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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017
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master services agreement (the “Merger MSA”) by and among TerraForm Power, Terra LLC, Terra Operating LLC, Brookfield and certain affiliates of Brookfield (collectively, the “MSA Providers”) pursuant to which the MSA Providers will provide certain management services to TerraForm Power and its subsidiaries commencing at the effective time of the Merger, (b) a revolving credit line agreement, substantially consistent with the term sheet as agreed between Orion Holdings and TerraForm Power as of the date of the Merger Agreement, (the “Sponsor Line Agreement”) by and among TerraForm Power and Brookfield or its affiliates pursuant to which Brookfield or its affiliates will commit up to a $500 million secured revolving credit line to TerraForm Power for use to acquire renewable energy assets or for profit improving capital expenditures, (c) a relationship agreement (the “Relationship Agreement”) by and among TerraForm Power, Terra LLC, Terra Operating LLC and Brookfield, pursuant to which, among other things, Brookfield agrees that the Company will serve as the primary vehicle through which Brookfield and certain of its affiliates will own operating wind and solar assets in North America and certain other Western European nations and that Brookfield will provide, subject to certain terms and conditions, TerraForm Power and its subsidiaries with a right of first offer on certain operating wind and solar assets that are owned by Brookfield and certain of its affiliates and are located in those countries (the “ROFO Pipeline”) and (d) a registration rights agreement (the “Registration Rights Agreement”) by and among TerraForm Power and Orion Holdings providing Orion Holdings with registration rights with respect to its shares in TerraForm Power after the Merger (together with the IDR Transfer Agreement (as defined below), Merger MSA, Sponsor Line Agreement, Relationship Agreement and Registration Rights Agreement, collectively, the “New Sponsorship Agreements” and individually, each a “New Sponsorship Agreement”). 

As consideration for the services provided or arranged for by Brookfield and its affiliates pursuant to the master services agreement, the Company will pay a base management fee on a quarterly basis that will be paid in arrears and calculated as follows:

for each of the first four quarters following the closing date of the Merger, a fixed component of $2.5 million per quarter (subject to proration for the quarter including the closing date of the Merger) plus 0.3125% of the market capitalization value increase for such quarter;
for each of the next four quarters, a fixed component of $3.0 million per quarter plus 0.3125% of the market capitalization value increase for such quarter; and
thereafter, a fixed component of $3.75 million per quarter plus 0.3125% of the market capitalization value increase for such quarter.

For purposes of calculating the quarterly payment of the base management fee, the term market capitalization value increase means, for any quarter, the increase in value of the Company’s market capitalization for such quarter, calculated by multiplying the number of outstanding shares of Class A common stock as of the last trading day of such quarter by the difference between (x) the volume-weighted average trading price of a share of Class A common stock for the trading days in such quarter and (y) $9.52. If the difference between (x) and (y) in the market capitalization value increase calculation for a quarter is a negative number, then the market capitalization value increase is deemed to be zero.

Affiliates of Brookfield will hold the IDRs of Terra LLC. At the closing of the Merger, the limited liability company agreement of Terra LLC will be amended and restated to, among other things, reset the IDR thresholds of Terra LLC to establish a first distribution threshold of $0.93 per share of Class A common stock and a second distribution threshold of $1.05 per share of Class A common stock. As a result of this amendment and restatement, amounts distributed from Terra LLC would be distributed on a quarterly basis as follows:

first, to the Company in an amount equal to the Company’s outlays and expenses for such quarter;
second, to holders of Class A units, until an amount has been distributed to such holders of Class A units that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Class A common stock of $0.93 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Class A common stock) if such amount were distributed to all holders of shares of Class A common stock;
third, 15% to the holders of the IDRs and 85% to the holders of Class A units until a further amount has been distributed to holders of Class A units in such quarter that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Class A common stock of an additional $0.12 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Class A common stock) if such amount were distributed to all holders of shares of Class A common stock; and
thereafter, 75% to holders of Class A units and 25% to holders of the IDRs.

The Merger Agreement also requires TerraForm Power to issue to Orion Holdings additional Class A shares in respect of any losses to TerraForm Power arising out of certain specified litigation matters upon the final resolution of such matters.


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