated as of March 9, 2018, by and among Stillwater Wind, LLC, the LC issuers and lenders from time to time party thereto and Société Générale (the “LC Reimbursement Agreement”).

Collateral Documents:

1. The Mortgage (as defined in Part V of Appendix D).

2. Pledge and Security Agreement, dated as of March 9, 2018, by and among Stillwater Member, Stillwater Energy, the Project Company and Société Générale, in its capacity as the Collateral Agent (as defined therein).

3. Depository Agreement, dated as of March 9, 2018, by and among Société Générale, in its capacities as the Administrative Agent, the Collateral Agent and the LC Administrative Agent (each as defined therein), the Project Company and Société Générale, as depository bank.

4. Special Deposit Account Control Agreement, dated as of March 9, 2018, among the Project Company, Société Générale and MUFG Union Bank, N.A.

5. Collateral Agency and Intercreditor Agreement, dated as of March 9, 2018, by and among the Project Company, Stillwater Energy, Stillwater Member and Société Générale, in its capacities as the Administrative Agent, the Collateral Agent and the LC Administrative Agent (each as defined therein).

6. Other Collateral Documents (as defined in the Financing Agreement) to be discharged at Closing and Security Documents (as defined in the LC Reimbursement Agreement).

Amendments to any document in this Part III of Appendix D

Excluding the amendment to the Mortgage reflected in Part V of Appendix D, not applicable.
IV.    Equity and Co-Ownership Arrangements & Key Counterparties

Equity Capital Contribution Agreement (“ECCA”):

Equity Capital Contribution Agreement, dated as of March 9, 2018, by and among Stillwater Member, Stillwater Energy and Allianz Renewable Energy Partners of America LLC.

App. D - 4




Tax Equity Investor:

Allianz Renewable Energy Partners of America LLC (the “Class A Equity Investor”)
Project LLC Agreement:

Amended and Restated Limited Liability Company Agreement of New Holdings, to be dated as of the Funding Date (as defined in the ECCA) (as amended in accordance with its terms, the “Project LLC Agreement”)
V.    Real Estate Documents


App. D - 5




1.    Mortgage, Assignment of Rents And Leases, Security Agreement, Financing Statement and Fixture Filing, dated as of March 9, 2018, by the Project Company in favor of Société Générale, in its capacity as the Collateral Agent, as amended by that certain Amendment of Mortgage, Assignment of Rents And Leases, Security Agreement, Financing Statement and Fixture Filing, effective as of November 14, 2018, whereby the Project Company has granted to the Collateral Agent a first priority Lien and security interest in and to the Site (as defined in the LC Reimbursement Agreement) (the “Mortgage”).
2.    The following agreements for the Wind Project; provided that capitalized terms not defined in this Part V of Appendix D and otherwise used in the description of any “Agreement” described below in this Part V of Appendix D shall have the meanings given in the description of the same “Agreement” (and from no other defined term on this Part V of Appendix D) in which such capitalized term is used
Tract 1
Unrecorded Wind Energy Agreement entered into as of December 7, 2017 by and between Kevin D. Halverson and Shirley D. Halverson (collectively “Halverson”) and Stillwater Wind, LLC, a Delaware limited liability company (“Developer”), as evidenced of record by Memorandum of Wind Energy Agreement effective as of December 7, 2017 by and between Halverson and Developer, recorded on December 12, 2017 under Document Number 370952, Official Public Records, Stillwater County, Montana.
Tract 2
First Amended and Restated Wind Energy Agreement dated November 5, 2018, but effective as of December 8, 2017, by and between Svenson Ranch, Inc., a Montana corporation (“Svenson”) and Developer, as evidenced of record by Memorandum of First Amended and Restated Wind Energy Agreement dated November 5, 2018, but effective as of December 8, 2017, by and between Svenson and Developer, recorded on November 9, 2018 under Document Number 373906, Official Public Records, Stillwater County, Montana.

Tract 3
Unrecorded Wind Energy Agreement entered into as of November 28, 2017 by and between Mothershead Living Trust (“Mothershead Trust”) and Developer, as evidenced of record by Memorandum of Wind Energy Agreement effective as of November 28, 2017 by and between Motherhead Trust and Developer, recorded on December 6, 2017 under Document Number 370878, Official Public Records, Stillwater County, Montana; Ratification of Wind Energy Agreements entered into as of March 2, 2018 by and between Margaret Mothershead, individually and as Trustee of the Mothershead Living Trust and as Co-Trustee of the Mothershead Family Trust, and Bob Dellinger, as Co-Trustee of the Mothershead Family Trust, recorded on March 2, 2018 under Document Number 371641, Official Records, Stillwater County, Montana.

Tract 4
Warranty Deed dated October 19, 2017 from WKN Montana II, LLC, a Montana limited liability company, as Grantor, to Developer, as Grantee, recorded November 14, 2017 under Document No. 370684 in the Official Public Records of Stillwater County, Montana, conveying to Grantee all of Grantor’s right, title and interest in and to “Parcel A” of the Svenson Ranch, Inc. Substation, as depicted on Certificate of Survey No. 351776, subject to the “Reverter” set forth in that certain Warranty Deed with Reverter dated October 9, 2012, recorded October 18, 2012 under Document No. 353071 in the Official Public Records of Stillwater County, Montana.



App. D - 6




Tract 5

Unrecorded Wind Energy Agreement entered into as of December 8, 2017 by and between Clarence F. Phipps, III (“Phipps”) and Developer, as evidenced of record by Memorandum of Wind Energy Agreement effective as of December 8, 2017 by and between Phipps and Developer, recorded on December 12, 2017 under Document Number 370956, Official Public Records, Stillwater County, Montana.



App. D - 7




APPENDIX E:
AFFILIATE TRANSACTIONS
No.
Document
Parties
1.    
2017 WTG Assignment Agreement:
Assignment and Assumption Agreement, dated as of March 9, 2018, between the Project Company and Pattern Renewables Development Company 2 LLC.
2.    
Class A Equity Investor Guaranty:
Guaranty by Allianz of America, Inc., dated as of March 9, 2018, in favor of Stillwater Member and Stillwater Energy.
3.    
Class A Guarantor Consent:
Consent and Agreement, dated as of March 9, 2018, by and among Stillwater Energy, Stillwater Member, Allianz of America, Inc and Société Générale, in its capacity as the Collateral Agent.
4.    
Intercreditor Agreement:
Collateral Agency and Intercreditor Agreement, dated as of March 9, 2018, by and among the Project Company, Stillwater Energy, Stillwater Member, and Société Générale, in its capacities as the Administrative Agent, the Collateral Agent and the LC Administrative Agent (each as defined therein).
5.    
ECCA Consent:
Consent and Agreement, dated as of March 9, 2018, by and among Stillwater Energy, Stillwater Member, Allianz Renewable Energy Partners of America LLC and Société Générale, in its capacity as the Collateral Agent (as defined therein).
6.    
Security Agreement:
Pledge and Security Agreement, dated as of March 9, 2018, by and among Stillwater Member, Stillwater Energy, the Project Company and Société Générale, in its capacity as the Collateral Agent (as defined therein).




App. E – 1




Schedule 2.5
Seller Consents and Approvals
None.



Schedule 2.5




Schedule 3.5
Purchaser Consents and Approvals

Following the submission of a joint voluntary notice by Purchasers and Seller to the Committee on Foreign Investment in the United States (“CFIUS”) under the Exon-Florio Amendment to the U.S. Defense Production Act of 1950 with respect to the transactions contemplated by this Agreement, CFIUS has completed its review or, if CFIUS initiates an investigation, its investigation of such transactions and made a determination that there are no unresolved national security concerns, the President of the United States of America shall not have taken action to block or prevent the consummation of such transactions and no requirements or conditions to mitigate any national security concerns shall have been imposed.

FERC - Order Granting Application for Authorization for Disposition of Jurisdictional Facilities and requests for Waivers, Confidential Treatment, and Expedited Consideration, filed by Stillwater Wind, LLC pursuant to Section 203 of the Federal Power Act



Schedule 3.5




Schedule 6.4(b)
Control of Defense of Third Party Claims
Not applicable.


Schedule 6.4(b) - 1

Exhibit
EXHIBIT 10.2
EXECUTION VERSION



AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
STILLWATER NEW B MEMBER LLC,
a Delaware Limited Liability Company
 
Dated as of November 20, 2018




 


TABLE OF CONTENTS



 
 
 
Page
ARTICLE 1
 
DEFINITIONS AND CONSTRUCTION
1

 
 
 
 
1.01
 
Definitions
1

1.02
 
Construction
13

 
 
 
 
ARTICLE 2
 
ORGANIZATION
13

 
 
 
 
2.01
 
Formation
13

2.02
 
Name
14

2.03
 
Registered Office; Registered Agent; Principal Office
14

2.04
 
Purposes
14

2.05
 
No State-Law Partnership
14

2.06
 
Units; Certificates of Membership Interest; Applicability of Article 8 of UCC
14

 
 
 
 
ARTICLE 3
 
MEMBERSHIP; DISPOSITIONS OF INTERESTS
15

 
 
 
 
3.01
 
Members
15

3.02
 
Representations, Warranties and Covenants
15

3.03
 
Dispositions and Encumbrances of Membership Interests
17

3.04
 
Drag, Tag, Right of First Offer
21

3.05
 
Liability to Third Parties
26

3.06
 
Withdrawal
26

3.07
 
Permitted Transfers to Controlled Affiliates
26

3.08
 
Upstream Pledges and Upstream Realization
27

 
 
 
 
ARTICLE 4
 
CAPITAL ACCOUNTS
27

 
 
 
 
4.01
 
Capital Accounts
27

4.02
 
Additional Capital Contributions; Member Loans
28

4.03
 
Return of Contributions
30

 
 
 
 
ARTICLE 5
 
DISTRIBUTIONS AND ALLOCATIONS
30

 
 
 
 
5.01
 
Allocations
30

5.02
 
Distributions
32

5.03
 
Distributions on Dissolution and Winding Up
32

5.04
 
Varying Interests
32

5.05
 
Withholding
33


 
i
 


TABLE OF CONTENTS
(continued)


 
 
 
 
ARTICLE 6
 
MANAGEMENT
33

 
 
 
 
6.01
 
Management; Standard of Care; No Commingling of Funds
33

6.02
 
Personnel of Affiliates; Authorized Signatories
34

6.03
 
Consent Required for Certain Actions
34

6.04
 
Transferability of Consent Rights
38

6.05
 
Limitations of Liability
38

6.06
 
Indemnification and Exculpation
39

6.07
 
Loss of Rights
40

6.08
 
Consequences of Removal of Managing Member of Holdings
42

 
 
 
 
ARTICLE 7
 
TAXES
43

7.01
 
Partnership Representative
43

7.02
 
Tax Reporting
44

 
 
 
 
ARTICLE 8
 
BOOKS, RECORDS, REPORTS, AND CONFIDENTIALITY
45

 
 
 
 
8.01
 
Maintenance of Books
45

8.02
 
Reporting
46

8.03
 
Confidentiality
47

8.04
 
Third Party Beneficiaries
49

8.05
 
Survival
49

 
 
 
 
ARTICLE 9
 
DISSOLUTION, WINDING-UP AND TERMINATION
49

 
 
 
 
9.01
 
Dissolution
49

9.02
 
Winding-Up and Termination
50

9.03
 
Certificate of Cancellation
51

 
 
 
 
ARTICLE 10
 
GENERAL PROVISIONS
51

 
 
 
 
10.01
 
Offset
51

10.02
 
Notices
51

10.03
 
Amendment or Restatement
51

10.04
 
Binding Effect
51

10.05
 
Governing Law; Construction
51

10.06
 
Dispute Resolution Procedure
52

10.07
 
Jurisdiction; Service of Process
52

10.08
 
Third Parties
52

10.09
 
Severability
52

10.10
 
Execution in Counterparts
52

10.11
 
Corporate Opportunities, Waiver of Fiduciary Duties, Etc.
53




 
ii
 


TABLE OF CONTENTS
(continued)


Exhibit A    –    Members, Capital Contributions, Etc.
Exhibit B    –    Members’ Addresses for Notice
Exhibit C    –    Form of Build Out Agreement



 
iii
 




This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Stillwater New B Member LLC (the “Company”), dated as of November 20, 2018 (the “Effective Date”), is adopted, executed and agreed to, for good and valuable consideration, by the Members (as defined herein).
RECITALS
1.    On October 18, 2018, Pattern US Finance Company LLC, a Delaware limited liability company (“Pattern Finance”) formed the Company as a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq., as amended from time to time (the “Act”) and entered into a Limited Liability Company Agreement of Stillwater New B Member LLC (the “Original LLC Agreement”).
2.    Pursuant to that certain Equity Capital Contribution Agreement, dated as of March 9, 2018 (the “ECCA”), by and among Stillwater B Member LLC, a Delaware limited liability company, Stillwater Energy Holdings LLC, a Delaware limited liability company and Allianz Renewable Energy Partners of America LLC, a Delaware limited liability company, Pattern Finance caused the Company, and Stillwater New Energy Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Holdings”), to execute a joinder (the “Joinder”) as contemplated in the ECCA (such execution of the Joinder, the “Joinder Event”);
3.    Holdings will acquire on the date hereof 100% of the membership interests in Stillwater Wind, LLC, a Delaware limited liability company (the “Project Company”), which owns a 79.75 MW nameplate capacity wind project in Stillwater County, Montana (the “Wind Farm”).
4.    Vertuous Energy LLC, a Delaware limited liability company (the “Investor”) has agreed to acquire 49% of the membership interests in the Company pursuant to that certain Purchase and Sale Agreement, dated as of the date hereof (the “Purchase and Sale Agreement”), between the Investor, Pattern Energy Group Inc. (“Pattern”), and Pattern Energy Group 2 LP, a Delaware limited partnership; and
5.    The Members wish to amend and restate the Original LLC Agreement in its entirety and to adopt the following Agreement with respect to various matters relating to the Company.
Accordingly, the Members hereby agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.01    Definitions. As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred to below:
Act – as defined in the Recitals.
Additional Contribution – as defined in Section 4.02(f).





Adjusted Capital Account with respect to any Member, the balance in such Member’s Capital Account as of the end of the relevant taxable year or other applicable date, increased by the amount that such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(l) and 1.704-2(i)(5), and decreased by such items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The adjustments in this definition of Adjusted Capital Account are intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
Affiliate – with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person provided that (x) the Company shall not be deemed an Affiliate of either Pattern Member or Investor for any purpose hereunder, and (y) neither Member shall be deemed an Affiliate of the other Member for any purpose hereunder.
Affiliated Party – with respect to any Person, any Affiliate of such Person and any director, officer, employee and agent of such Person and of such Person’s Affiliates.
Agreement – as defined in the introductory paragraph.
Article 9 Disposition – as defined in Section 3.04(b).
Assignee – any Person that acquires a Membership Interest or any portion thereof through a Disposition; provided, however, that, an Assignee shall have no right to be admitted to the Company as a Member except in accordance with Section 3.03(b)(ii).
Auction Rate Securities a security with a long term maturity which bears interest at a rate set in an auction process.
Bankruptcy or Bankrupt – with respect to any Person, that (a) such Person (i) makes a general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties; or (b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law has been commenced against such Person, and sixty (60) Days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and sixty (60) Days have expired without the appointment’s having been vacated or stayed, or sixty (60) Days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.
Bipartisan Budget Act – Title XI of the Bipartisan Budget Act of 2015 and any related provisions of law, court decisions, regulations, rules, and administrative guidance.

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Business Day – any day other than a Saturday, a Sunday, or a holiday on which the principal chartered banks in San Francisco, California, USA or Montreal, Quebec, Canada are not open for business.
Capital Account – the account to be maintained by the Company for each Member in accordance with Section 4.01.
Capital Call – a call by the Managing Member to the Members to contribute a specified amount of money to the Company, as provided in Section 4.02.
Capital Contribution – with respect to any Member, the amount of money, and the net agreed value (as unanimously agreed to by Members) of any property (other than money) contributed to the Company by the Member taking into account any liabilities described in Treasury Regulation Section 1.704-1(b)(2)(iv)(b)(2). Any reference in this Agreement to the Capital Contribution of a Member shall include any Capital Contribution of its predecessors in interest.
Cash Equivalents – any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States of America, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000.00, or (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s Investor Service, Inc. (or any successor thereto) or “A-1” (or the then equivalent grade) by Standard & Poor’s Rating Group, a division of Standard & Poor’s Corporation (or any successor thereto); provided, that, for the avoidance of doubt, Auction Rate Securities shall not be Cash Equivalents.
Certified Public Accountants – a firm of independent public accountants selected from time to time by the Managing Member, subject to Section 6.03; provided, the initial Certified Public Accountants shall be Ernst & Young LLP with respect to financial matters and Deloitte & Touche USA LLP with respect to Tax matters.
Claims – all claims, actions, causes of action, demands, assessments, losses, damages, liabilities, Taxes, penalties, costs and expenses (including reasonable attorneys’ fees and expenses) from losses (including amounts paid in settlement of claims) of every kind and character.
Class A Termination Date as defined in Section 6.07(a).
Code – the Internal Revenue Code of 1986, as amended.
Company – as defined in the introductory paragraph.

-3-
 




Company Minimum Gain – the meaning set forth with respect to the term “partnership minimum gain” in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
Competitive Activities – as defined in Section 3.03(b)(i).
Competitively Sensitive Information – as defined in Section 8.03(b).
Confidential Information – as defined in Section 8.03(c).
Consult or Consultation – to confer with, and reasonably consider and take into account the reasonable suggestions, comments or opinions of another Person.
Contributing Member – as defined in Section 4.02(f).
Control – the possession, directly or indirectly, of:
(a)    (i) in the case of a corporation, more than fifty percent (50%) of the outstanding voting securities thereof; (ii) in the case of a limited liability company, partnership, limited partnership or joint venture, the right to more than fifty percent (50%) of the distributions (including liquidating distributions) therefrom (for the avoidance of doubt, with respect to the Company, the Managing Member shall at all times be deemed to be in control); (iii) in the case of a trust or estate, including a business trust, more than fifty percent (50%) of the beneficial interest therein; and (iv) in the case of any other entity, more than fifty percent (50%) of the economic or beneficial interest therein; or
(b)    in the case of any entity, the power or authority, through ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity;
and the terms “controlling”, “controlled by” and “under common control with” have meanings correlative to the foregoing.
Controlled Affiliate – (i) in respect of Investor, an Affiliate of Investor that is controlled by PSP, and (ii) in respect of Pattern Member, an Affiliate of Pattern Member that is controlled by Pattern.
Day – a calendar day; provided, however, that if any period of Days referred to in this Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall be automatically extended until the end of the first succeeding Business Day.
Delaware Certificate – as defined in Section 2.01.
Dispose, Disposing or Disposition – with respect to any asset (including any Unit or Membership Interest or any portion thereof), a sale, assignment, transfer, conveyance, gift, exchange or other disposition of such asset, whether such disposition be voluntary, involuntary or by operation of Law, including the following: (i) a merger or consolidation of such entity (other than where such entity is the survivor thereof), (ii) a conversion of such entity into another type of entity to the extent

-4-
 




that such conversion would be treated as a sale or exchange of such asset for federal income tax purposes, or (iii) a distribution of such asset, including in connection with the dissolution, liquidation, winding-up or termination of such entity (unless, in the case of dissolution, such entity’s business is continued without the commencement of liquidation or winding-up). For avoidance of doubt, the Parties agree that an Encumbrance is not a Disposition.
Dispute – as defined in Section 10.06.
Disqualified Tax Exempt Person any Person that is treated as (i) a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code or (ii) a “tax-exempt controlled entity” within the meaning of Section 168(h)(6)(F) of the Code.
Dissolution Event – as defined in Section 9.01.
Distributable Cash – as of any date, all cash, Cash Equivalents and liquid investments (excluding proceeds of any Capital Contributions) held by the Company as of such date, subject to retaining sufficient cash reserves to meet the Company’s reasonably foreseeable needs in relation to: existing or reasonably foreseeable obligations; solvency; and the current annual budget (including all agreed retention, capital expenditures and reserves).
Distribution Date – in respect of any month, the last Business Day of the following calendar month.
Drag Along Notice – as defined in Section 3.04(a).
Drag Along Sale – as defined in Section 3.04(a).
Drag Sale Interests – as defined in Section 3.04(a).
DRO Zero Date – as defined in the Holdings Operating Agreement.
Effective Date – as defined in the introductory paragraph.
Encumber, Encumbering or Encumbrance – the creation of a lien (statutory or otherwise), mortgage, deed of trust, claim, option, easement, charge, pledge, security interest, hypothecation, assignment, use restriction or other encumbrance of any kind or nature whatsoever, whether voluntary or involuntary, choate or inchoate (including any agreement to give any of the foregoing), and any conditional sale or other title retention agreement.
Environmental Law – any and all applicable Laws pertaining to pollution or protection of health, safety, environment or natural resources, including applicable Laws (both statutory and common law) relating to actual or threatened emissions, discharges, or releases of pollutants, raw materials, products, contaminants, or hazardous or toxic materials or wastes into ambient air, surface water, groundwater, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or hazardous or toxic materials or wastes, and including all Governmental Approvals and agreements and duties issued under or imposed by such applicable Laws.

-5-
 




ERISA – as defined in Section 3.02(f).
ERISA Plan – as defined in Section 3.02(f).
Escalated Good Faith Discussions – as defined in Section 10.06.
Exempt Wholesale Generator or EWG – an “exempt wholesale generator” as such term is defined in Section 1262(6) of PUHCA and the FERC’s rules at 18 C.F.R. § 366.1.
Federal Power Act – the Federal Power Act, as amended, and FERC’s implementing regulations in connection therewith.
FERC – the Federal Energy Regulatory Commission or any successor thereto.
Flip Point – as defined in the Holdings Operating Agreement.
Funding Notice – as defined in Section 4.02(b).
GAAP – United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis.
Governmental Approval – all permits, licenses, approvals orders, determinations and authorizations of, and filing and registrations with, any Governmental Authority.
Governmental Authority – means any federal or national, state, provincial, county, municipal or local government or regulatory or supervisory department, body, political subdivision, commission, agency, instrumentality, ministry, court, judicial or administrative body, taxing authority, or other authority thereof (including any corporation or other entity owned or controlled by any of the foregoing) acting in a regulatory capacity and having jurisdiction over the matter or Person in question.
Holdings – as defined in the Recitals.
Holdings Operating Agreement – the Amended and Restated Limited Liability Company Agreement of Stillwater New Energy Holdings LLC, dated as of the date hereof, as amended from time to time.
including – including, without limitation.
Initial Good Faith Discussions– as defined in Section 10.06.
Investor – as defined in the Recitals.
IRS – U.S. Internal Revenue Service or any successor agency.
Law – any treaty, constitution, law (including Environmental Law), statute, ordinance, rule, order, decree, restriction, requirement, regulation or other directive which is legally binding or has the effect of law and has been enacted, issued or promulgated by any Governmental Authority.

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Loss any claim, obligation, liability, loss, damage, injury (to person, property, or natural resources), action, suit, judgment, cost and expense (including reasonable attorney’s fees) of whatever kind or nature, including Tax Losses, whether or not well founded, meritorious or unmeritorious, demanded, asserted or claimed.
Managing Member – initially, Pattern Member, and thereafter any Person that is appointed as Managing Member in accordance with this Agreement.
Material Contract means contracts of the following types:
1.    any lease or other type of agreement granting long-term real property tenure rights that is material to the Wind Farm, taken as a whole;
2.    applicable third-party partnership agreements (including agreements with tax equity partners);
3.    the engineering, procurement and construction agreement, balance-of-plant construction contract or similar agreement and related guarantee (but only to the extent adversely affecting the warranty provisions thereof);
4.    the turbine supply agreement or similar material equipment supply agreement and related guarantee (but only to the extent adversely affecting the warranty provisions thereof);
5.    the service and maintenance agreement or similar agreement entered into in respect of the Wind Turbines or any other material equipment;
6.    long-term power purchase agreement, long-term energy hedge agreement or similar agreement entered into with any off-taker to purchase electricity or other products from the Company or Holdings (or any of their respective Subsidiaries);
7.    the interconnection agreement;
8.    agreements evidencing indebtedness of the types described in Section 6.03(h); provided that agreements evidencing indebtedness that the Company and its Subsidiaries are permitted to incur without the Investor’s consent under Section 6.03(h) shall not require the Investor’s consent under Section 6.03(n);
9.    any other contract that affects the operating period of the Wind Farm to which the Company or Holdings (or any of their respective Subsidiaries) is a party or by which such Person, or any of its assets is bound and that:
(a)
limits the freedom of the Company or Holdings (or any of their respective Subsidiaries) to compete in any line of business or with any Person or in any area or granting “most favored nation” or similar status, in a manner that is material to the Wind Farm, taken as a whole;

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(b)
is with Pattern or any of its Affiliates that is material to the Wind Farm, taken as a whole; or
(c)
the entry into or loss of which would result in a material adverse effect on the Company or Holdings (or any of their respective Subsidiaries) or the Wind Farm.
MBR Authority – (i) authority conferred by FERC under Section 205 of the Federal Power Act to make wholesale sales of electric energy, capacity and certain ancillary services at negotiated or market-based rates, (ii) acceptance by FERC of a tariff under Section 205 of the Federal Power Act providing for such sales, and (iii) grant of such waivers of FERC regulations and accounting requirements and blanket authorizations under the Federal Power Act as are customarily held by holders of market-based rate authority, including blanket authorization under Section 204 of the Federal Power Act and Part 34 of FERC’s regulations for future issuances of securities or assumption of liabilities.
Member – any Person executing this Agreement as of the Effective Date as a member or thereafter admitted to the Company as a member as provided in this Agreement, but such term does not include any Person who has ceased to be a member in the Company. Exhibit A hereto sets forth certain particulars concerning the Members as of the Effective Date. The Managing Member shall amend, or cause to be amended, Exhibit A from time to time to reflect changes in the information set forth therein, including the admission or withdrawal of Members in accordance with this Agreement.
Member Nonrecourse Debt – the meaning set forth with respect to the term “partner nonrecourse debt” in Treasury Regulation Section 1.704-2(b)(4).
Member Nonrecourse Deductions – has the meaning set forth with respect to the term “partner nonrecourse deductions” in Treasury Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2).
Membership Interest – with respect to a Member, the entire ownership interest of such Member in the Company, including its share of income, gain, loss and credits and the right to receive distributions from the Company and all other rights, powers and benefits accorded a member under this Agreement and the duties and obligations of such Member hereunder.
Minimum Gain Attributable to Member Nonrecourse Debt – that amount with respect to each Member Nonrecourse Debt that is equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with the principles of Treasury Regulation Section 1.704-2(i)(3).
MOMA – the Management, Operation and Maintenance Agreement dated as of March 9, 2018, between the Project Company and Pattern Operators LP, and any replacement MOMA entered into in accordance with this Agreement or the Holdings Operating Agreement.
MOMA Operator – Pattern Operators LP under the MOMA or any Person appointed to replace Pattern Operators LP as MOMA Operator in accordance with the MOMA or this Agreement.

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Non-Contributing Member – as defined in Section 4.02(f).
Nonrecourse Deduction – the meaning set forth in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c).
Nonrecourse Liability – the meaning set forth in Treasury Regulation Section 1.704‑2(b)(3).
Original LLC Agreement – as defined in the Recitals.
Parties – the Members executing this Agreement, and any other Person that becomes a Member in accordance with the provisions hereof.
Partnership Representative – has the meaning assigned to that term in Section 6223 of the Code and any Treasury Regulations or other administrative or judicial pronouncements promulgated thereunder.
Pattern – as defined in Recitals.
Pattern Confidential Information – as defined in Section 8.03(a).
Pattern Finance – means Pattern US Finance Company LLC, a Delaware limited liability company.
Pattern Holdco means a Delaware limited liability company wholly-owned by Pattern Finance.
Pattern Member – means Pattern Finance or, if Pattern Finance has exercised its right to Transfer all of its Units to Pattern Holdco pursuant to Section 3.07, Pattern Holdco.
Pattern Seller – as defined in Section 3.04(a).
Permitted Transferee – with respect to any Person, a Controlled Affiliate of such Person; provided that, with respect to PSP, none of its portfolio companies or other investments shall be deemed a Permitted Transferee.
Person – has the meaning assigned to that term in Section 18-101(12) of the Act and also includes Governmental Authority and any other entity.
Power Purchase Agreement – the Power Purchase Agreement specified on Exhibit C to the Holdings Operating Agreement, and any replacement power purchase agreement entered into in accordance with this Agreement.
Principal Project Documents – as defined in the Holdings Operating Agreement.

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Pro Rata Share – as to the holder of any class of Units, the number of Units of such class held by such Member divided by the total number of Units of such class outstanding, in each case as set forth opposite its name on Exhibit A.
Project Administration Agreement – as defined in the Holdings Operating Agreement.
Project Company – as defined in the Recitals.
PSP – the Public Sector Pension Investment Board.
PSP Seller – as defined in Section 3.04(a)
PSP Veto Rights – as defined in Section 6.07.
PTC Period – as defined in the Holdings Operating Agreement.
Purchase and Sale Agreement – as defined in the Recitals.
Qualifying Facility – a “qualifying facility” within the meaning of FERC’s regulations at 18 C.F.R. § 292.101(b)(1) that is a “qualifying small power production facility,” as defined in Section 3(17)(C) of the FPA and FERC’s regulations at 18 C.F.R. § 292.203(a).
Regulatory Allocations – as defined in Section 5.01(c).
Related Party – any Person (i) who is related (within the meaning of Section 45(e)(4) of the Code) to the Company, Holdings, or the Project Company if such relationship would result in failure to satisfy Section 45(a)(2)(B) of the Code on sales of electricity by the Project Company or (ii) who is related for purposes of application of the loss disallowance rules of Section 267(a) or Section 707(b)(1) of the Code to sales of electricity by the Project Company. Clause (i) of this definition is intended to comply with Code Section 45, Notice 2007-65 and Notice 2008-60, I.R.B. 2008-30, and shall be interpreted consistent with those provisions.
Related Party Contract – any contract between the Company, Holdings, the Project Company or any Subsidiaries (on the one hand) and a Member or an Affiliated Party of a Member (on the other hand) and includes the Project Administration Agreement and the MOMA.
Representatives – as defined in Section 8.03.
Required Capital – as defined in Section 4.02(f).
ROFO Acceptance Period – as defined in Section 3.04(c).
ROFO Declination – as defined in Section 3.04(c).
ROFO Notice – as defined in Section 3.04(c).
ROFO Offer – as defined in Section 3.04(c)

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ROFO Offeree – as defined in Section 3.04(c).
ROFO Offeror – as defined in Section 3.04(c).
Service Providers – as defined in Section 6.05(a).
Shell Parent Company – as defined in Section 3.03(b)(iv).
SSA the sponsor services agreement, dated June 16, 2017, between Pattern and PSP.
Subject Membership Interests – as defined in Section 3.04(c).
Subsidiary – with respect to any Person, any other Person of which the securities having a majority of the ordinary voting power in electing the board of directors (or other governing body), at the time as of which any determination is being made, are owned by such first Person either directly or through one or more of its Subsidiaries; provided that, for the purposes of the definition of Material Contracts, Section 6.03 and Section 8.04, Holdings and Project Company shall be deemed to be Subsidiaries of the Company.
Tag Along Acceptance Notice – as defined in Section 3.04(b).
Tag Along Notice – as defined in Section 3.04(b).
Tag Along PSP Seller – as defined in Section 3.04(b).
Tag Along Purchaser – as defined in Section 3.04(b).
Tag Along Sale – as defined in Section 3.04(b).
Tag Along Sale Interests – as defined in Section 3.04(b).
Tagging Interests – as defined in Section 3.04(b).
Tax(es) (a) any taxes, customs, duties, charges, fees, levies, penalties or other assessments, fees and other governmental charges imposed by or payable to any Governmental Authority, including income, gross income, profits, gross receipts, gains, net proceeds, windfall profit, severance, property, real and personal property (tangible and intangible), production, sales, use, leasing or lease, license, excise, interest equalization, duty, franchise, capital stock, net worth, employment, occupation, payroll, employees’ income withholding, other withholding, Medicare and Social Security (or similar), unemployment, disability, payroll, fuel, excess profits, occupational, premium, severance, estimated, alternative or add-on minimum, ad valorem, value added, turnover, user, transfer, registration, stamp, interest equalization, or environmental tax, or any other tax, custom, duty, fee, levy or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax, or additional amount attributable thereto; and (b) any liability for the payment of amounts with respect to payment of a type described in the preceding clause (a), including as a result of being a member of an affiliated, consolidated, combined or unitary group, as a result of succeeding to such liability as a result of merger, conversion or asset

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transfer or as a result of any obligation under any tax sharing, tax allocation or tax indemnity agreement or similar arrangement, by operation of law or otherwise.
Tax Loss – means (i) any Tax and (ii) any economic damages or losses relating to Tax, including but not limited to those attributable to unavailability or deferral of any Tax loss, deduction or credit, any indemnification or make-whole payments made to any Person, and any economic adjustment under any tax equity, joint venture or other arrangement (including any delay or reduction in any allocation of profits, loss and/or tax attributes or any distribution of cash or proceeds from any company or a holding vehicle thereof).
Taxable Corporation – a Person that (a) is treated as an association taxable as a corporation and whose income is subject to tax under Section 11 of the Code and (b) is not treated (i) as a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code or (ii) as a tax-exempt entity for purposes of Section 168(h)(5) or Section 168(h)(6) of the Code.
Third Party – with respect to any Member or Pattern, any Person who deals at arm’s length with such Member or Pattern, as the case may be.
Third Party Transfer Documents – as defined in Section 3.04(a).
Transfer – to sell, assign, dispose of, exchange, pledge, Encumber, hypothecate or otherwise transfer any Unit or Membership Interest or any portion thereof, or any participation or interest therein, whether directly or indirectly (including pursuant to a derivative transaction), or agree or commit to do any of the foregoing; provided that (i) neither the granting by any Person of a lien to a bona fide third party lender as collateral security for the obligations of such Person to such lender (an “Upstream Pledge”), or any action by such a lender to foreclose on any such lien (an “Upstream Realization”), shall be deemed a Transfer of any Unit or Membership Interest, except that the sale by such a lender of the applicable Unit or Membership Interest to a third party, whether in a foreclosure sale or otherwise, shall constitute a Transfer and (ii) a Transfer of the units or other equity interest in a Member or in any Person that directly or indirectly holds units or other equity interests in such Member, other than an Upstream Pledge or Upstream Realization, shall not constitute a Transfer by the Member of its Units provided that (a) where the Member is Pattern Member, that after such Transfer, Pattern continues to ultimately control Pattern Member and (b) where the Member is the Investor, that after such Transfer, PSP continues to ultimately control the Investor.
Treasury Regulations – the federal income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of successor Treasury Regulations).
Uniform Commercial Code – the Uniform Commercial Code as in effect from time to time in the State of New York.
United States person – has the meaning set forth in Section 7701(a)(30) of the Code.
Units – as defined in Section 2.06.

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Upstream Pledge – as defined in the definition of “Transfer”.
Upstream Realization – as defined in the definition of “Transfer”.
Wind Farm – as defined in the Recitals.
Wind Turbine – each of the Siemens SWT-2.625-120 wind turbine generators and the Siemens SWT-2.3-108 wind turbine generators that are included in the Wind Farm, together with the associated mechanical systems, communications systems and towers.
Other terms defined herein have the meanings so given them in this Agreement.
1.02    Construction. Unless the context requires otherwise: (a) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine, and neuter; (b) words used or defined in the singular include the plural and vice versa; (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) references to Exhibits refer to the Exhibits attached to this Agreement, each of which is made a part hereof for all purposes; (e) references to Laws refer to such Laws as they may be amended from time to time, and references to particular provisions of a Law include any corresponding provisions of any succeeding Law; (f) terms defined in this Agreement are used throughout this Agreement and in any Exhibits hereto as so defined; and (g) references to money refer to legal currency of the United States of America.
ARTICLE 2
ORGANIZATION
2.01    Formation. The Company was formed as a Delaware limited liability company by the filing of a Certificate of Formation of Stillwater New B Member LLC (the “Delaware Certificate”), dated as of October 18, 2018, with the Secretary of State of Delaware pursuant to the Act. Pursuant to this Agreement, the Investor is being admitted as a new Member, and the Members desire to continue the Company for the purposes and upon the terms and conditions set forth herein. This Agreement shall be effective upon the execution and delivery of this Agreement by all Parties.

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2.02    Name. The name of the Company is “Stillwater New B Member LLC” and all Company business must be conducted in that name.
2.03    Registered Office; Registered Agent; Principal Office. The address of the registered office of the Company required by the Act to be maintained in the State of Delaware shall be 251 Little Falls Drive, Wilmington, DE 19808 or such other office (which need not be a place of business of the Company) as the Managing Member may designate in the manner provided by Law. The registered agent of the Company in the State of Delaware shall be Corporation Service Company or such other Person or Persons as the Managing Member may designate in the manner provided by Law. The principal office of the Company in the United States shall be at such place as the Managing Member may designate, which need not be in the State of Delaware, and the Company shall maintain records there or in such other place as the Managing Member shall designate. The Managing Member shall give prompt notice to each Member of any election or change in the principal office of the Company.
2.04    Purposes. The purposes of the Company are limited to (i) indirectly through Holdings and the Project Company, acquiring, financing, developing, owning, leasing, selling, procuring, encumbering, securing, designing, constructing, reconstructing, erecting, installing, testing, commissioning, decommissioning, improving, replacing, relocating, removing, repairing, maintaining, using, monitoring, managing, operating, repowering, dismantling, and disposing of the Wind Farm; (ii) owning, holding or disposing of the membership interests in Holdings owned by the Company; (iii) exercising any power and taking any action as are considered necessary or desirable in connection with the administration of the Company’s affairs described in clauses (i) and (ii) of this Section 2.04, including the maintaining of records, the engagement of professional advisors and consultants, the establishment of bank accounts, and prosecution or defense of legal actions; and (iv) taking all actions incidental, ancillary, necessary or appropriate to the foregoing that may be engaged in by a limited liability company formed under the Act. Notwithstanding anything to the contrary in this Agreement, the Company shall not hold an interest in any Person where such Person is not wholly owned by the Company (except for its interest in Holdings).
2.05    No State-Law Partnership. The Members intend that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member, for any purposes other than U.S. federal (and, when applicable, state) Tax purposes, and this Agreement may not be construed to suggest otherwise.
2.06    Units; Certificates of Membership Interest; Applicability of Article 8 of UCC. Membership Interests shall be represented by units (each, a “Unit”). Each Unit shall represent a Capital Contribution in the amount of $1.00. The Members hereby specify, acknowledge and agree that all Units (and the Membership Interests represented thereby) are securities governed by Article 8 and all other provisions of the Uniform Commercial Code, and pursuant to the terms of Section 8-103(c) of the Uniform Commercial Code, such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the Uniform Commercial Code. All Units (and the Membership Interests represented thereby) shall be represented by certificates, shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this Agreement.

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ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.01    Members. As of the date of this Agreement, the Members listed on Exhibit A hereto are hereby admitted as Members of the Company, with the number of Units set forth in such Exhibit A.
3.02    Representations, Warranties and Covenants. Each Member, severally but not jointly, hereby represents, warrants and, with respect to Sections 3.02(d), (e), and (g), covenants to the Company and each other Member that the following statements are true and correct as of the Effective Date or such later date on which such Person becomes a Member, as applicable, and, with respect to Sections 3.02(d), (e), and (g) shall be true and correct at all times that such Member is a Member (provided, that the representation, warranty and covenant in clauses (e) and (g) below shall be deemed to be given only until the end of the PTC Period and that the representation, warranty and covenant in Sections 3.02(h) below shall only be given by the Managing Member):
(a)    that such Member is duly incorporated, organized or formed (as applicable), validly existing, and (if applicable) in good standing under the Law of the jurisdiction of its incorporation, organization or formation; if required by applicable Law, that such Member is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation, organization or formation; and that such Member has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and that all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries, or other applicable Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by that such Member have been duly taken;
(b)    that such Member has duly executed and delivered this Agreement and the other documents contemplated herein to which it is a party, and that they constitute the legal, valid and binding obligation of such Member, enforceable against it in accordance with their terms (except as may be limited by bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity);
(c)    that such Member’s authorization, execution, delivery, and performance of this Agreement does not and will not (i) conflict with, or result in a breach, default or violation of, (A) the organizational documents of such Member, (B) any contract or agreement to which such Member is a party or is otherwise subject (other than to the extent such conflict, breach, default or violation would not materially adversely affect its ability to perform its obligations hereunder), or (C) any Law, order, judgment, decree, writ, injunction or arbitral award to which such Member is subject; or (ii) require any consent, approval or authorization from, filing or registration with, or notice to, any Governmental Authority or other Person, unless such requirement has already been satisfied;
(d)    that such Member (or, if it is a disregarded entity for federal Tax purposes, its beneficial owner for federal Tax purposes as provided in Treasury Regulation Section

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301.7701-3) is and so long as it is a Member shall be a United States person and shall not be subject to withholding under Section 1445 or Section 1446 of the Code;
(e)    during the PTC Period, that such Member is not and so long as it is a Member shall not be a Related Party;
(f)    that no part of the Capital Contribution made by such Member, and no part of any purchase price used by such Member to acquire any Units or Membership Interest, constitutes assets of any “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is subject to Title I of ERISA (an “ERISA Plan”), or other “benefit plan investor” (as defined in Section 3(42) of ERISA) or assets allocated to any insurance company separate account or general account in which any such ERISA Plan or benefit plan investor (or related trust) has any interest;
(g)    that, during the PTC Period, either (i) (A) such Member is not and shall not be a “tax-exempt entity” within the meaning of Code Section 168(h)(2)(A) or a “tax-exempt controlled entity” within the meaning of Code Section 168(h)(6)(F)(iii)(I) and (B) no Person who owns a direct or indirect interest in such Member is or shall be a “tax-exempt entity” or a “tax-exempt controlled entity”, unless such Person owns such interest solely through a Taxable Corporation or such Member is a Taxable Corporation, or (ii) such Member has fully indemnified each other Member and each other member of Holdings for any adverse Tax consequences it experiences as a result of the classification of such Member or such Person who owns a direct or indirect interest in such Member as a “tax-exempt entity” or a “tax-exempt controlled entity” in a manner reasonably acceptable to such other Members and such other members of Holdings;
(h)    the Managing Member shall cause the Company not to transfer, directly or indirectly, its equity interests in Holdings in violation of any restrictions on disposition thereof under the Holdings Operating Agreement (unless waived by the applicable members of Holdings); and
(i)    that neither of the Members, nor any of their respective Affiliates, will develop another wind farm prior to the Flip Point with wind turbines within a distance equal to or less than five (5) kilometers from any Wind Turbine, unless either the applicable Member, or such Affiliate, as applicable, enter into a Build Out Agreement in substantially the form attached hereto as Exhibit C or otherwise in form and substance acceptable to the Members (and, to the extent required, the Class A member of Holdings), it being understood and agreed that for the purposes of this Section, Affiliates shall not include any portfolio company or fund investment of PSP.
The representations, warranties and covenants of the Members contained in this Section 3.02 shall survive the execution and delivery of this Agreement and continue in full force and effect with respect to each Member until it ceases to be bound by the provisions of this Agreement.

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3.03    Dispositions and Encumbrances of Membership Interests.
(a)    General Restriction. No Member may Dispose of or Encumber all or any portion of its Units or Membership Interest except in strict accordance with this Section 3.03. Any attempted Disposition or Encumbrance of any Unit or Membership Interest by a Member, other than in strict accordance with this Section 3.03, shall be, and is hereby declared, null and void ab initio. The Members agree that a breach of the provisions of this Section 3.03 may cause irreparable injury to the Company and to the other Members for which monetary damages (or other remedy at law) are inadequate in view of (i) the complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of a Member to comply with such provision and (ii) the uniqueness of the Company’s business and the relationship among the Members. Accordingly, the Members agree that the provisions of this Section 3.03 may be enforced by specific performance.
(b)    Dispositions of Membership Interests. No Member may Dispose of all or any portion of its Units and no Assignee of Units may be admitted as a Member or Managing Member except in compliance with this Section 3.03(b); provided, that this Section 3.03(b) shall not apply to an Encumbrance or a Disposition upon foreclosure (or Disposition in lieu of such foreclosure) of an Encumbrance which shall be governed by Section 3.03(c). No Disposition of a Membership Interest shall effect a release of the Disposing Member from any liabilities to the Company or the other Members arising from events occurring prior to or in connection with the Disposition. The Disposing Member and its Assignee shall pay, or reimburse the Company and each Member for, all reasonable costs and expenses incurred by the Company in connection with the Disposition and admission, on or before the tenth (10th) Day after the receipt by that Person of the Company’s or such Member’s invoice for the amount due.
(i)    Restrictions on Dispositions. No Disposition of any Membership Interest or Units by a Member shall be effective unless the following requirements are satisfied:
(1)    Principal Project Documents. Such Disposition would not result in a breach of the Holdings Operating Agreement, the Power Purchase Agreement or any other Principal Project Documents, unless otherwise waived or consented to in writing by the applicable counterparty or counterparties thereto so as not to constitute a breach or default thereunder.
(2)    Applicable Laws and Regulations. Such Disposition would not violate any provision of applicable Law provided, that this clause (2) shall only apply to Dispositions to the extent such violation would or would be reasonably likely to have a material impact on the ability of the Company to perform its obligations under the Holdings

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Operating Agreement, Holdings, any Class A member of Holdings, the Project Company or the Wind Farm.
(3)    Related Party. If such Disposition would occur prior to the end of the PTC Period, such Disposition would not be to a Related Party (or a Person who would become a Related Party as a result of such Disposition).
(4)    Investment Company Act. Such Disposition would not require the Company to register as an “investment company” under the Investment Company Act of 1940, as amended.
(5)    Consents and Permits. All Governmental Approvals with respect to such Disposition shall have been obtained (other than any such Governmental Approval which, if not obtained, would not result in an adverse impact on the Wind Farm).
(6)    Dispositions to Competitors. Such Disposition by the Investor would not be to any Person other than Pattern or its Affiliates that directly or indirectly (including through one or more Affiliates) develops or operates wind power or solar power projects (collectively, the “Competitive Activities”) unless such transferee is a pension fund, investment fund, pooled investment vehicle, insurance company or institutional investor that is directly or indirectly engaged in Competitive Activities through another Person (including through one or more Affiliate) provided that (i) the transferee’s primary business activity is not its direct or indirect ownership of such Person, and (ii) such Disposition shall not be to the Person that is directly engaged in Competitive Activities.
(7)    Drag, Tag and Right of First Offer. Such Disposition, to the extent it constitutes a Transfer, complies with the requirements of Section 3.04.
(8)    Entity Classification. Such Disposition would not cause Holdings to be classified as an entity other than a partnership (or cause the Company or Holdings to be treated as a publicly traded partnership taxable as a corporation) for purposes of the Code unless the transferor provides an indemnity from an entity reasonably satisfactory to the other Members and the other members of Holdings and in a manner reasonably acceptable to such other Members

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and such other members of Holdings to each other Member and each other member of Holdings for any adverse Tax consequences it experiences as a result of any change in classification caused by such Disposition; provided, that if the Disposition occurs after the DRO Zero Date, such indemnity shall be reduced by any net economic benefit resulting from any change in classification caused by such Disposition.
(9)    EWG Status and MBR Authority. Such Disposition of a Membership Interest would not result in (i) the Project Company ceasing to be an Exempt Wholesale Generator or losing or having FERC impose new material conditions on its MBR Authority, or (ii) the Wind Farm ceasing to be a Qualifying Facility.
(10)    Tax-Exempt Use Property. If such Disposition would occur prior to the end of the later of (i) the PTC Period and (ii) the Flip Point, either (x) such Disposition would not cause the Wind Farm to be treated wholly or partly as “tax-exempt use property” within the meaning of Section 168(h) of the Code or (y) the transferor provides an indemnity from an entity reasonably satisfactory to the other Members and the members of Holdings and in a manner reasonably acceptable to each other Member and the members of Holdings for any adverse Tax consequences it experiences as a result of any change in classification caused by such Disposition.
(11)    OFAC.        Such Disposition is not to a Person (i) who appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury; (ii) with whom a transaction is prohibited by applicable provisions of Executive Order 13224, the USA Patriot Act, the Trading with the Enemy Act or the foreign asset control regulations of the United States Treasury Department, in each case as amended from time to time; (iii) who is controlled by any Person described in clause (i) or (ii); and (iv) who has its principal place of business located in any country with whose citizens the Company is prohibited from entering into transactions pursuant to the requirements set forth in clause (ii).

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(12)    Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).    None of the funds being used to purchase the Units or satisfy the transferee’s commitments under this Agreement represent or will represent proceeds of crime for the purpose of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).
(13)    Suppression of Terrorism. The Disposition is not to a Person identified in the Regulations implementing the United Nations Resolutions on the Suppression of Terrorism, the United Nations Al Qaida and Taliban Regulations, the Regulations Implementing the United Nations Resolution on the Democratic People’s Republic of Korea, the Regulations Implementing the United Nations Resolution on Iran or the Special Economic Measures (Burma) Regulations.
(14)    Securities Law Exemption.    The Disposition is exempt from all requirements to file a prospectus, registration statement or similar document with applicable securities regulatory authorities.
(ii)    Documentation Requirements. In connection with any Disposition permitted under Section 3.03(b)(i):
(A)    Notice. The Disposing Member shall deliver to each other Member written notice not less than ten (10) Business Days prior to the effective date of such Disposition (other than in connection with a Disposition to an Affiliate, including pursuant to Section 3.03(b)(iv), in which case written notice shall be given no later than ten (10) Business Days after the effective date of such Disposition).
(B)    Disposition Instrument. The Disposing Member shall deliver to the Managing Member an instrument implementing the Disposition in form and substance reasonably acceptable to the Managing Member and shall do all such acts or things that may be necessary to effect the Disposition.
(iii)    Admission as a Member. Upon Disposition of Units by a Member in accordance with Section 3.03(b)(i) and Section 3.03(b)(ii), the Assignee shall be admitted to the Company as a Member.
(iv)    Indirect Dispositions of Membership Interest Permitted. Nothing in this Agreement shall restrict, limit or require consent for, any direct or indirect Disposition

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of any ownership or membership interest in any Member or any Person which directly or indirectly holds an ownership or membership in a Member; provided, however, that any Disposition by any Member that is a Shell Parent Company or by any Shell Parent Company that directly or indirectly owns a Member, shall be subject to the applicable requirements of Section 3.03(b)(i) and Section 3.03(b)(ii)(A). The “Shell Parent Company” shall mean any direct or indirect owner of the Company that does not, directly or through any other Person, own or lease any material assets (other than the Membership Interests), have an interest in any other project or business or have any material investments or material rights unrelated to the Company, Holdings, the Project Company or the Wind Farm. For avoidance of doubt, any Person that owns another Person (other than the Company, Holdings or the Project Company) that is not a Shell Parent Company shall not be a Shell Parent Company.
(c)    Encumbrances of Membership Interest; Foreclosure. Nothing in this Agreement shall limit any Member from Encumbering its Membership Interest to secure financial indebtedness of such Member or any Affiliate thereof and, in connection with any Encumbrance by a Member in accordance with this Section 3.03(c), each non-Encumbering Member shall reasonably cooperate with any reasonable request of the Encumbering Member and also with any reasonable request by the Class A member of Holdings under the Holdings Operating Agreement to deliver any consent documentation required by any lender in connection with such Encumbrance; provided that a Member may only Encumber its Membership Interest to secure financial indebtedness of such Member or any Affiliate thereof if, when granted, the Encumbrance is not in favor of a Related Party or a Person that would become a Related Party upon foreclosure of such Encumbrance (with respect to any Encumbrance prior to the end of the PTC Period); provided, further, that the foregoing obligation to reasonably cooperate with any reasonable request to deliver consent documentation shall not obligate any non-Encumbering Member to modify or amend any of its rights or privileges under this Agreement. Any subsequent Disposition of Membership Interest by the lenders or their agent to a third party following any such foreclosure (or deed in lieu of such foreclosure) must comply with the requirements of Section 3.03(b).
3.04    Drag, Tag, Right of First Offer.
(a)     Drag Along Rights.
(1)    Subject to first complying with its obligations pursuant to Section 3.04(c), if Pattern Member together with its Permitted Transferees (to whom a Membership Interest has been transferred) (collectively, a “Pattern Seller”) desires to effect a bona fide Transfer of all (but not less than all) of its Units in the Company, whether in one transaction or a series of related transactions (the “Drag Sale Interests” and, any such transactions or series of related transactions, a “Drag Along Sale”) to any Third Party, other than a Permitted Transferee, for cash then the Pattern Seller shall (in its sole discretion) be permitted to deliver written notice to the Investor and its Permitted Transferees (to whom a Membership Interest has been transferred) (collectively, a “PSP Seller”) of such Drag Along Sale no later than fourteen (14) calendar days prior to the anticipated date of consummation of such Drag Along Sale

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(the “Drag Along Notice”). Such Drag Along Notice shall (i) identify the purchaser, the purchase price per Drag Sale Interests and a summary of the other material terms and conditions of the proposed Drag Along Sale and (ii) be accompanied by forms of all agreements (including any schedules, exhibits and annexes thereto) to be entered into by or on behalf or for the account or otherwise for the benefit of the Pattern Seller, as applicable, in connection with the Drag Along Sale. Following receipt of the Drag Along Notice, the PSP Seller shall be obligated to sell to the purchaser all of the PSP Seller’s Membership Interest in the Company at the same purchase price per Unit, and otherwise on the same terms therefor and subject to the same conditions thereto, as the Pattern Seller.
(2)    Neither the Pattern Seller nor any Controlled Affiliate thereof shall have entered into any collateral agreement, commitment or understanding with the purchaser or its affiliates that has or would have the effect of providing to the Pattern Seller or any such Controlled Affiliate consideration of greater value than the consideration offered pursuant to the Drag Along Sale; provided that such restriction shall not apply to any commercial agreement in effect at the time of such transaction (including, for the avoidance of doubt, the MOMA and the Project Administration Agreement) that was entered into prior to the date hereof or following receipt of an Investor’s consent, if any, required in accordance with Section 6.03.
(3)    The PSP Seller shall not be required to make any representations or warranties with respect to the Drag Along Sale other than customary fundamental representations and warranties as to ownership, title and due authorization and the PSP Seller shall be solely responsible for the accuracy of such representations and warranties (and shall not have any liability for any such representations and warranties of Pattern Seller). In addition, the PSP Seller shall only be responsible for any indemnification obligations, escrow amounts and holdback amounts in connection with the Drag Along Sale on a several and proportionate (and not joint and several basis) in accordance with its direct ownership interests in the Company relative to the Pattern Seller. The PSP Seller shall not be required to enter into or be bound by any non-compete or similar restrictive covenants in connection with any Drag Along Sale.
(4)    If the PSP Seller is not represented on the closing date of the Drag Along Sale or is represented but fails for any reason whatsoever to produce and deliver any required instruments and documents as may be consistent with its obligations hereunder and necessary or desirable to give effect to the sale and Transfer of applicable Units held by the PSP Seller and as may be necessary to discharge any encumbrance that affects such Units (collectively, the “Third Party Transfer Documents”) to the Third Party, then the price per Unit payable to the PSP Seller in connection with the Drag Along Sale, subject to the provisions of this Agreement may be deposited by the Third Party in a special account in the name of the PSP Seller at a branch of the bank used by the Third Party. Such deposit shall constitute valid and effective payment of any purchase price payable to the PSP Seller pursuant

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to this Section 3.04(a) even though the PSP Seller has, in breach of this Agreement, voluntarily encumbered or disposed of any of the Units and notwithstanding the fact that a conveyance or conveyances or assignment or assignments of the Units may have been delivered in breach of this Agreement to any alleged pledgee, transferee or other Person. If the purchase price payable to the PSP Seller pursuant to this Section 3.04(a) is deposited as aforesaid, then, from and after the date of such deposit, and even though the Third Party Transfer Documents have not been delivered to the Third Party, the purchase of the Units being sold by the PSP Seller shall be deemed to have been fully completed and all right, title, benefit and interest, both at law and in equity, in and to such Units shall be conclusively deemed to have been transferred and assigned to and become vested in the Third Party and all right, title, benefit and interest, both at law and in equity, of the PSP Seller, or of any transferee, assignee or any other Person having any interest, legal or equitable, therein or thereto shall cease and determine, provided, however, that the PSP Seller shall be entitled to receive the purchase price payable to the PSP Seller pursuant to this Section 3.04(a) so deposited, with interest, upon delivery to the Third Party of the Third Party Transfer Documents.
(5)    The PSP Seller hereby irrevocably constitutes and appoints the Third Party as its true and lawful attorney and agent in the name of and on behalf of the PSP Seller to execute and deliver in the name of the PSP Seller all such assignments, transfers, deeds or instruments as may be necessary to effectively transfer and assign the Units held by the PSP Seller to the Third Party, provided that such assignments, transfers, deeds and instruments do not conflict with the provisions of this Section 3.04(a). Such appointment and power of attorney, being coupled with an interest, shall not be revoked by the dissolution, winding-up, bankruptcy or insolvency of the PSP Seller and the PSP Seller hereby ratifies and confirms and agrees to ratify and confirm all that the Third Party may lawfully do or cause to be done by virtue of the provisions hereof. The PSP Seller hereby irrevocably consents to the Transfer of its Units made pursuant to the provisions of this Section 3.04(a).
(6)    The Investor and its Permitted Transferees shall be obligated to, and hereby do, waive any dissenters’ rights, appraisal rights or similar rights in connection with any Drag Along Sale.
(7)    If, substantially concurrently with the closing of a Drag-Along Sale, the purchaser in such transaction agrees to the termination of the MOMA and/or Project Administration Agreement and the MOMA or the Project Administration Agreement is terminated in connection with such Drag-Along Sale, Pattern will waive any termination fees payable under such terminated MOMA or Project Administration Agreement, as applicable.
(8)    This Section 3.04(a) shall not apply to an Article 9 Disposition.
(b)    Tag Along Rights. Subject to first complying with Section 3.04(c), if at any time a Pattern Seller desires to effect a bona fide Transfer of some or all of its direct or

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indirect ownership interests in the Company whether in one transaction or a series of related transactions (the “Tag Along Sale Interests” and, any such transactions or series of related transactions, a “Tag Along Sale”) to any Third Party, other than a Permitted Transferee, (a “Tag Along Purchaser”), then the Managing Member shall be required to provide the Investor and its Permitted Transferees (to the extent that such Permitted Transferees own any Membership Interest) (collectively the “Tag Along PSP Seller”) with at least thirty (30) calendar days’ prior written notice (the “Tag Along Notice”) of such proposed Tag Along Sale. Such Tag Along Notice shall (A) identify the Tag Along Purchaser, the amount of Tag Along Sale Interests proposed to be transferred directly or indirectly by the Pattern Seller, the percentage of the then-issued and outstanding Units that such proposed Tag Sale Interests represents, the sales price per Unit, and a summary of the other material terms and conditions of the proposed Tag Along Sale and (B) be accompanied by forms of all agreements (including any schedules, exhibits and annexes thereto) to be entered into by or on behalf or for the account or otherwise for the benefit of the Pattern Seller in connection with the proposed Transfer. Within twenty (20) calendar days following receipt by the Tag Along PSP Seller of the Tag Along Notice, the Tag Along PSP Seller may, by providing written notice (which notice shall be deemed to be irrevocable when sent) (the “Tag Along Acceptance Notice”) to the Managing Member, elect to Transfer to the Tag Along Purchaser, as part of the Tag Along Sale, an amount of Units owned by the Investor (the “Tagging Interests”) up to the total amount of issued and outstanding Units proposed to be Transferred to the Tag Along Purchaser, up to the total amount of issued and outstanding Units proposed to be Transferred to the Tag Along Purchaser pursuant to the Tag Along Sale multiplied by PSP’s Pro Rata Share, at the same purchase price per Unit as the Pattern Seller and otherwise on the same terms therefor and subject to the same conditions thereto. Neither the Pattern Seller nor any Controlled Affiliate thereof shall have entered into any collateral agreement, commitment or understanding with the Tag Along Purchaser or its affiliates that has or would have the effect of providing to the Pattern Seller or any such Controlled Affiliate consideration of greater value than the consideration offered pursuant to the Tag Along Sale; provided that such restriction shall not apply to any commercial agreement in effect at the time of such transaction (including, for the avoidance of doubt, the MOMA and the Project Administration Agreement) that was entered into prior to the date hereof or that was entered into following receipt of any Investor’s consent, if any, required in accordance with Section 6.03. If the Tag Along Purchaser does not accept all of the Tagging Interests tendered by the Tag Along PSP Seller, then the Pattern Seller shall have the option to either (i) proportionately reduce the number of Tag Along Sale Interests and Tagging Interests to account for the maximum number of ownership interests that the Tag Along Purchaser is willing to purchase or (ii) abandon the Tag Along Sale. If the Tag Along PSP Seller does not deliver a Tag Along Acceptance Notice within twenty (20) calendar days after receipt of the Tag Along Notice, the Investor shall be deemed to have waived its rights with respect to the Transfer of its Units pursuant to the applicable Tag Along Sale and the Pattern Seller shall have until one hundred eighty (180) days after the expiration of such twenty (20) calendar day period after the date of the Tag Along Notice in which to Transfer the ownership interests in the Company described in the Tag Along Notice on terms not more favorable to the Pattern Seller than those set forth in the Tag Along Notice. If at the end of such one hundred eighty (180) day period the Pattern Seller shall not have completed the Transfer of

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all of the Pattern Seller’s ownership interests in the Company contemplated to be transferred in the Tag Along Notice (reduced to account for any Tagging Interests (if any) and all Tagging Interests (if any)), then the Tag Along PSP Seller’s tag along rights shall again apply with respect to any such unsold ownership interests. This Section 3.04(b) shall not apply to any “Disposition” (as defined in the Holdings Operating Agreement) of the Class B membership interests in Holdings pursuant to Article 9 of the Holdings Operating Agreement (the “Article 9 Disposition”).
(c)    Right of First Offer.
(1) If any Member, PSP or any of its Permitted Transferees or a Pattern Seller (as applicable, the “ROFO Offeree”) desires to Transfer all or any portion of its Membership Interest in the Company to any Third Party other than to a Permitted Transferee who agrees to be bound by the obligations set forth in this Agreement, the ROFO Offeree shall give the other Member(s) (the “ROFO Offeror”) written notice setting forth the details of the Membership Interests of the Company to be transferred (the “Subject Membership Interests”) and any other material terms of the proposed Transfer reasonably known or anticipated by the ROFO Offeree (a “ROFO Notice”).
(2)    Within forty-five (45) calendar days after delivery of a ROFO Notice, the ROFO Offeror shall either: (i) deliver a written offer to the ROFO Offeree to purchase the Subject Membership Interests (a ROFO Offer”) or (ii) deliver a written notice to the ROFO Offeree that the ROFO Offeror will not make a ROFO Offer (a “ROFO Declination”). If the ROFO Offeror fails to deliver either a ROFO Offer or a ROFO Declination within such forty-five (45)-day period, the ROFO Offeror will be deemed to have delivered a ROFO Declination.
(3)    Unless a ROFO Offer is accepted pursuant to written notice from the ROFO Offeree to the ROFO Offeror within ten (10) calendar days following the delivery of a ROFO Offer (the “ROFO Acceptance Period”), such ROFO Offer shall be deemed to have been rejected by the ROFO Offeree. In the event that the ROFO Offeree validly rejects a ROFO Offer or the ROFO Offeror delivers a ROFO Declination, subject to complying with its obligations under Section 3.04(b), the ROFO Offeree shall be free to Transfer the applicable Subject Membership Interests to any Third Party; provided that in the event the ROFO Offeror has previously delivered a ROFO Offer that was rejected by the ROFO Offeree, the ROFO Offeree shall only be permitted to enter into a definitive agreement to Transfer the applicable Subject Membership Interest (A) during the nine (9) month period following the expiration of the ROFO Acceptance Period, (B) at a price greater than or equal to 105% of the price offered in the ROFO Offer and (C) on terms and conditions (economic and otherwise) that are not materially less favorable (in the aggregate) to the ROFO Offeree than the terms and conditions set forth in the ROFO Offer. If at the end of such nine (9) month period the ROFO Offeree shall not have completed

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the Transfer of the Subject Ownership Interest, then it shall once again be required to comply with this Section 3.04(c).
(4)    If a ROFO Offer is accepted during the ROFO Acceptance Period, the ROFO Offeror shall acquire the Subject Membership Interest, and the ROFO Offeree shall Transfer the Subject Membership Interest to the ROFO Offeror at the price set forth in the ROFO Offer; provided that neither party shall be required to provide any representations or warranties with respect to such Transfer other than customary fundamental representations and warranties as to ownership, title and due authorization.
(5)    A sale by a ROFO Offeree of a Subject Ownership Interest to a ROFO Offeror shall be completed in accordance with the provisions of Section 3.03(b)(ii), provided however, that the closing of such sale shall be not later than ninety (90) days from the date on which the ROFO Offer is accepted or such later date as may be required to facilitate obtaining any required consents or approvals of any Governmental Authority or counterparty to a Principal Project Document that is required in connection with such sale, and the consideration paid to the ROFO Offeree by the ROFO Offeror shall be as set out in the ROFO Offer.
(6)    This Section 3.04(c) shall not apply to an Article 9 Disposition.
(d)    Applicability to Pattern.     To the extent Section 3.04(b) or (c) of the Agreement is applicable to any Transfer by Pattern of all or any portion of Pattern’s indirect ownership interest in Holdings, Pattern Member shall cause Pattern to comply or cause the applicable Pattern Seller, as the case may be, to comply with the terms of Section 3.04(b) or Section 3.04(c) as the seller of the Tag Along Sale Interests or the Subject Membership Interests, as applicable.
3.05    Liability to Third Parties. No Member shall be personally liable for the debts, obligations or liabilities of the Company, whether arising in contract, tort or otherwise, solely by reason of being a Member.
3.06    Withdrawal. A Member may not withdraw or resign from the Company except as permitted by this Agreement.
3.07    Permitted Transfers to Controlled Affiliates.
Subject to Section 3.03(b) (except for Section 3.03(b)(i)(7)), a Member who is not then in default of its obligations under this Agreement will be entitled to Transfer to a Controlled Affiliate, without first complying with Section 3.04, title to all or part of its Units to one or more of its Controlled Affiliates, provided that:
(a)    the Transferor first establishes to the satisfaction of the non-Transferring Members, acting reasonably, (and if the non-Transferring Members do not agree that the Transferee is a Permitted Transferee then the matter shall be subject to the dispute resolution

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procedures outlined in Section 10.06) that the Person to which it is transferring its Units is a Permitted Transferee;
(b)    the non-Transferring Members receive prior written notice of such Transfer; and
(c)    where the Transferor transfers less than all of its Units to a Controlled Affiliate, all Units held or acquired by such Transferor and its Controlled Affiliate(s) shall be aggregated together for the purpose of determining the availability of any rights under this Agreement, and (i) such Transferor and its Controlled Affiliate(s) may apportion such rights as among themselves in any manner they deem appropriate and (ii) shall be jointly and severally liable for their respective obligations under this Agreement.
3.08    Upstream Pledges and Upstream Realization.
Any Upstream Pledges and Upstream Realization shall be permitted, and shall not be deemed to constitute a “Transfer” for the purposes of Section 3.04, so long as (a) any subsequent disposition, sale, assignment, transfer, conveyance, gift, exchange or other disposition by such lender or agent of its direct or indirect interest in Units or Membership Interests is to a Person that has either (i)(A) a rating not less than “BBB” from S&P or “Baa3” from Moody’s or (B) is Controlled by an Affiliate meeting the criteria specified in (A), or (ii) together with its Affiliate(s) on consolidated basis, a tangible net worth of at least US$500,000,000, or, in the case of an investment fund, pension plan or other similar entity, aggregate assets under management of at least US$500,000,000 and (b) such subsequent disposition, sale, assignment, transfer, conveyance, gift, exchange or other disposition by such lender or agent of such direct or indirect interests in Units or Membership Interests complies with the transfer restrictions hereunder, to the extent applicable, including the requirements of Section 3.04.
ARTICLE 4
CAPITAL ACCOUNTS
4.01    Capital Accounts.
(a)    Each Member’s Capital Account balance (as of the Effective Date) and Pro Rata Share shall be as indicated on Exhibit A. The aggregate Capital Account balances of the Members, as indicated on Exhibit A, equals the fair market value of the assets held by the Company on the Effective Date.
(b)    Each Member’s Capital Account shall be increased by (i) the amount of money contributed by that Member to the Company, (ii) the fair market value (as unanimously agreed to by the Members) of property contributed by that Member to the Company, (iii) allocations to that Member of Company income and gain (or items thereof) allocated pursuant to Section 5.01(a) or specially allocated pursuant to Section 5.01(b), Section 5.01(c), or Section 9.02(a), including income and gain exempt from tax and income and gain described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) (but excluding income and gain described in Treasury Regulation Section 1.704-1(b)(4)(i)), and (iv) the

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amount of any Company liabilities assumed by such Member or that are secured by any property distributed to such Member, and shall be decreased by (v) the amount of money distributed or deemed distributed to that Member by the Company, (vi) the fair market value (as agreed to unanimously by Members and so adjusted with the adjustment allocated as income or loss) of property distributed to that Member by the Company, (vii) allocations to that Member of expenditures of the Company described (or treated as described) in Section 705(a)(2)(B) of the Code, (viii) allocations to that Member of Company loss and deduction (or items thereof) allocated pursuant to Section 5.01(a) or specially allocated pursuant to Section 5.01(b), Section 5.01(c), Section 5.01(d), or Section 9.02(a), including loss and deduction described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) (but excluding items described in (vii) above and loss or deduction described in Treasury Regulation Section 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii)) and (ix) the amount of any liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company. To the extent not otherwise inconsistent with the provisions of this Section 4.01, the Members’ Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulation Sections 1.704‑1(b)(2)(iv) and 1.704-1(b)(4), including (A) adjustments required by the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(f), (B) adjustments to reflect the allocations to the Members of depreciation, depletion, amortization, and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g) and (C) adjustments required by the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(m). The Members’ Capital Accounts shall be increased or decreased to reflect a revaluation of the Company’s property on its books based on the fair market value of the Company’s property as of the following times: (1) the contribution of more than a de minimis amount of money or other property to the Company by a new or existing Member as consideration for new or additional Units, (2) the distribution of more than a de minimis amount of money or other property by the Company to a Member as consideration for a Membership Interest, (3) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or a new Member acting in a Member capacity or in anticipation of being a Member, or (4) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g). Upon the Disposition of all or a portion of a Membership Interest, the Capital Account of the Disposing Member that is attributable to such Membership Interest shall carry over to the Assignee in accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(l). The foregoing provisions of this Article 4 and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Sections 1.704-1 and 1.704-2 and shall be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto.
4.02    Additional Capital Contributions; Member Loans.

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(a)    The Managing Member shall determine from time to time the capital and operating requirements of the Company and shall make Capital Calls to fund such capital and operating requirements.
(b)    Capital Calls will be issued from time to time in writing (a “Funding Notice”) by the Managing Member to each Member, in accordance with the then applicable operating budget or as approved by the Managing Member, with a schedule setting out the aggregate amount of the Capital Call and the portion of such Capital Call required to be contributed by each Member, calculated by multiplying such aggregate Capital Call by such Member’s Membership Interest. Unless unanimously agreed by the Members, all Capital Calls shall be satisfied in cash and not in other property.
(c)    Any Funding Notice issued by the Managing Member will include the bank account information to which payment is to be made and the due date on which the payment is required from each Member, which date shall be at least five (5) Business Days following the date that the Funding Notice is delivered or given.
(d)    Following the issuance of a Capital Call by the Managing Member, each Member will make a Capital Contribution to the Company in the amount specified as such Member’s portion of the Capital Call in the Funding Notice.
(e)    Each Member shall be required to contribute its respective share of a Capital Call, as set forth in the applicable Funding Notice.
(f)    If a Funding Notice is issued by the Managing Member and any Member fails to contribute capital in accordance with such Funding Notice (in this Section 4.02(f), a “Non-Contributing Member”), then each Member that has contributed its required capital (“Required Capital”) in accordance with such Funding Notice (in this Section 4.02(f), a “Contributing Member”) shall have the right, but not the obligation, to contribute an amount up to the amount of the capital required to have been contributed by the Non-Contributing Member (such a contribution, an “Additional Contribution”). The Contributing Member will be issued Units in respect of both the Required Capital it contributed and the Additional Contribution it contributed, notwithstanding Section 2.06 and any other provision to the contrary herein, such that the Contributing Member is issued three Units for each $1.00 contributed, provided that such dilution does not result in a breach of, or a violation of any restriction on “Disposition” contained in, and as defined under, the Holdings Operating Agreement.
(g)    Except as set forth above, no Member will be required or permitted to make a Capital Contribution or a loan to the Company.
(h)    Upon a Member making a Capital Contribution, the Managing Member will amend Exhibit A hereto to reflect each Member’s membership interests (which for certainty shall not be adjusted as a result of any Capital Contribution made by a Member except as expressly provided in this Section 4.02) and Capital Contribution.

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4.03    Return of Contributions. Except as expressly provided herein, a Member is not entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions. An unrepaid Capital Contribution is not a liability of the Company or of any Member.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
5.01    Allocations.
(a)    General. For purposes of maintaining the Capital Accounts pursuant to Section 4.01, after giving effect to the special allocations set forth in Section 5.01(b) and in Section 5.01(c), and subject to the limitation in Section 5.01(d), each item of income, gain, loss, deduction and credit of the Company for any period (or portion of a period) after the Effective Date shall be allocated to the Members in accordance with their Pro Rata Shares.
(b)    Special Allocations. The following special allocations shall be made in the following order:
(i)    Company Minimum Gain Chargeback. Notwithstanding the other provisions of this Section 5.01 or 9.02(a), except as provided in Treasury Regulation Section 1.704-2(f), if there is a net decrease in Company Minimum Gain during any Company taxable period, each Member shall be allocated items of Company income and gain for such period (and, if necessary subsequent periods) in the manner and in the amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2), 1.704‑2(j)(2)(i) or any successor provisions. This Section 5.01(b)(i) is intended to comply with the minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii)    Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt. Notwithstanding the other provisions of this Section 5.01 or Section 9.02(a), except Section 5.01(b)(i) and as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt determined in accordance with Treasury Regulation Section 1.704-2(i)(5) at the beginning of a taxable period, any Member with a share of Minimum Gain Attributable to Member Nonrecourse Debt at the beginning of such taxable period shall be allocated items of Company income and gain for such period (and, if necessary, subsequent taxable periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704‑2(j)(2)(ii), or any successor provisions. This Section 5.01(b)(ii) is intended to comply with the partner nonrecourse debt minimum gain chargeback requirement in Treasury Regulation Section 1.704‑2(i)(4) and shall be interpreted consistently therewith.
(iii)    Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company gross income (if any) shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to

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the extent required by Treasury Regulations, any such Member’s negative balance in an Adjusted Capital Account as quickly as possible; provided, that an allocation pursuant to this Section 5.01(b)(iii) shall be made only if and to the extent that such Member would have a negative balance in an Adjusted Capital Account after all other allocations provided for in this Section 5.01 have been tentatively made as if this Section 5.01(b)(iii) was not in this Agreement.
(iv)    Gross Income Allocation. In the event any Member has a negative balance in an Adjusted Capital Account at the end of any taxable period, each such Member shall be specially allocated items of Company income and gain in the amount of such negative balance as quickly as possible; provided, that an allocation pursuant to this Section 5.01(b)(iv) shall be made only if and to the extent that such Member would have a negative balance in an Adjusted Capital Account after all other allocations provided for in this Article 5 have been made as if Section 5.01(b)(iii) and this Section 5.01(b)(iv) were not in this Agreement.
(v)    Nonrecourse Deductions. Any Nonrecourse Deduction for any taxable period shall be allocated to the Members in accordance with Section 5.01(a).
(vi)    Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any taxable period shall be allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation Sections 1.704-2(i) and (j).
(vii)    Liquidating Allocations. Any items of income, gain, loss, deduction and credit arising in connection with the liquidation shall be allocated pursuant to Section 9.02(a).
(c)    Curative Allocations. The allocations set forth in Sections 5.01(b)(i) through (vi) hereof as limited by Section 5.01(d) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. To the extent the Company can do so consistently with the Treasury Regulations, the Company shall reallocate items of income, gain, loss, deduction and credit among the Members such that, to the extent possible, the net amount of the allocations under Section 5.01(a) and (b) and Section 9.02(a) will be the net amount that would have been allocated to each Member if this Agreement did not contain the Regulatory Allocations; provided, that, to the extent that it is not possible to reallocate such items of income, gain, loss, deduction and credit in such a manner in a given taxable year, such reallocations will be made in subsequent taxable years, as applicable, to the extent consistent with such Treasury Regulaitons.
(d)    Loss Limitations. No allocation of items of loss or deduction pursuant to Section 5.01(a) or Section 9.02(a)(v) shall be made to a Member if such allocation would cause such Member to have a negative balance in an Adjusted Capital Account, or increase the amount of a Member’s negative balance in an Adjusted Capital Account. In the event some but not all of the Members would have a negative balance in an Adjusted Capital Account as a consequence of an allocation of items of loss or deduction pursuant to Section

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5.01(a) or Section 9.02(a)(v), the limitation set forth in this Section 5.01(d) shall be applied on a Member by Member basis and items of loss or deduction not allocable to any Member as a result of such limitation shall be allocated to the other Members in the manner otherwise required pursuant to Section 5.01(a) and Section 9.02(a)(v) to the extent such other Members have positive balances in their Adjusted Capital Accounts so as to allocate the maximum permissible items of loss and deduction to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(e)    Other Allocation Rules.
(i)    For purposes of determining the income or losses, or any other items allocable to any period, income, losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Managing Member using any permissible method described in Section 706 of the Code and the Treasury Regulations thereunder.
(ii)    The Members are aware of the income Tax consequences of the allocations made by this Section 5.01 and Section 9.02(a) and hereby agree to be bound by the provisions of this Section 5.01 and Section 9.02(a) in reporting their shares of Company income and loss for income tax purposes.
(iii)    Solely for purposes of determining a Member’s proportionate share of any “excess nonrecourse liabilities” of the Company within the meaning of Treasury Regulation Section 1.752-3(a)(3), the Members’ interests in the Company’s profits are in accordance with their proportionate allocations under Section 5.01(a).
(f)    Income Tax Allocations; Code Section 704(c). For income tax purposes, each item of income, gain, loss, and deduction shall be allocable in the same manner such items are allocated for book purposes pursuant to this Section 5.01; provided, however, that income, gain, loss and deductions with respect to property contributed to the Company by a Member or revalued pursuant to Treasury Regulation Section 1.704‑1(b)(2)(iv)(f) shall be allocated among the Members in a manner that takes into account the variation between the adjusted tax basis of such property and its book value, as required by Section 704(c) of the Code and Treasury Regulation Section 1.704‑1(b)(4)(i), using the remedial allocation method permitted by Treasury Regulation Section 1.704-3(d).
5.02    Distributions. All Distributable Cash shall, subject to Sections 5.03 and 5.05, be distributed by the Company to the Members on each Distribution Date on which the Company has Distributable Cash, in accordance with their Pro Rata Shares. Each distribution shall be made only in cash unless unanimously agreed by the Members.
5.03    Distributions on Dissolution and Winding Up. Notwithstanding Section 5.02, upon the dissolution and winding up of the Company, liquidating distributions shall be made as provided in Section 9.02.
5.04    Varying Interests. All items of income, gain, loss, deduction or credit shall be allocated, and all distributions shall be made, to the Persons shown on the records of the Company

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to have been Members as of the last calendar day of the period for which the allocation or distribution is to be made. Notwithstanding the foregoing, if during any taxable year there is a change in any Member’s Units, the Members agree that their allocable shares of such items for the taxable year shall be determined by taking into account their varying interests based upon an “interim closing of the books” method effective as of close of business on the date such change occurs, as permitted by Treasury Regulation Section 1.706-1(c).
5.05    Withholding. Notwithstanding any other provision of this Agreement, the Company shall comply with any withholding requirements under any Law and shall remit amounts withheld to, and file required forms with, applicable Tax authorities. To the extent that the Company is required to withhold and pay over any amounts to any Tax authority with respect to distributions or allocations to any Member, the amount withheld shall be treated as a distribution of cash to such Member in the amount of such withholding. In the event of any claimed over-withholding, Members shall be limited to an action against the applicable Tax authority. If an amount required to be withheld was not withheld from an actual distribution, the Company may reduce subsequent distributions by the amount of such required withholding and any penalties or interest thereon. Each Member agrees to furnish to the Company such forms or other documentation as is necessary to assist the Company in determining the extent of, and in fulfilling, its withholding obligations. The Company shall make good faith efforts to provide notice of any applicable withholding and consult with the affected Member with respect thereto in a good faith effort to reduce or eliminate such withholding within a reasonable amount of time after becoming aware of any such withholding obligation.
ARTICLE 6
MANAGEMENT
6.01    Management; Standard of Care; No Commingling of Funds.
(a)    Except as otherwise expressly provided in this Agreement, including the provisions of Sections 6.02, 6.03 and 6.05, the management of the Company is fully vested in the Managing Member. Subject to the provisions of this Agreement, each Member agrees that it will not exercise its authority under the Act to bind or commit the Company to agreements, transactions or other arrangements, or to hold itself out as an agent of the Company. Decisions or actions taken in accordance with the provisions of this Agreement shall constitute decisions or actions by the Company and shall be binding on each Member and employee of the Company.
(b)    The Managing Member covenants that it will exercise the powers and discharge its duties under this Agreement honestly and in good faith and that it will exercise the degree of care, diligence and skill that a reasonably prudent Person would exercise in comparable circumstances. The Managing Member also covenants that it will devote such time and attention to the conduct of the purposes of the Company as is reasonably required for the prudent management of the purposes of the Company.
(c)    The Managing Member will take all necessary actions to ensure that the funds and other property of the Company are not commingled with the funds or other property of any other Person.

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6.02    Personnel of Affiliates; Authorized Signatories. Subject to Section 6.03, with respect to duties discharged hereunder by the Managing Member, the Managing Member may (i) discharge such duties through the personnel of an Affiliate of the Managing Member and (ii) designate “Authorized Signatories” of the Company and delegate signature authority to such Persons to execute documents on behalf of the Company where directed to do so by the Managing Member. The Managing Member shall not be entitled to compensation for services rendered pursuant to this Section 6.02.
6.03    Consent Required for Certain Actions. Any provision of this Agreement (other than Section 6.04(b) and Section 6.07(b)(2), (c)(2) and (d)(2)) to the contrary notwithstanding, without the prior written consent of the Investor, the Managing Member shall not, except as expressly required by the Power Purchase Agreement, take any action to cause the Company, Holdings or the Project Company (or any of their respective Subsidiaries) to, or cast its vote on the behalf of the Company as a Class B member or managing member of Holdings in any matter coming up for a vote under Holdings Operating Agreement that would cause Holdings or the Project Company (or any of their respective Subsidiaries) to, take any of the following actions:
(a)    any amendment of the certificate of formation or operating agreement of the Company or Holdings (or any of their respective Subsidiaries), other than (i) as required by the Holdings Operating Agreement, (ii) amendments that are required by Law, are of a clerical or “housekeeping” nature, or are contemplated by this Agreement (including Section 7.01(b)) or (iii) in the case of the Holdings Operating Agreement, amendments to give effect to the provisions of the Bipartisan Budget Act and any Treasury Regulations or other administrative pronouncements promulgated thereunder (including adoption of the “push-out” election provided for by Section 6226(a) of the Code);
(b)    (i) the incorporation or acquisition of a Subsidiary of the Company or Holdings (or any of their respective Subsidiaries) or the disposition of any shares of a Subsidiary of the Company or Holdings, (ii) the Company or Holdings (or any of their respective Subsidiaries) entering into any partnership, joint venture or similar arrangement with any other Person, or (iii) the purchase of any business by the Company or Holdings (or any of their respective Subsidiaries) or the acquisition by stock or purchase by the Company or Holdings (or any of their respective Subsidiaries) of all or substantially all the assets of any other Person;
(c)    the sale (or entry into of binding agreements to that effect), lease, exchange or other disposition of (i) all or substantially all of the assets of the Company or Holdings (or any of their respective Subsidiaries) or (ii) assets of the Company or Holdings (or any of their respective Subsidiaries) that would result in a material adverse effect on the power generation of the Wind Farm, or, in the case of each of clauses (i) and (ii) immediately above, the granting of an option or right to such effect;
(d)    initiating or otherwise participating in voluntary winding-up or bankruptcy proceedings of the Company or Holdings (or any of their respective Subsidiaries);

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(e)    any merger, amalgamation or consolidation or the entering into of any agreement, arrangement or understanding to merge, amalgamate or consolidate, the Company or Holdings (or any of their respective Subsidiaries) with any Person;
(f)    any change to the equity capital structure of the Company or Holdings (or any of their respective Subsidiaries) (whether by subdivision, consolidation or reclassification), the issuance or allotment of any equity or the granting of any right, option or privilege to acquire any equity or the redemption or repurchase by the Company or Holdings (or any of their respective Subsidiaries) of any equity, other than (i) as contemplated in this Agreement or the Delaware Certificate in the case of the Company, or the Holdings Operating Agreement or Holdings’ certificate of formation in the case of Holdings, in each case including any purchase rights or equity dilutions provisions (including to fund non-discretionary expenses or amounts necessary to comply with legal obligations), or (ii) amendments that are required by Law or are of a clerical or “housekeeping” nature;
(g)    the taking or institution of any proceedings for the continuance, winding up, liquidation, reorganization or dissolution of the Company or Holdings (or any of their respective Subsidiaries), in each case under applicable debtor relief Laws, other than as required by applicable Law;
(h)    (i) any incurrence of any indebtedness by the Company, Holdings or any of their respective Subsidiaries for borrowed money or granting of any lien or security interest by the Company or Holdings (or any of their respective Subsidiaries) in respect of any indebtedness for borrowed money, including any financing or refinancing, that is not in existence as of the date hereof other than (A) in the case of an amendment to or refinancing of existing indebtedness of the Company or Holdings, where the amended or refinanced indebtedness would not result in a capital call or be in excess of the total amount of the existing indebtedness outstanding at the time of the refinancing that would be amended or extinguished by the refinancing plus all applicable fees, costs and expenses including breakage costs incurred in connection with such new financing or the repayment of the existing indebtedness; or (B) indebtedness of less than 2% of the book value of assets of the Project Company that is required to meet the Project Company’s obligations that cannot reasonably be expected to be met with Distributable Cash (as such term is defined in the Holdings Operating Agreement) or that can be satisfied with the posting of a letter of credit or other security, (ii) making any loan for borrowed money or entering into any external borrowing arrangements where the Company or Holdings (or any of their respective Subsidiaries) acts as a lender, (iii) the Company or Holdings (or any of their respective Subsidiaries) entering into any derivative transaction or amending in any material manner or terminating any derivative transaction other than in connection with a transaction described in clauses (i)(A) or (i)(B) above and other than short-term energy hedge, renewable attributes and/or capacity transactions, or (iv) any incurrence of any indebtedness for borrowed money or granting of any security interest or entering into any other borrowing arrangements, in each case by the Company or Holdings (or any of their respective Subsidiaries) with any Affiliated Party;

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(i)    the repayment of any loan or advance made by an Affiliated Party of the Company to the Company (or any of its Subsidiaries) or of Holdings to Holdings (or any of its Subsidiaries), other than in accordance with the terms agreed upon at the time the loan or advance was made;
(j)    the granting of any security on the assets of the Company or Holdings (or any of their respective Subsidiaries) other than (i) under a financing that is otherwise permitted under this Agreement, or (ii) customary liens created in the operation of the Wind Farm such as liens for trade payables, mechanics, suppliers and warehouse liens, capital leases and tax liens;
(k)    the guarantee or indemnification by the Company or Holdings (or any of their respective Subsidiaries) of, or the grant of security by the Company or Holdings (or any of their respective Subsidiaries) for, the debts or obligations of any third party, in each case other than customary guarantees or indemnities arising out of the ordinary course of business of the Company or Holdings (or any of their respective Subsidiaries);
(l)    the guarantee or indemnification by the Company or Holdings (or any of their respective Subsidiaries) of, or the grant of security by the Company or Holdings (or any of their respective Subsidiaries) for, the debts or obligations of any Affiliated Party thereof;
(m)    any change to the distribution policy of the Company (or any of their respective Subsidiaries) agreed by Pattern and PSP at or prior to the closing of the Purchase and Sale Agreement (or as amended by mutual agreement), or, with respect to Holdings or the Project Company, reflected in the Holdings Operating Agreement or the operating agreement of the Project Company, respectively, other than, in the case of Holdings, any changes to allocations and distributions mandated from time to time by the Holdings Operating Agreement;
(n)    the Company or Holdings (or any of their respective Subsidiaries) entering into (on or after the date of this Agreement), causing the early termination of, or making material amendments to any (i) any Material Contract, (ii) applicable third-party partnership agreements (including the Holdings Operating Agreement), or (iii) any contract with Pattern or its Affiliates, including the MOMA and Project Administration Agreement, except (x) in each case for new contracts, terminations and/or amendments that are required by applicable Law or to avoid a material default by the Company or Holdings (or any of their respective Subsidiaries) or otherwise preserve material rights of the Company or Holdings (or any of their respective Subsidiaries) under such contract or agreement, and (y) in the case of clause (ii) as required to give effect to the exercise of options or rights under such agreements. Notwithstanding the foregoing, with respect to any new contracts that are proposed to be entered between the Company or Holdings (or any of their respective Subsidiaries), on the one hand, and Pattern or any of its Affiliates, on the other, the Managing Member shall provide written notice to the Investor setting out details of the scope of services to be provided by Pattern or such other Affiliate thereof under such new contract and the corresponding fees payable to Pattern or such other Affiliate thereunder. Within thirty (30) calendar days

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of such a notice, the Investor may object to such new contract on the ground that either the scope of services to be provided is not reasonable or that the proposed fees payable are not within the range of “market fees” (factoring in the proposed scope). If the Investor objects prior to the expiration of such thirty (30) day notice period, then the matter shall be referred to a dispute resolution process (such process to include mediation through progressively senior levels of each of the Investor and the Managing Member following which the matter shall be referred to an independent third party expert reasonably selected by the Investor, who shall determine if the scope of services to be provided is not reasonable or that the proposed fees payable are not within the range of “market fees” (factoring in the proposed scope)). If the Investor does not timely object to the proposed new contract, or if the independent third party expert so determines that the proposed scope of services is reasonable and the fees payable are within the range of “market fees”, then the Managing Member shall be permitted to cause the applicable new contract to be so entered into;
(o)    the approval by the Company or Holdings (or any of their respective Subsidiaries) of any capital expenditure or series of related capital expenditures in excess of 2% of the book value of the assets of the Project Company other than as necessary to comply with applicable Law, address a safety emergency or casualty or maintain an insurance policy relating to the Project Company;
(p)    the initiation or settlement by the Company or Holdings (or any of their respective Subsidiaries) of any material litigation or material administrative proceeding;
(q)    appointment and removal/replacement of auditors of the Company or Holdings (or any of their respective Subsidiaries), other than when such appointment, removal or replacement of auditors is designed to have the auditor of the Company or Holdings be the same as Pattern’s auditor;
(r)    adoption of and changes to employee benefits arrangements or schemes of the Company or Holdings (or any of their respective Subsidiaries), except for non-material changes which are reasonable for a Person (other than a natural person) of the same size and nature as the Company or Holdings;
(s)    the creation, modification or termination by the Company or Holdings (or any of their respective Subsidiaries) of any plan for the purchase of equity or other securities through the award of options to purchase equity, including a stock option plan or similar program;
(t)    any change to the accounting methods of the Company or Holdings (or any of their respective Subsidiaries) or to the fiscal year-end, other than (i) when such change to the accounting methods of the Company or Holdings (or any of their respective Subsidiaries) or to the fiscal year-end is designed to conform to the accounting methods or fiscal year-end of Pattern or (ii) to comply with GAAP;
(u)    any significant change in the scope or nature of the business of the Company or Holdings (or any of their respective Subsidiaries) and the entering into any contract,

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agreement or commitment that would result in a significant change in the scope or nature of the business of the Company or Holdings (or any of their respective Subsidiaries); or
(v)    seeking to launch an initial public offering or the admission to trading on a recognized stock exchange of the whole or any part of the Company’s or Holdings’ issued securities (or those of any of its Subsidiaries); or
(w)    file Internal Revenue Service Form 8832 (or such alternate or successor form) to elect to have the Company or Holdings classified as a corporation for federal income tax purposes under Regulation Section 301.7701-3, or take any affirmative action to have the Company or Holdings be treated for federal income tax purposes other than as a partnership, except in each case, as may be required by Law.
6.04    Transferability of Consent Rights.
(a)    The consent rights set forth in Section 6.03 will not be transferable with the Investor’s Membership Interests, except for Dispositions to Permitted Transferees or the transferee of 100% of the Membership Interests acquired by the Investor on the Effective Date. If the Investor Disposes of less than all of its Membership Interests, the Investor shall, subject to Section 6.04(b) and Sections 6.07(b), (c) and (d), retain full authority to exercise its surviving consent rights.
(b)    The consent rights set forth in Section 6.03 will terminate when the Investor and its Permitted Transferees own less than such amount of the Units that represents (i) a Pro Rata Share of 25% unless, in the case of a dilution pursuant to Section 4.02(f) from a failure by Investor or its Affiliates to fund Capital Calls made pursuant to this Agreement, the Investor and its Permitted Transferee own a Pro Rata Share of 10% or more, or (ii) a Pro Rata Share of 10% if such reduction has resulted from a dilution pursuant to Section 4.02(f) from a failure by Investor or its Affiliates to fund Capital Calls made pursuant to this Agreement.
(c)    If, subsequent to the termination of the consent rights of the Investor and its Permitted Transferees pursuant to Section 6.04(b)(i) above, the Investor or such Permitted Transferees transfer its or their remaining Units in accordance with this Agreement to a Third Party and such transfer results in such Third Party owning 100% of the Membership Interests acquired by the Investor on the Effective Date, such Third Party shall have the consent rights of the Investor herein; provided, that Section 6.04(b) and Sections 6.07(b)(2), (c)(2) and (d)(2) shall thereafter apply to such Third Party as if such Sections referred to such Third Party instead of the Investor.
6.05    Limitations of Liability.
(a)    The Managing Member, in its capacity as the Managing Member, shall have no liability to the Company or to the other Members for any action taken or failure to act on behalf of the Company within the scope of the authority conferred on the Managing Member by this Agreement or otherwise by Law, unless the act or omission was performed

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or omitted fraudulently or in bad faith or constituted gross negligence or a breach of the Managing Member’s obligations under this Agreement or applicable Law. Neither the Managing Member nor its directors, shareholders, officers, employees or agents are liable, responsible for or in any way accountable (in damages or otherwise) to the Company or a Member for: (i) except as otherwise provided in this Section 6.05, any mistakes or errors in judgment, or any act or omission believed in good faith by the Managing Member to be within the scope of authority conferred by this Agreement or otherwise by Law; (ii) any action or inaction arising from good faith reliance upon the opinion or advice as to legal matters of legal counsel or as to accounting matters