EQUITY CAPITAL CONTRIBUTION AGREEMENT

Exhibit 10.3

EXECUTION VERSION

 

EQUITY CAPITAL CONTRIBUTION AGREEMENT

BY AND AMONG

INTERMOUNTAIN RENEWABLE POWER, LLC,

THERMO NO. 1, BE-01, LLC

AND

MERRILL LYNCH L.P. HOLDINGS INC.

 

Dated as of

August 31, 2008

Equity Capital Contribution Agreement

TABLE OF CONTENTS

 

 

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LIST OF SCHEDULES

 

 

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EQUITY CAPITAL CONTRIBUTION AGREEMENT

This EQUITY CAPITAL CONTRIBUTION AGREEMENT (this “ Agreement ”), dated as of August 31, 2008 (the “ Effective Date ”), is made and entered into by and among Intermountain Renewable Power, LLC, a Delaware limited liability company (“ IRP ”), and Thermo No. 1 BE-01, LLC, a Delaware limited liability company (the “ Company ”), on the one hand, and Merrill Lynch L.P. Holdings Inc., a Delaware corporation (“ MLE ”), on the other hand.

RECITALS

WHEREAS , the Company was formed by filing its certificate of formation pursuant to the LLC Act on August 29, 2007; and

WHEREAS , immediately prior to the Effective Date, IRP owns all of the membership interests in the Company and Raser owns all of the membership interests in IRP; and

WHEREAS , the Company’s assets are comprised of: (a) all of the rights and interests in a proposed 10.35 megawatt net nameplate geothermal power plant and related systems designed to use 50 B280 gross PureCycle© geothermal power system turbines provided by UTC Power Corporation, and to be located in Beaver County, Utah, and (b) the other Assets (as defined below); and

WHEREAS , prior to the Effective Date, IRP has or will have contributed capital to the Company and caused the Company to finance development of the Facility; and

WHEREAS , on the Effective Date, IRP intends to cause the Company to issue additional membership interests in the Company to MLE; and

WHEREAS , the additional membership interests in the Company to be issued to MLE on the Effective Date shall be designated the Class A Interests, and the membership interest held by IRP on the Effective Date shall be designated the Class B Interests; and

WHEREAS , the Parties intend to provide for the issuance of the Class A Interests, and IRP and MLE intend to make their respective Capital Contributions to the Company, each as provided herein.

NOW, THEREFORE , in consideration of the foregoing premises and the mutual representations, warranties and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

DEFINED TERMS

Section 1.1 Defined Terms .

1.1.1 Capitalized terms not otherwise defined in this Agreement have the meanings given such terms in Schedule Z .

 

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1.1.2 The Parties hereto agree that Schedule Z attached hereto shall be deemed amended upon any amendment, modification, revisions or restatement thereof pursuant to any Schedule Z Document, whereupon Schedule Z shall be removed and replaced by such amended, modified, revised or restated form of Schedule Z without any further action required by the Parties hereto; provided , however , that no such amendment, modification, revisions or restatement thereof shall be effective as against any Party unless such Party has provided its prior written consent to such amendment, modification, revision or restatement, such consent not to be unreasonably withheld, conditioned or delayed.

Section 1.2 Interpretation .

1.2.1 The words “Equity Capital Contribution Agreement”, “this Agreement”, “herein”, “hereunder”, “hereof”, “hereby”, or other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision hereof.

1.2.2 Unless the context requires otherwise, in this Agreement (a) words singular or plural in number shall be deemed to include the other and pronouns having a masculine, feminine or neuter gender shall be deemed to include the other, (b) any reference to any Person shall include its permitted successors and assigns, (c) any reference to Governmental Authority shall include any Person succeeding to its functions and capacities, (d) any reference to any Article, Section, Exhibit or Schedule shall mean and refer to the Article or Section contained in or the Exhibit or Schedule attached to this Agreement, (e) Exhibits and Schedules attached hereto are part of this Agreement, (f) all the agreements, documents, exhibits, schedules and other instruments defined or referenced herein shall mean such agreements, documents, exhibits, schedules and other instruments as the same may from time to time be amended, revised, modified or supplemented or the terms and conditions thereof waived to the extent permitted by, and in accordance with the terms thereof and of the other Operative Documents, (g) the words “include” and “including” shall mean to include, without limitation, (h) all times are Eastern Standard Time or Eastern Daylight Time, as the case may be, and (i) all amounts to be paid hereunder are referenced in Dollars and are to be paid by wire transfer in immediately available funds.

ARTICLE II

INVESTMENT IN THE COMPANY

Section 2.1 Agreement to Invest . MLE will make a Capital Contribution to the Company on the Effective Date and commit to make an additional Capital Contribution on the Second Funding Date in the amounts described in Section 2.2.1 and Section 2.2.2 in exchange for the Class A Interests. IRP will make the Capital Contributions described in Section 2.2.3 in connection with its ownership of the Class B Interests.

Section 2.2 Capital Contributions .

2.2.1 On the Effective Date, notwithstanding anything else to the contrary, including a breach of any representations, warranties and covenants hereunder, MLE will contribute to the capital of the Company cash in an amount equal to 15 percent of its Capital Contribution Commitment.

 

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2.2.2 On the Second Funding Date, notwithstanding anything else to the contrary, including a breach of any representations, warranties and covenants hereunder, MLE will contribute to the capital of the Company cash in an amount equal to the remainder of its Capital Contribution Commitment.

2.2.3 No later than the Effective Date, IRP will have contributed the Facility, Facility Site, Leases, related Assets and all other rights related to any of the foregoing to the Company, to the extent such Property is not then owned by the Company. On the 10th day of each calendar month, commencing with the first full calendar month after the Effective Date and continuing until the last full calendar month prior to Final Completion, IRP will make Capital Contributions to the Company to fund any Drilling Shortfall then existing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

IRP represents and warrants to MLE that the following statements are true and correct as of the Effective Date and, except as otherwise provided below, as of the Second Funding Date, as follows:

Section 3.1 Organization; Powers . The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite limited liability company power and authority necessary to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

Section 3.2 Authority; Enforceability . The Equity Transactions and the issuance of the Class A Interests to MLE are within the Company’s limited liability company powers and have been duly authorized by all necessary limited liability company action and, if required, member action (including, without limitation, any action required to be taken by any class of members of the Company or any other Person, whether interested or disinterested, in order to ensure the due authorization of the Equity Transaction and the issuance of the Class A Interests). This Agreement and each other Operative Document to which the Company is a party has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, as applicable, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity and public policy, regardless of whether considered in a proceeding in equity or at law.

Section 3.3 Approvals; No Conflicts . The Equity Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including members, partners directors or stockholders, whether interested or disinterested, of the Company or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of this Agreement and each other Tax Equity Document or the consummation of the Equity Transactions, except (i) such as have been obtained or made and are in full force and effect, are not yet required to be obtained or could not reasonably be expected to have a Material Adverse Effect as to the Company, and (ii) the recording and filing of the Security Instruments as required to perfect the

 

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Collateral Agent’s Liens; (b) will not violate any Applicable Law or regulation or the Organizational Documents of the Company or any order of any Governmental Authority; (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Company or its Properties, or give rise to a right thereunder to require any payment to be made by the Company; and (d) will not result in the creation or imposition of any Lien on any Property of the Company (other than the Liens created by the Financing Documents).

Section 3.4 Financial Condition; No Material Adverse Effect .

3.4.1 The financial statements for the Company attached hereto as Schedule 3.4 (a) are in accordance with the books and records of the Company, which have been maintained in such manner as to permit the preparation of financial statements in accordance with GAAP; (b) have been prepared in conformity with GAAP, subject in the case of unaudited financial statements only to year-end adjustments and the absence of footnote disclosures; and (c) fairly present in all material respects the financial condition and results of operation of the Company as of the date thereof and for the period covered thereby.

3.4.2 The Company has no material obligations or liabilities that are not reflected in the financial statements that have been delivered to the Lenders.

Section 3.5 Litigation and other Governmental Proceedings . Except as set forth on Schedule 3.5 , there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the Knowledge of IRP, threatened against or affecting the Company (a) that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect as to the Company, or (b) that involve this Agreement, any Financing Document, any Project Document or the Transactions. To the Knowledge of IRP, there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending or threatened against or affecting any Project Party that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect as to the Company.

Section 3.6 Environmental Matters .

3.6.1 The Company and its Subsidiaries are in compliance with, and at all times have complied with, all Environmental Laws applicable to the operations associated with its business, each of its owned or leased real properties, and each of the Former Real Property.

3.6.2 The Company has obtained or has taken appropriate steps to obtain all EHS Permits, all EHS Permits are in good standing, and the Company and its Subsidiaries are currently and have at all times been in compliance with all terms and conditions of EHS Permits. No material change in the facts or circumstances reported or assumed in the applications for or the granting of the EHS Permits exists. There are no proceedings pending or, to the Knowledge of IRP, threatened in writing which would jeopardize the validity of any of the EHS Permits.

3.6.3 The Company is not subject to any pending investigation or, to the Knowledge of IRP, any investigation threatened in writing, or any judicial or administrative proceeding, notice, order, judgment, decree or settlement, alleging or addressing in connection with the Company’s operations, its business, its real property or Former Real Property (a) any

 

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violation of any Environmental Laws, (b) any Remedial Work, (c) any liabilities and costs arising from a Release or threatened Release at its real property, Former Real Property or any other location, or (d) any liabilities and costs for personal injury or threatened personal injury related to exposure to Hazardous Materials, or injury or threatened injury to property or natural resources related to the Release or disposal of Hazardous Materials.

3.6.4 None of the Company, any of its Subsidiaries or, to the Knowledge of IRP, any other Person has ever caused or allowed any Hazardous Material to be constructed, deposited, Released, stored, or disposed onto or underneath any real property owned by the Company or Former Real Property in violation of any applicable Environmental Laws or in a manner that could give rise to any remedial or corrective action pursuant to applicable Environmental Laws.

Section 3.7 Compliance with Laws and Agreements; Permits; No Credit Agreement Defaults .

3.7.1 The Company is in compliance in all material respects with all Applicable Law applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business other than where non-compliance or non-possession could not reasonably be expected to have a Material Adverse Effect as to the Company.

3.7.2 There are no permits under existing law as the Facility is currently designed that are or will become Governmental Approvals other than the permits described in Schedule 3.7 . Each permit described in Schedule 3.7 is either: (a) in full force and effect and is not subject to any appeals or further proceedings or to any unsatisfied condition that may allow material modification or revocation, in the case of those permits listed in Part I of Schedule 3.7 ; or (b) of a type that is routinely granted on application and that would not normally be obtained before the commencement of a construction or reconstruction in the case of those permits listed in Part II of Schedule 3.7 . The Company has no reason to believe that any material permit so indicated on Part II of Schedule 3.7 will not be obtained before or at the time it becomes a Governmental Approval.

3.7.3 Each of the Project Parties possesses all licenses, permits, franchise, patents, copyrights, trademarks and trade names, or rights thereto necessary to perform its duties under the Project Documents to which it is a party and such Project Party is not in violation of any valid rights of others with respect to any of the foregoing; provided that this representation shall be to the Knowledge of IRP for all Project Parties other than the Company and the Raser Entities.

3.7.4 The Company is not in default nor has any event or circumstance occurred which, but for the expiration of any applicable grace period or the giving of notice, or both, would constitute a default or would require the Company to Redeem or make any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness is outstanding or by which the Company or any of its Properties is bound, except where, in each case, such default or event or circumstance, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect as to the Company.

 

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3.7.5 No Credit Agreement Default or Credit Agreement Event of Default has occurred and is continuing.

Section 3.8 Tax Matters .

3.8.1 The Company has been treated since its formation either as a partnership or a disregarded entity for federal income tax purposes, and no elections have been filed with the IRS to treat the Company as a corporation.

3.8.2 The Company has timely, completely and accurately filed all material Tax Returns required to be filed by or with respect to it with the appropriate taxing authorities, the Company has paid or withheld all material taxes as required. The Company is not currently the beneficiary of any extension of time within which to file any Tax Returns, or the assessment or collection of any tax. No Company Tax Returns have been audited or examined by any taxing authority. There are no ongoing or pending or, to the Knowledge of IRP, threatened, audits, examinations, claims, or assessments against the Company and no proposed assessments in respect of Taxes. The Company has not waived or agreed to any extension of any statute of limitations for any Taxes.

3.8.3 No taxing authority in a jurisdiction where the Company does not file a Tax Return has made a claim or assertion or, to the Knowledge of IRP, threatened, that the Company is or may be subject to Taxes in such jurisdiction.

3.8.4 No private letter rulings have been requested with respect to the Company or the Facility.

3.8.5 Raser, IRP and the Company have not benefited in connection with the Facility from any government grant, tax-exempt financing, subsidized energy financing or other federal tax credits within the meaning of Section 45(b)(3) of the Code.

3.8.6 None of the assets of the Company is tax-exempt use property within the meaning of Section 168(h) of the Code (assuming that MLE is not a tax-exempt entity within the meaning of Section 168(h)(6) of the Code).

3.8.7 No sales and use taxes are owed in connection with construction of the Facility and its transfer from UTC or the Contractor to the Company.

Section 3.9 ERISA . The Company does not have and does not employ any employees and has no plans to hire or employ any employees. The Company has not and does not maintain any Plan.

Section 3.10 Disclosure; No Material Misstatements . The Company has disclosed to MLE all agreements, instruments and corporate or other restrictions to which it is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect as to the Company. None of the other reports, financial statements, certificates or other information furnished (other than financial projections and estimates) by or on behalf of the Company to MLE or any of its Affiliates hereunder or under any other Financing Document (as modified or supplemented by other information so furnished) taken as a

 

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whole contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading.

Section 3.11 Insurance . The Company has all insurance policies required under the Credit Agreement , or (if the Credit Agreement has been terminated) as required under the LLC Operating Agreement.

Section 3.12 Equity Interests . Set forth on Schedule 3.12 is a complete and accurate description of the authorized Equity Interests of the Company, by class, and, a description of the number of shares, interests, units or other Equity Interests of each such class that are issued and outstanding and the record owner or holder thereof immediately prior to the issuance of the Class A Interests to MLE. Such Equity Interests held by Raser or any of its Affiliates are not subject to any Liens other than the Liens granted pursuant to the Financing Documents or as provided in the Tax Equity Documents. Other than as described on Schedule 3.12 , there are no subscriptions, options, warrants, or calls granted by the Company relating to any shares of any such Person’s Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument. Except as otherwise set forth on Schedule 3.12 , the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Equity Interests or any security convertible into or exchangeable for any of its Equity Interests. All of the outstanding Equity Interests of the Company have been validly issued and are fully paid and non-assessable. The Company has no Subsidiaries.

Section 3.13 Properties; Title, etc .

3.13.1 The Company has good, marketable and indefeasible title to the Facility and all its Properties, in each case, free and clear of all Liens except Permitted Liens.

3.13.2 All Leases are valid and subsisting, in full force and effect, and, to the Knowledge of IRP, no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases exists.

3.13.3 The rights and Properties presently owned, leased or licensed by the Company including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Company to conduct its business in all material respects in the same manner as its business has been conducted prior to the Effective Date and as contemplated to be conducted.

3.13.4 The Company owns, is licensed or otherwise has the right to use, all trademarks, tradenames, copyrights, patents and other Intellectual Property material to its business, and the use thereof by the Company does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect as to the Company. The Company either owns or has valid licenses or other rights to use all technical information used in its businesses as presently conducted, subject to the limitations contained in the agreements

 

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governing the use of the same, which limitations are customary for companies engaged in the business similar to that of the Company.

Section 3.14 Maintenance of Properties . As of the Effective Date: (a) the Properties of the Company have been maintained, operated and developed in a good and workmanlike manner and in conformity with all Applicable Laws in all material respects and in conformity with the provisions of all contracts related to such Properties in all material respects; and (b) all Property owned in whole or in part by the Company that is necessary to conduct normal operations of the Company is being maintained in a state adequate to conduct such normal operations.

Section 3.15 Access to Utilities, Roads, etc . All utility services necessary for the construction and the operation of the Facility for its intended purposes are or, prior to Final Completion, will be available at the Facility Site. All roads necessary for the construction and full utilization of the Facility for its intended purpose under the Project Documents have either been completed or the necessary rights of way therefor have been acquired. All necessary easements, rights of way, agreements and other rights for the construction, interconnection and utilization of the interconnection lines have been acquired.

Section 3.16 Project Documents, Operative Documents . The Company has delivered true, correct and complete copies of all Project Documents to the Administrative Agent. To the Knowledge of IRP, the representations and warranties of the other Project Parties contained in the Project Documents were true, correct and complete when made. Other than those that can be reasonably expected to be commercially available when and as required, the services to be performed, the materials to be supplied and the real property interests, and other rights granted pursuant to the Project Documents (a) comprise all of the property interests necessary to secure any right material to the acquisition, leasing, development, construction, installation, completion, operation and maintenance of the Facility in accordance with all Applicable Law, all without reference to any propriety information not owned by the Company or available to the Company under the Project Documents, (b) are sufficient to enable the Facility to be located, constructed and operated on the Facility Site, and (c) provide adequate ingress and egress for any reasonable purpose in connection with the construction and operation of the Facility under the Project Documents. There are no material services, materials or rights required for the construction or operation of the Facility other than those held by the Company or available under the Project Documents. Each Operative Document is in full force and effect, and the Company is not in default under any material term of any of the Operative Documents. No default or event, which would, by passage of time or notice or both, become an event of default under a Operative Document has occurred and, to the Knowledge of IRP, no Material Project Party is in default under any material term of any Operative Document and no default or event which would, by the passage of time or notice or both, become an event of default by a Material Project Party under a Operative Document has occurred. To the Knowledge of IRP, no event, act, circumstance or condition exists which constitutes, or, with the passage of time would constitute, an event of force majeure under any Operative Document.

Section 3.17 Regulatory Matters . The Company is not a “holding company” or a “subsidiary company” of a “holding company,” or a “public-utility company,” within the meaning of the PUHCA and is not subject to accounting or cost-allocation regulation under the PUHCA. The Company is not a “public utility” under the FPA and is not subject to regulation by the FERC

 

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thereunder. The Company does not own, manage, operate or control any physical or other facilities for the production, transmission, distribution or sale of electricity in interstate commerce, or of natural gas. The Company is not subject to regulation by the United States Surface Transportation Board. The Interconnection Agreement is in effect, is valid, is enforceable by the Company, and provides for the interconnection of the Facility’s entire electrical generating capacity and delivery of the Facility’s entire net electrical output to the interconnection point for the entire term of the Interconnection Agreement. MLE shall not become subject to regulation by the FERC under either the FPA or the PUHCA, solely as a result of the execution, delivery and performance of the Tax Equity Documents, to which MLE is party, or the consummation of the Transactions, as contemplated thereby.

Section 3.18 Qualifying Facility . The Facility is a duly certified Qualifying Facility, and the Facility’s status as such has been finally determined in accordance with all applicable regulations and is not subject to any actual or threatened challenge.

Section 3.19 REC Qualification . The Facility has been precertified by the California Energy Commission as eligible for the California renewable portfolio standard, which precertification has not been withdrawn.

Section 3.20 Funding under the Financing Documents . All conditions to funding under the Financing Documents to be satisfied to date have been satisfied and all amounts contemplated by the Equity Base Case Model to be advanced under the Financing Documents to date have been funded to the Company in accordance with the terms of the Financing Documents.

Section 3.21 No Condemnation . Neither IRP nor the Company has received notice of condemnation of the Facility or the Facility Site and no condemnation is pending or, to the Knowledge of IRP, threatened with respect to the Facility or the Facility Site, or any portion thereof material to the ownership or operation and maintenance of the Facility and the sale of power therefrom.

Section 3.22 No Unitization Agreement . The Leases are not subject to a unitization agreement that makes calculation of royalties not only a function of output from the SITLA and Minersville tracts, but also from other properties.

Section 3.23 Intangible Drilling Costs . All intangible drilling and development costs incurred by Raser, IRP or the Company before the Effective Date have been or will be expensed by Raser for federal income tax purposes. None of Raser, IRP or the Company has elected or will elect to capitalize or amortize any such costs for such tax purposes.

Section 3.24 No Other Representations . The Company acknowledges that it is not relying on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations or warranties expressly set out in this Agreement, the LLC Operating Agreement , the other Tax Equity Documents and any certification delivered in connection with any of the foregoing.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF IRP

IRP represents and warrants to MLE that the following statements are true and correct as of the Effective Date and, except as otherwise provided below, as of the Second Funding Date, as follows:

Section 4.1 Organization; Powers . IRP is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to carry on its business as such business is now conducted, and as proposed to be conducted.

Section 4.2 Authority; Enforceability . IRP has full power and authority to execute and deliver each Tax Equity Document to which it is a party and to consummate the Equity Transactions. The execution and delivery by IRP of the Tax Equity Documents to which it is a party and the consummation by IRP of the Equity Transaction have been duly authorized by all necessary limited liability company action required on its part. This Agreement and each other Tax Equity Document to which IRP is a party has been duly executed and delivered by it. This Agreement and each other Tax Equity Document to which IRP is a party constitutes the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such terms may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’ rights generally, or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

Section 4.3 No Violation . The execution, delivery and performance by IRP of this Agreement and each other Tax Equity Document to which it is a party and the consummation of the Equity Transaction do not and will not (a) violate or conflict with any provision of its governance documents, (b) violate or require any filing or notice under any provision or requirement of any federal, state or local law, statute, judgment, order, writ, injunction, decree, award, rule, or regulation of any Governmental Authority applicable to it, (c) violate, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty, premium or right of termination to arise or accrue under, any agreement or instruments to which it is a party or by which any of its assets are bound, or (d) result in the creation or imposition of any Lien, in each case, which violation, breach, default or Lien would materially adversely affect its ability to perform its obligations under this Tax Equity Documents to which it is a party.

Section 4.4 Litigation . There are no claims, actions, suits, investigations or proceedings (including any arbitration proceeding) of any nature, at law or in equity, pending or, to the Knowledge of IRP, threatened by or against it or its directors, officers, employees, agents, or any of its Affiliates which would materially adversely affect its ability to execute, deliver and perform each Tax Equity Document to which it is a party and consummate the Equity Transactions.

Section 4.5 No Consents or Approvals . There is no requirement applicable to IRP to make any filing with, or to obtain the consent or approval of any Person as a condition to the execution, delivery and performance of this Agreement and each other Tax Equity Document to

 

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which it is a party or the consummation of the Equity Transactions that has not already been obtained.

Section 4.6 Tax Matters .

4.6.1 IRP is wholly-owned by Raser and is a disregarded entity for federal income tax purposes.

4.6.2 IRP is an Unrelated Person.

4.6.3 Raser is a “United States person” (as defined in Section 7701(a)(30) of the Code) not subject to withholding under Section 1446 of the Code.

Section 4.7 Investment Intent: Restricted Securities .

4.7.1 IRP is acquiring its Class B Interest for investment for its own account and not as a nominee or agent. IRP understands that the Class B Interests have not been, and will not be, registered under the Securities Act and is being acquired in a transaction not involving a public offering by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of IRP’s investment intent and the accuracy of IRP’s representations as expressed herein.

4.7.2 IRP understands that no public market now exists for the Class B Interest or any of the securities of the Company and that the Company has not made any assurances that a public market will ever exist for the Class B Interest or the Company’s securities.

Section 4.8 No Brokers . Neither IRP, nor any of its Affiliates, has retained any broker, agent or finder or incurred any liability or obligation for any brokerage fees, commissions or finder fees with respect to this Agreement or the Equity Transactions.

Section 4.9 No Other Representations . IRP acknowledges that it is not relying on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations or warranties expressly set out in this Agreement, the LLC Operating Agreement , the other Tax Equity Documents and any certification delivered in connection with any of the foregoing.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF MLE

MLE represents and warrants to the Company and IRP that the following statements are true and correct as of the Effective Date and, except as otherwise provided below, as of the Second Funding Date, as follows:

Section 5.1 Organization; Powers . MLE is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to carry on its business as such business is now conducted, and as proposed to be conducted.

 

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Section 5.2 Authority; Enforceability . MLE has full power and authority to execute and deliver each Tax Equity Document to which it is a party and to consummate the Equity Transactions. The execution and delivery by MLE of the Tax Equity Documents to which it is a party and the consummation by MLE of the Equity Transactions have been duly authorized by all necessary action required on the part of MLE. This Agreement and each other Tax Equity Document to which MLE is a party has been duly executed and delivered by MLE. This Agreement and each other Tax Equity Document to which MLE is a party constitutes the valid and binding obligation of MLE, enforceable against MLE in accordance with its terms except as such terms may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’ rights generally, or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

Section 5.3 No Violation . The execution, delivery and performance by MLE of this Agreement and each other Tax Equity Document to which it is a party and the consummation of the Equity Transactions do not and will not (a) violate or conflict with any provision of the governance documents of MLE, (b) violate or require any filing or notice under any provision or requirement of any federal, state or local law, statute, judgment, order, writ, injunction, decree, award, rule, or regulation of any Governmental Authority applicable to MLE (it being understood that no representation is made as to the PURPA, the FPA, the PUHCA or any rules or regulations of FERC except as set forth in Section 3.17 hereof), (c) violate, result in a breach of, constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty, premium or right of termination to arise or accrue under, any agreement or instruments to which it is a party or by which any of its assets are bound, or (d) result in the creation or imposition of any Lien, in each case, which violation, breach, default or Lien would materially adversely affect its ability to perform its obligations under the Tax Equity Documents to which it is a party.

Section 5.4 Litigation . There are no claims, actions, suits, investigations or proceedings (including any arbitration proceeding) of any nature, at law or in equity, pending or, to the knowledge of MLE, threatened by or against MLE, the directors, officers, employees, agents of MLE, or any of its Affiliates which would materially adversely affect MLE’s ability to execute, deliver and perform each Tax Equity Document to which it is a party and consummate the Equity Transactions.

Section 5.5 No Consents or Approvals . There is no requirement applicable to MLE to make any filing with, or to obtain the consent or approval of any Person as a condition to the execution, delivery and performance of the Agreement and each other Tax Equity Document to which it is a party or the consummation of the Equity Transactions that has not yet been obtained.

Section 5.6 Investment Intent: Restricted Securities .

5.6.1 MLE is acquiring the Class A Interests for investment for its own account and not as a nominee or agent. MLE understands that the Class A Interests have not been, and will not be, registered under the Securities Act and is being acquired in a transaction not involving a public offering by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide

 

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nature of MLE’s investment intent and the accuracy of MLE’s representations as expressed herein.

5.6.2 MLE understands that no public market now exists for the Class A Interest or any of the securities of the Company and that neither the Company nor IRP has made any assurances that a public market will ever exist for the Class A Interest or the Company’s securities.

Section 5.7 Accredited Investor . MLE is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act, and is able to bear the economic risk of losing its entire investment in the Company.

Section 5.8 Brokers . Neither MLE nor any of its Affiliates has retained any broker, agent or finder or incurred any liability or obligation for any brokerage fees, commissions or finder fees with respect to this Agreement or the Equity Transactions.

Section 5.9 Tax Matters .

5.9.1 MLE is an Unrelated Person.

5.9.2 MLE is a “United States person” (as defined in Section 7701(a)(30) of the Code) not subject to withholding under Section 1446 of the Code.

Section 5.10 No Other Representations . MLE acknowledges that it is not relying on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations or warranties expressly set out in this Agreement, the LLC Operating Agreement , the other Tax Equity Documents and any certification delivered in connection with any of the foregoing.

ARTICLE VI

CERTAIN COVENANTS

Section 6.1 Further Assurances . Each of the Parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate, as promptly as practicable, the Equity Transactions, including obtaining all necessary consents, waivers, authorizations, orders and approvals of Third Parties, whether private or governmental, required of it.

Section 6.2 Transfer Taxes . All transfer, documentary, sales, use, real property transfer, recording, gains, registration and other similar taxes and fees (“ Transfer Taxes ”) incurred in connection with the issuance of the Class A Interests pursuant to this Agreement shall be borne by the Company, whether imposed on MLE or the Company, and the Company, at its own expense, shall file (to the extent required or permitted by applicable law) all necessary Tax Returns and other documentation with respect to all such Transfer Taxes.

Section 6.3 Drilling Plan and Budget . On the Effective Date and, thereafter, on the fifth day of each calendar month, commencing with the first full calendar month occurring after the Effective Date and continuing until the last full calendar month prior to the Final Completion

 

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Date, IRP shall deliver to MLE a Drilling Plan and Budget, as prepared, amended and updated by IRP each calendar month, in the form of Exhibit A . The Drilling Plan and Budget shall discuss updates to the current plan, as amended and updated from time to time, for geothermal resource drilling to achieve Final Completion at the Target Capacity Rating in accordance with the EPC Agreement and the aggregate budget related thereto necessary to achieve Final Completion at the Target Capacity Rating.

Section 6.4 Drilling Escrow Certificate . On the Effective Date and, thereafter, on the fifth day of each calendar month, commencing with the first full calendar month occurring after the Effective Date and continuing until the last full calendar month prior to the Final Completion Date, IRP shall instruct the Geothermal Engineer to deliver to MLE a Drilling Escrow Certificate in the form of Exhibit B .

Section 6.5 Placed in Service Certificate . Promptly after the Facility is placed in service for federal income tax purposes, IRP will deliver to MLE a certificate containing representations as to facts supporting a determination regarding placed in service, such certificate to be substantially in the form attached as Exhibit C .

ARTICLE VII

AGREEMENT TO DELIVER DOCUMENTS

Section 7.1 Company Deliverables . The Company shall deliver to each other Party hereto the following items on or before the Effective Date:

7.1.1 a secretary’s certificate duly authorized by the secretary or other authorized officer of the Company certifying the (i) resolutions or other corporate authorization relating to the execution and delivery of this Agreement and the other Transaction Documents to which it is a Party and the consummation of the transactions contemplated hereby and thereby and, in each case, such resolutions or other corporate authorization shall be in full force and effect and not revoked as of the Effective Date, and (ii) Organizational Documents of the Company;

7.1.2 a good standing certificate (or its equivalent) for the Company issued by the secretary of state of the jurisdiction of organization of the Company;

7.1.3 true, correct and complete copies of each of the Transaction Documents to which the Company is a Party, including all attachments thereto, other than the Tax Equity Documents;

7.1.4 duly executed counterparts of this Agreement and all Tax Equity Documents to which it is a party, including all attachments thereto;

7.1.5 copies of the Reports then available or otherwise required to be produced and delivered pursuant to any Transaction Document;

7.1.6 legal opinions of counsel to the Company with respect to customary matters in form and substance acceptable to MLE;

 

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7.1.7 unaudited financial statements of the Company for the most recent year reviewed by the Accounting Firm, unaudited financial statements of the Company for the most recent quarter and the current unaudited balance sheet of the Company; and

7.1.8 true, correct and complete copies of all insurance certificates from the insurance broker with respect to the insurance policies relating to the Facility that are described in Schedule 8.9 of the LLC Operating Agreement as construction period insurance which insurance is required to be in place on the Effective Date, or such other evidence reasonably satisfactory to MLE in consultation with the Insurance Consultant that such insurance policies are in full force and effect as of the Effective Date and include the terms and conditions set forth in such Schedule 8.9.

Section 7.2 IRP Deliverables . IRP shall deliver to each other Party hereto the following items on or before the Effective Date:

7.2.1 a secretary’s certificate duly authorized by the secretary or other authorized officer of IRP certifying the (i) resolutions or other corporate authorization relating to the execution and delivery of this Agreement and the other Transaction Documents to which it is a Party and the consummation of the transactions contemplated hereby and thereby and, in each case, such resolutions or other corporate authorization shall be in full force and effect and not revoked as of the Effective Date, and (ii) Organizational Documents of IRP;

7.2.2 a good standing certificate (or its equivalent) for IRP issued by the secretary of state of the jurisdiction of organization of IRP;

7.2.3 true, correct and complete copies of each of the Transaction Documents to which it is a Party, including all attachments thereto, other than the Tax Equity Documents;

7.2.4 duly executed counterparts of this Agreement and all Tax Equity Documents to which it is a party, including all attachments thereto;

7.2.5 legal opinions of counsel to IRP with respect to customary matters in form and substance acceptable to MLE;

7.2.6 unaudited financial statements of IRP for the most recent year reviewed by the Accounting Firm, unaudited financial statements of IRP for the most recent quarter and the current unaudited balance sheet of IRP; and

7.2.7 the Raser Guaranty.

Section 7.3 MLE Deliverables . MLE shall deliver to each other Party hereto the following items on or before the Effective Date:

7.3.1 a secretary’s certificate duly authorized by the secretary or other authorized officer of MLE certifying the (i) resolutions or other corporate authorization relating to the execution and delivery of this Agreement and the other Transaction Documents to which it is a Party and the consummation of the transactions contemplated hereby and thereby and, in

 

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each case, such resolutions or other corporate authorization shall be in full force and effect and not revoked as of the Effective Date, and (ii) Organizational Documents of MLE;

7.3.2 a good standing certificate (or its equivalent) for MLE issued by the secretary of state of the jurisdiction of organization of the MLE;

7.3.3 true, correct and complete copies of each of the Transaction Documents to which MLE is a Party, including all attachments thereto, other than the Tax Equity Documents;

7.3.4 duly executed counterparts of this Agreement and all Tax Equity Documents to which it is a party, including all attachments thereto; and

7.3.5 legal opinions of counsel to MLE with respect to customary matters in form and substance acceptable to IRP.

ARTICLE VIII

SECOND FUNDING DATE

Section 8.1 MLE Consents; Opinions in Favor of Lenders . MLE shall upon the request of the Company deliver to the Administrative Agent or Collateral Agent, as applicable, (i) the Class A Consent, (ii) the Class A Investor Pledge Agreement, and (iii) legal opinions of MLE’s counsel in form and substance required under the Financing Documents.

Section 8.2 MLE Rights Pending Second Funding Date .

8.2.1 Prior to the Second Funding Date, IRP shall not, shall cause the Company not to, and the Company shall not, materially amend, supplement or modify any of the Operative Documents or enter into any Operative Document or any additional Operative Document not in effect on the date of this Agreement without the prior written consent of MLE, which consent shall not be unreasonably withheld.

8.2.2 If, prior to the Second Funding Date, a Material Adverse Effect shall have occurred with respect to the Company or IRP, any change in Applicable Law or proposed change in Applicable Law occurs, IRP shall promptly notify MLE thereof and shall, upon request and without limiting any other remedy available to MLE, timely participate in discussions with MLE concerning such matters and any proposed resolution thereof. No later than five Business Days, prior to the Second Funding Date, IRP shall, and shall cause the Company to, provide to MLE copies of all of the consultants’ bring-downs, updates or supplements to any of the Reports that are received by IRP or any Affiliate that were not previously provided to MLE directly from the applicable consultant. The Company shall, and IRP shall cause the Company to, deliver fully signed copies of each of the certificates required to be delivered to achieve Facility Substantial Completion and Final Completion in accordance with the EPC Agreement to MLE upon receipt of the same.

8.2.3 Prior to the Second Funding Date, MLE and its representatives shall have the right, upon reasonable notice, and at all reasonable times during usual business hours to have reasonable access to the Facility and the Facility Site during the development and construction of

 

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the Facility, regardless of stage of construction, to inspect the properties of the Company and to audit, examine and make copies of the books of account and other records of the Company, including for the purpose of determining compliance with Environmental Laws.

8.2.4 Prior to the Second Funding Date, the Company shall promptly furnish to MLE all material documents and information that it acquires in connection with the Facility. The Company shall, upon request of MLE, promptly furnish to MLE and its representatives such other reports and information in connection with the affairs, business, financial condition, operations, prospects or management of the Company or the Facility as MLE may reasonably request from time to time, all in reasonable detail.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnification by IRP . Subject to the terms and conditions of this Article IX , IRP shall indemnify, defend, reimburse and hold harmless MLE and its Affiliates, and their respective officers, directors, employees, attorneys, contractors and agents (collectively, the “ MLE Indemnified Parties ”), from and against any and all claims, actions, causes of action, demands, assessments, losses, damages, liabilities, judgments, settlements, taxes, penalties, costs, and expenses (including reasonable attorneys’ fees and expenses, including such fees and expenses at trial and on any appeal), of any nature whatsoever (collectively, “ MLE Indemnified Costs ”), asserted against, resulting to, imposed upon, or incurred by any or all of the MLE Indemnified Parties, directly or indirectly, by reason of or resulting from or in connection with the breach by IRP (whether by IRP in the capacity of a Class B Investor, Managing Member, or Tax Matters Member, or otherwise) of the IRP representations (including Exhibit C ), warranties, covenants, obligations or other agreements contained in this Agreement and the LLC Operating Agreement (collectively, “ Indemnified Claims ”).

Section 9.2 Direct Claims . In any case in which an MLE Indemnified Party seeks indemnification under Section 9.1 and that is not subject to Section 9.3 because no Third Party Claim is involved, the MLE Indemnified Party shall notify IRP in writing of the amount of MLE Indemnified Costs the MLE Indemnified Party claims are subject to indemnification under the terms of this Article IX . The failure of the MLE Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim, except as provided in Section 9.8 and except to the extent the resulting delay materially and adversely prejudices the position of IRP with respect to such claim.

Section 9.3 Third Party Claims .

9.3.1 Notice of Claim . Within 15 days after obtaining actual knowledge of a Third Party Claim in respect of which an MLE Indemnified Party may seek indemnification under Section 9.1 , such MLE Indemnified Party shall give written notice of the claim to IRP (“ Indemnification Notice ”). The Indemnification Notice shall state, to the extent known, the nature, basis, and status of the Third Party Claim and the amount of MLE Indemnified Costs claimed. Any failure to deliver an Indemnification Notice to IRP with respect to a Third Party Claim shall not relieve IRP from any liability that IRP may have to the MLE Indemnified Party under this Article IX , except as provided in Section 9.8 and except to the extent the failure to

 

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give timely notice results in an increase in the amount of MLE Indemnified Costs included in the Indemnified Claim, and IRP shall not be liable for any such increase.

9.3.2 Defense by IRP . IRP shall be entitled to participate in and, subject to Section 9.3.3 , to assume the defense of, any Third Party Claim for which an MLE Indemnified Party intends to seek indemnification, with counsel selected by IRP and reasonably satisfactory to the MLE Indemnified Party; provided , however , that such claim shall be investigated and defended, and such counsel shall be retained, at IRP’s sole expense and, provided further , the MLE Indemnified Party shall continue to be entitled to participate in such defense with counsel of its choice at its sole cost and expense unless otherwise specified in this Agreement. Prior to assuming the defense of any Third Party Claim, IRP shall give the MLE Indemnified Party written notice of its election to defend or settle a Third Party Claim (“ Defense Election ”) within 15 days of receiving an Indemnification Notice with respect to such claim. The MLE Indemnified Party shall cooperate to the extent commercially reasonable with IRP in connection with any defense or negotiation of any such action or claim by IRP. IRP shall keep the MLE Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.

9.3.3 Defense by MLE Indemnified Party . Notwithstanding the foregoing, in the event that (i) IRP advises an MLE Indemnified Party that IRP will not contest a claim for indemnification hereunder, or (ii) IRP fails to notify the MLE Indemnified Party of its election to defend a Third Party Claim within 15 days of receipt of an Indemnification Notice to notify, in writing, such MLE Indemnified Party of its election, to defend, settle or compromise, at its sole cost and expense, any such Third Party Claim (or discontinues its defense at any time after it commences such defense), then the MLE Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such Third Party Claim in each case, and all costs and expenses thereof shall constitute Indemnified Claims hereunder. In any event, unless and until IRP delivers a Defense Election to MLE Indemnified Party, IRP shall be liable for the MLE Indemnified Party’s reasonable costs and expenses arising out of the defense, settlement or compromise of any Third Party Claim subject to indemnification hereunder. If IRP does not assume such defense, the MLE Indemnified Party shall keep IRP apprised at all times as to the status of the defense; provided , however , that the failure to keep the MLE Indemnifying Party so informed shall not affect the obligations of IRP hereunder.

9.3.4 No Settlement Without Consent . IRP shall not be liable for any settlement of any action, claim or proceeding effected without its written consent; provided , however , that IRP shall not unreasonably withhold, delay or condition any such consent. Notwithstanding anything in this Section 9.3 to the contrary, IRP shall not, without the MLE Indemnified Party’s prior written consent, settle or compromise any claim or consent to entry of judgment in respect thereof which involves any condition other than payment of money by the MLE Indemnified Party, or that does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the MLE Indemnified Party, a full and complete release from all liability in respect of such claim.

Section 9.4 Indemnification Payments . Any dispute between the Parties about Indemnified Claims made under this Article IX will be resolved by resort to the mechanism in Section 11.11 of the LLC Operating Agreement . Payments for Indemnified Claims shall be made within 10

 

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Business Days after IRP receives notice of the claim or, if later, after resolution of any dispute about the claim under Section 11.11 of the LLC Operating Agreement , in the case of direct claims under Section 9.2 , and promptly after the amount of the claim is (i) finally determined by a court of competent jurisdiction, (ii) agreed upon in a settlement agreement or other compromise with the claimant, or (iii) agreed upon by IRP and the MLE Indemnified Parties, in the case of Third Party Claims under Section 9.3 . All payments made pursuant to this Section 9.4 shall be paid by IRP in immediately available funds in U.S. dollars.

Section 9.5 Tax Disputes . Nothing in this Article IX shall permit IRP to control or participate in any Tax contest or dispute involving MLE or any Affiliate of MLE, or permit MLE to control or participate in any Tax contest or dispute involving IRP or any Affiliate of IRP other than the Company. The Parties agree that the handling of any Tax contests involving the Company will be governed by Section 7.10 of the LLC Operating Agreement .

Section 9.6 After Tax Basis . For tax reporting purposes, to the maximum extent permitted by the Code, each Party will agree to treat all amounts paid under any of the provisions of this Article IX as an adjustment to the Capital Contribution made in exchange for the Class A Interests (or otherwise as a non taxable reimbursement, contribution or return of capital, as the case may be). To the extent any such indemnification payment is includable as income of an MLE Indemnified Party as determined by agreement of the Parties, or if there is no agreement, by an opinion of a nationally-recognized tax counsel selected jointly by the Parties that such amount is “more likely than not” includable as income of the recipient, the amount of the payment shall be increased by the amount of any United States federal income tax required to be paid by the MLE Indemnified Party or its Affiliates on the receipt or accrual of the indemnification payment, including, for this purpose, the amount of any such Tax required to be paid by the MLE Indemnified Party on the receipt or accrual of the additional amount required to be added to such payment pursuant to this Section 9.6 , assuming full taxability, using the same assumptions about taxability and tax rates as relating to the calculation of Internal Rate of Return in the LLC Operating Agreement. If an opinion is delivered in accordance with the foregoing sentence, the MLE Indemnified Party shall report the relevant indemnification payments as income consistent with such opinion and otherwise act in a manner consistent with such opinion. Any payment made under this Article IX shall be reduced by the present value (as determined on the basis of a discount rate equal to the Target IRR and the same assumptions about taxability and tax rates) of any United States federal income tax benefit to be realized by the MLE Indemnified Party or its Affiliates by reason of the facts and circumstances giving rise to such indemnification.

Section 9.7 Survival . All representations, warranties, covenants and obligations made or undertaken by a Party in this Agreement or the LLC Operating Agreement are material, have been relied upon by the other Parties and shall survive until the final date for any assertion of claims in Section 9.8 .

Section 9.8 Final Date for Assertion of Indemnity Claims . All representations and warranties of IRP in Article III and Article IV and in connection with any certificate given under Section 6.6 shall survive for a period of nine months following the applicable date when made, provided that, notwithstanding the foregoing, (a) the representations and warranties in Section 3.8 (Tax Matters) shall survive until that date which is 90 days after the applicable statute of limitations

 

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expires (taking into account any waivers or extensions thereof), (b) the representations and warranties in Section 3.1 (Organization; Powers), Section 3.2 (Authority; Enforceability), Section 3.3 (Approvals; No Conflicts), Section 3.12 (Equity Interests), Section 4.1 (Organization; Powers), Section 4.2 (Authority; Enforceability) and Section 4.3 (No Violation) shall survive forever; and (c) the representations and warranties in Section 3.6 (Environmental Matters) shall survive for a period of two years after the applicable date when made; provided , further that if written notice of a claim for indemnification has been given by an MLE Indemnified Party on or prior to the last day of the respective foregoing period, then the obligation of IRP to indemnify such MLE Indemnified Party pursuant to this Article IX shall survive with respect to such claim until such claim is finally resolved. The covenants in Article VI will survive without any time limit. Notwithstanding anything in Section 9.7 or 9.8 , any claim against IRP for gross negligence, bad faith, fraud or willful misconduct shall not be subject to any time limitations.

Section 9.9 Limitations on Liability . Notwithstanding anything to the contrary contained in this Agreement:

9.9.1 Net of Insurance Benefits . The amount of MLE Indemnified Costs IRP is required to pay to indemnify any MLE Indemnified Party with respect to any Indemnified Claim shall be reduced to the extent that such MLE Indemnified Party actually receives any amounts pursuant to the terms of the insurance policies obtained and maintained by the Company (if any) covering such claim. In no instance shall any MLE Indemnified Costs be reduced, pursuant to this Section 9.9.1 , by the amount of insurance proceeds from policies obtained and maintained by any MLE Indemnified Party.

9.9.2 No Consequential Damages . IRP’s indemnification obligations pursuant to this Article IX shall be limited to actual MLE Indemnified Costs and shall not include special, incidental, consequential, indirect, punitive, or exemplary MLE Indemnified Costs (including lost profits and damages for a lost opportunity); provided , however , that any special, incidental, consequential, indirect, punitive, or exemplary MLE Indemnified Costs recovered by a third party (including Governmental Authorities) against an MLE Indemnified Party shall be treated as actual MLE Indemnified Costs for purposes of this Section 9.9.2 ; and provided , further , that the disallowance of Production Tax Credits shall not be considered special, incidental, consequential, indirect, punitive or exemplary MLE Indemnified Costs for purposes of this Section 9.9.2 .

9.9.3 MLE Indemnified Party Negligence or Misconduct; Breach . No MLE Indemnified Party shall be indemnified for MLE Indemnified Costs suffered by such Person to the extent that such MLE Indemnified Costs are attributable to the gross negligence or willful misconduct of such Person or the breach by MLE of its obligations under the Tax Equity Documents.

Section 9.10 Exclusive Remedy . The indemnities provided for in this Article IX shall be the exclusive remedy for money damages for the breach by IRP of its obligations under this Agreement and the LLC Operating Agreement .

 

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ARTICLE X

GENERAL PROVISIONS

Section 10.1 Notices . All notices and other communications given hereunder shall be in writing and shall be deemed duly given when sent by confirmed facsimile transmission, by overnight courier or by personal delivery. All notices shall be delivered or sent to the Parties at their respective address(es) or number(s) shown below or to such other address(es) or number(s) as a Party may designate by prior written notice given in accordance with this provision to the other Party:

If to the Company or IRP to:

Raser Technologies

5152 N. Edgewood Drive

Provo, UT 84604-5680

Attention: Richard Clayton, Executive Vice President and General Counsel

Fax number: (801) 374-3314

Email: dick.clayton@rasertech.com

If to MLE, to :

Investment Banking Corporate Finance Group

Merrill Lynch & Company, Inc.

4 World Financial Center

28th Floor

New York, NY 10080

Attention: Roy Piskadlo, Managing Director

Fax number: (212)449-3886

Email: roy_piskadlo@ml.com

Section 10.2 Remedies . Except as expressly set forth herein, each Party shall be free to pursue all its rights at law or in equity or otherwise to enforce its rights under this Agreement.

Section 10.3 Expenses . Transaction Expenses incurred through the date of this Agreement have been paid by IRP or an Affiliate thereof pursuant to the Equity Commitment Letters. Transaction Expenses incurred from the Effective Date through the Second Funding Date will be paid by Raser or an Affiliate thereof and reimbursed as provided in the Account and Security Agreement . Raser shall pay for all Transaction Expenses incurred after the date of this Agreement if the Equity Transactions do not close for any reason.

Section 10.4 Complete Agreement . The Tax Equity Documents, the exhibits and schedules hereto and thereto, and the other documents executed and delivered in accordance with the Tax Equity Documents, contain the entire agreement between the Parties hereto with respect to the Equity Transactions, and shall supersede all previous oral and written and all contemporaneous

 

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oral negotiations, commitments, understandings and representations pertaining to the subject matter hereof.

Section 10.5 Governing Law; Jurisdiction . This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law rules thereof which may permit or require the application of the laws of another jurisdiction. The Parties hereby irrevocably submit to the jurisdiction of the courts of the State of New York in the county of New York or of the United States of America in the Southern District of New York and hereby waive, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue in an such action or proceeding in any such court.

Section 10.6 Severability . Any provision of this Agreement shall be held void, voidable, invalid or inoperative, no other provision of this Agreement shall be affected as a result thereof, and, accordingly, the remaining provisions of this Agreement shall remain in full force and effect as though such void, voidable, invalid or inoperative provision had not been contained herein.

Section 10.7 Section Headings: Construction . The Article and Section headings herein have been inserted for convenience of reference only and shall not in any manner affect the construction, meaning or effect of anything herein contained nor govern the rights and liabilities of the Parties.

Section 10.8 Public Announcements . The Parties shall consult with one another before issuing any public announcement, statement or other disclosure with respect to this Agreement or the other Tax Equity Documents or the Equity Transactions and no party shall issue any such public announcement, statement or other disclosure without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed) unless such action is required by Applicable Law. Each Party, upon the request of any other Party, shall provide to such other Party, and such other Party shall have the right to review in advance all information relating to this Agreement or the other Tax Equity Documents or the Equity Transactions that appear in any filing made in connection with the transactions contemplated hereby or thereby.

Section 10.9 Assignability and Parties in Interest . This Agreement and the rights, interests or obligations hereunder may not be assigned by any of the Parties hereto without the prior written consent of the other Parties hereto; provided , however , that (a) the Company may assign its rights under this Agreement to the Collateral Agent as collateral security for the obligations of the Company under the Credit Agreement and (b) IRP may assign its rights hereunder to the Collateral Agent as collateral security for the obligations of the Company under the Credit Agreement and (c) MLE may assign its rights under this Agreement to the Collateral Agent as collateral security for the obligations of the Company under the Credit Agreement , and (d) each of the Parties may assign its rights under this Agreement to the same extent and in conjunction with the Transfer of such Party’s Equity Interest pursuant to Article IX of the LLC Operating Agreement ; provided , however , that each such assignee pursuant to this Section 10.9(d) shall execute and deliver an assignment and assumption agreement, assuming all obligations relating to the rights assigned. This Agreement shall inure to the benefit of and be binding upon MLE, the Company, IRP and their respective successors and permitted assigns. Except as otherwise provided in this Agreement, nothing in this Agreement will confer upon any person or entity not

 

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a party to this Agreement, or the legal representatives of such person or entity, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement.

Section 10.10 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 10.11 Amendment and Modification; Waivers . No term, provision or condition of this Agreement, including Schedules and Exhibits attached hereto, may be amended, modified or waived except by an instrument duly executed and delivered by a duly authorized officer of the Party against which enforcement is sought. The waiver of any term, condition or provision hereof shall be limited to, unless expressly stated otherwise, specific facts or circumstances for which waiver shall have been granted and such waiver shall not be construed as, or otherwise constitute, a general waiver of any term, condition or provision hereof. Except as may be specifically agreed in writing, the failure of Owner or Contractor to insist in any one or more instances upon the strict performance of any one or more of the provisions of this Agreement or to exercise any right herein contained or provided hereunder, shall not be construed as, or constitute in any way, a waiver, modification or relinquishment of the performance of such provision or right(s), or of the right to subsequently demand such strict performance or exercise such right(s), and such rights shall continue unchanged and remain in full force and effect.

Section 10.12 Confidentiality . The Parties agree to comply with the terms of the confidentiality agreement attached hereto as Schedule 10 .

Section 10.13 Delivery of Reports, Notices, Certificates and Other Documents . For any purpose hereunder, no report, notice or certificate, a form of which is attached as an Exhibit in any Operative Document, shall be deemed provided hereunder unless such report, notice or certificate is substantially in the form required thereby and duly executed by each signatory thereto.

[R EMAINDER OF P AGE I NTENTIONALLY L EFT B LANK ]

 

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IN WITNESS WHEREOF , each Party has caused this Agreement to be signed on its behalf as of the date first written above.

 

INTERMOUNTAIN RENEWABLE POWER, LLC , a Delaware limited liability company
By:		/s/ Richard D. Clayton
Name:		Richard D. Clayton
Title:		Manager

 

THERMO NO. 1 BE-01, LLC , a Delaware limited liability company, as Company
By:		Intermountain Renewable Power, LLC, a Delaware limited liability company
Its:		Managing Member
		By:		/s/ Richard D. Clayton
		Name:		Richard D. Clayton
		Title:		Manager

 

MERRILL LYNCH L.P. HOLDINGS INC. , as Class A Investor
By:		/s/ Joseph S. Valenti
Name:		Joseph S. Valenti
Title:		Vice President

Equity Capital Contribution Agreement Signature Page

SCHEDULE 3.4

Financial Statements

[To be attached separately]

 

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SCHEDULE 3.5

Litigation

NONE

 

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SCHEDULE 3.7

Governmental Approvals

 

 

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SCHEDULE 3.12

Equity Interests

Class A Interest (99%): Merrill Lynch L.P. Holdings Inc.

Class B Interest (1%): Intermountain Renewable Power, LLC

 

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SCHEDULE 10

Confidentiality Agreement

Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such term in the Agreement to which this Schedule is attached.

Each Party receiving Confidential Information (as defined herein) (the “ Receiving Party ”) with respect to another Party (the “ Disclosing Party ”) hereby acknowledges and agrees as follows:

1. Such Confidential Information is being, or has been, provided on the condition that the terms and conditions of this Schedule are adhered to by the Receiving Party and its Representatives;

2. Such Confidential Information will be used solely for the purpose of engaging in the transactions contemplated by the Agreement (the “ Transactions ”), and that such Confidential Information will be kept confidential by the Receiving Party and its Representatives; provided , however , that (i) any of such Confidential Information may be disclosed to the Representatives of the Receiving Party who need to know such information in connection with the Transactions (it being understood that such Representatives shall be informed by you of the confidential nature of such Confidential Information and shall be directed by the Receiving Party to treat such Confidential Information confidentially and to take precautions to maintain such confidentiality), and (ii) any disclosure of such Confidential Information may be made to which the Disclosing Party consents in writing;

3. The Receiving Party will undertake, and to cause its Representatives to undertake, reasonable precautions to safeguard and protect the confidentiality of the Confidential Information and the Receiving Party shall be responsible for any breach of the terms and conditions of this Schedule by the Receiving Party or its Representatives;

4. In the event that the Receiving Party is requested pursuant to, or required by, Applicable Law to disclose any Confidential Information, the Receiving Party shall provide the Disclosing Party with prompt notice of such request or requirement in order to enable the Disclosing Party to seek an appropriate protective order or other remedy, to consult with the Receiving Party with respect to the Disclosing Party taking steps to resist or narrow the scope of such request or legal process, or to waive compliance, in whole or in part, with the terms and conditions of this Schedule ; provided , that in event that no such protective order or other remedy is obtained before disclosure is required or the Disclosing Party waives compliance with the terms and conditions of this Schedule , the Receiving Party shall furnish only that portion of Confidential Information which the Receiving Party is advised by legal counsel is legally required and the Receiving Party will use its commercially reasonable efforts to ensure that all Confidential Information that is so disclosed will be accorded confidential treatment or otherwise kept confidential, in each case, to the maximum extent possible; provided , further that the Receiving Party may comply with any request or requirement by a regulatory of self-regulatory authority or agency to disclose any Confidential Information; provided , further that notwithstanding anything in this Agreement to the contrary, to comply with Treasury Regulation Section 1.6011-4(b)(3), each Party (and any employee, representative or other agent of such Party) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the Transactions;

5. To the extent that any Confidential Information includes materials or information subject to the attorney-client privilege, work product doctrine or any other applicable privilege concerning pending or threatened legal proceedings or governmental investigations, the Receiving Party and the Disclosing Party understand and agree that each such Party has a commonality of interest with respect to Transactions and it is each such Parties’ desire, intention and mutual understanding that the sharing of

 

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such material is not intended to, and shall not, waive or diminish in any way the confidentiality of such material or its continued protection under the attorney-client privilege, work product doctrine or other applicable privilege; provided , further , that all such material that is entitled to protection under the attorney-client privilege, work product doctrine or other applicable privilege shall remain entitled to such protection under these privileges and under the joint defense doctrines and you may not waive any such privileges unless required by Applicable Law;

6. Money damages would not be a sufficient remedy for any breach of the terms and conditions of this Schedule and that the Disclosing Party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach, and the Receiving Party shall not oppose the seeking or granting of such relief; provided , further , that such remedies shall not be deemed to be the exclusive remedies for a breach of the terms and conditions of this Schedule but shall be in addition to all other remedies available at law or equity to the Disclosing Party;

7. In the event of litigation relating to enforcement of the terms and conditions of this Schedule , the prevailing Party shall be entitled to receive from the other Party the reasonable costs and expenses, including reasonable attorney fees, relating to the prosecution or defense in such litigation;

8. No failure or delay by the Disclosing Party in exercising any right, power or privilege it has hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder;

9. The Receiving Party shall be entitled, including following termination of the Agreement, to retain one copy of any Confidential Information as may be required to comply with internal record-keeping procedures of the Receiving Party or Applicable Law; provided , the Receiving Party shall use commercially reasonable efforts, at the Receiving Party’s option, either to destroy or return all other remaining copies of Confidential Information to the Disclosing Party within sixty (60) calendar days of termination of the Agreement; and

10. As used in this Schedule :

A. The term “ Confidential Information ”, with respect to any Disclosing Party, means all information with respect to or otherwise relating to the Disclosing Party provided at any time, whether before or after the Effective Date, but does not include information which (i) was already in the possession of the Receiving Party prior to the date hereof, which possession the Receiving Party can reasonably substantiate, provided that such information was not known by the Receiving Party to be subject to another confidentiality agreement or arrangement with or other obligation of secrecy to the Disclosing Party or another Person, or (ii) becomes generally available to the public other than as a result of a disclosure by the Receiving Party or a Representatives of the Receiving Party (for purposes of this Schedule , no information disclosed by the Receiving Party or any of the Representatives of the Receiving Party shall be deemed generally available to the public), or (iii) becomes available to the Receiving Party on a non-confidential basis from a source other than the Disclosing Party or its Representatives, Affiliates, legal counsel, accountants, and other professional advisors; provided , that such source is not known by the Receiving Party or the Representatives of the Receiving Party to be bound by a confidentiality agreement or arrangement with or other obligation of secrecy to the Disclosing Party or another Person; provided , that upon becoming aware of any such confidentiality agreement or arrangement or other obligation of secrecy, then such information shall be deemed to be Confidential Information and no further disclosure or use thereof may occur by the Receiving Party or the Representatives of the Receiving Party except in accordance with the terms of this Schedule .

 

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B. The term “ Representative ” means, with respect to any Person, such Person’s Affiliates and its and their directors, officers, employees, agents and advisors (including, without limitation, financial advisors, counsel, accountants, engineers and other advisors).

 

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Final Version

SCHEDULE Z

Unless the context otherwise requires, the following terms shall have the following respective meanings for all purposes, and the following definitions are equally applicable both to the singular and plural forms and the feminine, masculine and neuter forms of the terms defined. Any term defined below by reference to any Operative Document shall have such meaning whether or not such Operative Document has been terminated or otherwise remains in effect on the date of usage. This Schedule Z is comprised of three parts: (i) General Definitions; (ii) Parties; and (iii) Documents.

GENERAL DEFINITIONS

“ Account(s) ” means all “accounts” as defined in Article 9 of the UCC. [ASA, CA]

“ Account Bank ” means Deutsche Bank Trust Company Americas, in its capacity as bank with respect to the Deposit Accounts and within the meaning of Section 9-102 of the UCC. [ASA]

“ Account Debtor ” means each Person who is obligated on a Receivable or any Supporting Obligation related thereto. [ASA]

“ Accounting Firm ” means any of Company’s primary independent accounting firm which shall be Hein & Associates LLP or such other nationally or regionally recognized firm certified public accountants, in each case, selected by the Manager and approved by a Class Majority Vote. [LLCA]

“ Actual Availability Rating ” means the net electrical output of the Facility during full operation, represented as a percentage of the Actual Capacity Rating, demonstrated pursuant to the Availability Prove-Out and set forth on the Notice of Facility Substantial Completion. [EPC, Schedule Z]

“ Actual Capacity Rating ” means lesser of (i) Demonstrated Operational Capacity and (ii) Demonstrated Geothermal Capacity. [EPC, Schedule Z]

“ Actual Debt Investment ” means the amount identified as “Term Loan” in the Recalculated Equity Base Case Model. [Schedule Z]

“ Actual Efficiency ” means the product of (i) the Actual Capacity Rating, multiplied by (ii) the Actual Availability Rating, reflected as a numerical value. [Schedule Z]

Schedule Z

“ Actual Equity Investment ” means the amount identified as “Tax Equity Prepayment” in the Recalculated Equity Base Case Model. [Schedule Z]

“ Actual Facility Characteristics ” means the following characteristics actually achieved by the Facility upon Facility Substantial Completion: (i) the Actual Capacity Rating, (ii) the Actual Availability Rating, and (iii) the Actual PIS Turbines. [EPC]

“ Actual PIS Turbines ” means the number of Turbines comprising the Facility that achieve Turbine Substantial Completion on or before the Required Turbine Substantial Completion Date. [EPC, Schedule Z]

“ Additional Operative Document ” means (a) any agreement replacing or superseding an existing Operative Document, (b) any agreement for the sale of energy, capacity or ancillary services, or (c) any other agreement (i) relating to obligations in excess of $500,000 for any single fiscal year and $2,000,000 over the term of such agreement, and (ii) relating to the development of the Project entered into by the Company and any other Person subsequent to the Effective Date. [CA]

“ Adjusted Capital Account ” means the Capital Account of a Member (a) increased by the amount of potential deficit that the Member is deemed obligated to restore, calculated as described in the last sentence of Treasury Regulation Section 1.704-2(g)(1) and the last sentence of Treasury Regulation Section 1.704-2(i)(5) and (b) decreased by expected items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). [LLCA]

“ Administrative Agent’s Account ” means a non-interest bearing trust account established by the Administrative Agent on behalf of the Lenders for the purpose of receiving Debt Service payments from the Company for the further payment to the Agents and the Lenders. [CA]

“ Advance ” has the meaning specified in Section 2.1 of the Credit Agreement . [ASA, CA, Schedule Z]

“ Advance Date ” means the time and Business Day on which all the conditions precedent set forth in Section 3.1 and 3.2 of the Credit Agreement are satisfied or waived and the Company receives an Advance under the Credit Agreement . [CA]

“ Advance Request ” has the meaning specified in Section 2.2.1 of the Credit Agreement . [ASA, CA]

“ Affected Lender ” has the meaning specified in Section 2.12.3 . of the Credit Agreement . [CA]

“ 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 such Person. For purposes of any Transaction Document, (i) the Company shall not be deemed to be an Affiliate of the Lenders or the Lenders’ Affiliates and (ii) solely for purposes of Section 9.1.2 of the Credit Agreement , the Company shall not be deemed an Affiliate of Raser and Raser’s Affiliates. The Company shall be deemed to be an Affiliate of IRP prior to the Closing

 

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(for purposes of representations and warranties in the Equity Capital Contribution Agreement ), but shall not be deemed to be an Affiliate of any Member from and after the Closing. [ASA, CA ECCA, EPC, LLCA, O&M, Schedule Z]

“ After-Tax Payout ” means (A) the Class A Investors reaching an Internal Rate of Return equal to the Target IRR on the same date as in the Equity Base Case Model originally agreed when the Equity Capital Contribution Agreement was signed, (B) the Class A Investors reaching a pre-tax return through the assumed 20- year useful life of the Project of at least 2%, treating the Production Tax Credits the Class A Investors are expected to be allocated as equivalent to cash (the “ Target Pre-Tax Return ”), and (C) the allocations and distributions of the Class A Investors after the Flip Date decreasing to no less than 5% or such greater percentage as is necessary for the Class A Investors to achieve the Target Pre-Tax Return. [Schedule Z]

“ Agent Parties ” has the meaning specified in Section 14.3 of the Credit Agreement . [CA]

“ Agents ” means, collectively, the Administrative Agent and the Collateral Agent, as applicable, together with their successors and assigns to the extent permitted by the terms of the Credit Agreement . [ASA, CA, Schedule Z]

“ Agreement ” means, as used in any agreement, instrument or other document, such agreement, instrument or other document. [ASA, CA, ECCA, EPC, LLCA, O&M Schedule Z]

“ Annual Operating Plan and Budget ” means the Facility Plan and Budget and Wellfield Plan and Budget; provided , that with respect to the Annual Operating Plan and Budget for any period occurring on or before December 31, 2009, Annual Operating Plan and Budget means the Annual Operating Plan and Budget referenced in Section 6.1.6 of the O&M Agreement . Where “Annual Operating Plan and Budget” is referenced as a numerical quantity, it shall equal the sum of the total budgets set forth in the Facility Plan and Budget and Wellfield Plan and Budget. [ASA, CA, LLCA, O&M, Schedule Z]

“ Anti-Terrorism Order ” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended. [CA]

“ Applicable Law ” means, as used in any Transaction Document or with respect to any Party to such Transaction Document, means all common laws, customary laws, constitutional laws, statutes, directives, codes, resolutions, enactments, treaties, ordinances, judgments, decrees, injunctions, writs and orders of any Governmental Authority and rules, regulations, orders, interpretations and Governmental Approvals of any Governmental Authority, in each case, having jurisdiction over or with respect to such Transaction Document, such Party or the transactions contemplated thereby and the performance thereunder. [ASA, CA, ECCA, EPC, LLCA, O&M, Schedule Z]

“ Applied Drilling Escrow Amount ” has the meaning set forth in Section 3.8 of the Account and Security Agreement. [ASA, EPC]

 

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“ Appraisal Method ” means an appraiser selected jointly by the Class A Investors and the Class B Investors. However, if they cannot agree on an appraiser within 15 days of a party invoking the procedure described in this definition, then the Class A Investors and the Class B Investors will each appoint its own appraiser; provided , that if either the Class A Investors or the Class B Investors fail to appoint an appraiser within five days after the end of such fifteen (15) day period, the determination of the appraiser appointed by the other class of Members (if so appointed within such period) shall be conclusive and binding on the Members. If the appraisers appointed by the Class A Investors and the Class B Investors are unable to agree upon the fair market value within 30 days after the appointment of the second of such appraisers, the fair market value will be the average of the market values reported by each appraiser. The fair market value determined by this Appraisal Method will be conclusive and binding on the Members. [LLCA]

“ Appraisal Notice ” has the meaning set forth in Section 9.7 of the LLC Operating Agreement . [LLCA]

“ Approved Reserve Letter of Credit ” means a letter of credit issued by a bank or other financial institution and containing terms and conditions satisfactory to the Required Lenders in their sole discretion, which letter of credit shall at all times be in the stated amount equal to at least the Minimum Debt Service Reserve and shall not expire until the Final Maturity Date (giving effect to any automatic renewal periods contained therein). [Schedule Z]

“ Approved Transferee ” means, in the case of a Transfer of a Class A Interest, any Person that is (i) either (A) an Affiliate of such transferring Class A Investors, (B) an institutional investor with a tangible net worth of at least $50,000,000 at the time of such Transfer, or (C) a Person whose obligations under this Agreement are guaranteed by an institutional investor with a tangible net worth of at least $50,000,000 at the time of such Transfer, (ii) not a Competitor, and (iii) not a Disqualified Transferee; and, in the case of a Transfer of a Class B Interest, any Person that is (i) an experienced geothermal company with a national or international reputation with experience owning and operating commercial geothermal plants with an aggregate capacity of at least 50 megawatts (or undertakes to engage such an experienced geothermal company to manage the Company), (ii) either (A) an Affiliate of such transferring Class B Investors, or (B) a Person with a tangible net worth of at least $50,000,000 or whose obligations as Class B Investors are guaranteed by an entity having such a tangible net worth, and (iii) is not a Disqualified Transferee. [LLCA]

“ ASA Intellectual Property ” means, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses. [ASA, Schedule Z]

“ Asset Manager ” has the meaning set forth in Section 4.2 of the O&M Agreement . [O&M]

“ Assets ” means all right, title and interest of the Company in land, properties, buildings, improvements, fixtures, foundations, assets and rights of any kind, whether tangible or intangible, real, personal or mixed, including contracts, equipment, systems, books, data, reports, studies and records, proprietary rights, intellectual property, the Leases, Interconnection Asset,

 

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easements, Licenses and Permits, rights under or pursuant to all warranties, representations and guarantees, cash, accounts receivable, deposits and prepaid expenses, including the Project and any and all of the foregoing pertaining thereto. [LLCA, Schedule Z]

“ Assigned Agreements ” means all agreements and contracts to which (a) the Company is a party as of the effective date of the Credit Agreement , including, without limitation, each Project Document and each Operative Document, or to which (b) the Company becomes a party after the effective date of the Credit Agreement , as each such agreement may be amended, supplemented or otherwise modified from time to time to the extent permitted by the terms of the Credit Agreement . [ASA, Schedule Z]

“ Authorized Representative ” means, as used in any Agreement, the natural Person appointed by each Party to such Agreement pursuant to the terms thereof to act on such Party’s behalf with respect to such Party’s rights and obligations under such Agreement. [EPC, LLCA, O&M]

“ Availability Period ” means the period beginning on the Effective Date of the Credit Agreement and ending on the Final Completion Date. [CA]

“ Availability Prove-Out ” has the meaning set forth in Section 7.1 of the EPC Agreement . [EPC, Schedule Z]

“ Available Contingency Amount ” means, as of any date, the sum of (i) the product of (x) the Contingency Amount, multiplied by (y) the result of (A) the aggregate amount of Milestone Payments requested prior to and including on such date, divided by (B) the Contract Price, minus (ii) the aggregate amount of the Contingency Amount paid to Contractor by Owner pursuant to Section 5.1.3 of the EPC Agreement prior to such date. [EPC]

“ Bankruptcy ” means, with respect to any Person, a situation in which (i) such Person shall file a voluntary petition in bankruptcy or shall be adjudicated as bankrupt or insolvent, or shall file any petition or answer or consent seeking any reorganization, arrangement, moratorium, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future Applicable Laws relating to bankruptcy, insolvency or other relief for debtors, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver, conservator or liquidator of such Person or of all or any substantial part of its properties (the term “ acquiesce ”, as used in this definition, includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree within fifteen (15) calendar days after entry of such order, judgment or decree); (ii) a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against such Person seeking a reorganization, arrangement, moratorium, composition, readjustment, liquidation, dissolution or similar relief under any present or future Applicable Laws relating to bankruptcy, insolvency or other relief for debtors, and such Person shall acquiesce and such decree shall remain unvacated and unstayed for an aggregate period of sixty (60) calendar days (whether or not consecutive) from the date of entry thereof, or a trustee, receiver, conservator or liquidator of such Person shall be appointed with the consent or acquiescence of such Person and such appointment shall remain unvacated and unstayed for an aggregate period of sixty (60) calendar days, whether or not consecutive; (iii) such Person shall admit in writing its inability to pay its debts as they mature; (iv) such Person

 

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shall give notice to any Governmental Authority of insolvency or pending insolvency, or suspension or pending suspension of operations; or (v) such Person shall make a general assignment for the benefit of creditors or take any other similar action for the protection or benefit of creditors. [ECCA, EPC, LLCA, O&M, Schedule Z]

“ Bankruptcy Code ” means Title 11 of the United States Code, as in effect from time to time. [ASA, Schedule Z]

“ Base Fee ” has the meaning set forth in Section 7.2 of the O&M Agreement . [O&M, Schedule Z]

“ Board ” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority. [CA, Schedule Z]

“ Bonus Payments ” means bonus, incentive or similar special payments required to be made by the Company under the EPC Agreement , O&M Agreement or any other Project Document (other than payments with respect to a Borrower Indemnification Event).

“ Book-Entry Security ” means a security maintained in the form of entries (including, without limitation, the security entitlements in, and the financial assets based on, such security) in the commercial book-entry system of the Federal Reserve System. [ASA, Schedule Z]

“ Borrower Indemnification Event ” means any event or occurrence or directly related series of events or occurrences giving rise to the obligation of the Company to make payments in respect of damages or indemnifications under any of the Project Documents. [Schedule Z]

“ Budget Commitment ” means the amount identified as the “Budget Commitment” on Schedule E to the EPC Agreement . [EPC, Schedule Z]

“ Business Day ” means any calendar day, except Saturdays, Sundays and days on which the Federal Reserve Bank in New York are closed or authorized to be closed. [ASA, CA, ECCA, EPC, LLCA, O&M, Schedule Z]

“ Buy-Down CA Redemption Amount ” means the sum of (i) the Buy-Down Debt Overage, plus (ii) any interest accrued but unpaid under the Credit Agreement, as of the Guaranteed Final Completion Date, applicable to an aggregate principal amount of Advances equal to the Buy-Down Debt Overage, plus (iii) the Make-Whole Amount with respect to an aggregate principal amount of Advances equal to the Buy-Down Debt Overage. [CA, Schedule Z]

“ Buy-Down Debt Overage ” means the sum of (i) the Target Debt Investment, minus (ii) the Actual Debt Investment. [CA, Schedule Z]

“ Buy-Down Equity Overage ” means the sum of (i) the Target Equity Investment, minus (ii) the Actual Equity Investment. [ECCA, Schedule Z]

“ Buy-Down Liquidated Damages ” means the sum of (i) the Buy-Down CA Redemption Amount, plus (ii) the Buy-Down LLC Redemption Amount. [ASA, EPC]

 

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“ Buy-Down LLC Redemption Amount ” means the sum of (i) the Buy-Down Equity Overage, plus , (ii) an amount sufficient to achieve the After-Tax Payout on an amount of Class A Interests equal to the Buy-Down Equity Overage for the period to the Guaranteed Final Completion Date, plus (iii) 2% of the Buy-Down Equity Overage. [LLCA, Schedule Z]

“ Buy-Down Trigger Event ” has the meaning set forth in Section 6.4.1 of the EPC Agreement . [ASA, CA, EPC, Schedule Z]

“ Called Principal ” means, with respect to any Advance, the principal amount of such Advance that is to be prepaid pursuant to Section 2.5 or 2.6 of the Credit Agreement or has become or is declared to be immediately due and payable pursuant to Section 8 of the Credit Agreement , as the context requires. [Schedule Z]

“ Capacity Prove-Out ” has the meaning set forth in Section 7.2 of the EPC Agreement . [EPC, Schedule Z]

“ Capital Account ” means an account for each Member established and maintained as described in Section 4.2 of the LLC Operating Agreement . [LLCA]

“ Capital Contribution ” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property contributed to the Company with respect to the Interests in the Company held or acquired by such Member. [ECCA, Schedule Z]

“ Capital Contribution Commitment ” means, with respect to the Class A Investors, $24,500,000. [ECCA, Schedule Z]

“ Capital Investment Proceeds ” means the proceeds received by Owner in connection with the sale of equity to Contractor or other capital investments made by Contractor to Owner in connection with Contractor’s membership interests therein. [EPC]

“ Capital Leases ” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder. [CA, Schedule Z]

“ Cash Equivalent Investments ” means, at any time, (a) any evidence of Debt, maturing not more than one year after the acquisition thereof, issued or guaranteed by the United States Government, or any agency thereof, (b) any evidence of Debt, maturing not more than one year after the acquisition thereof, issued or guaranteed by any state, any political subdivision thereof, or any public instrumentality thereof, rated at least A-l by Standard & Poor’s Ratings Group or P-l by Moody’s Investors Service, Inc., (c) commercial paper, or corporate demand notes, in each case (unless issued by a Lender or its holding company) rated at least A-l by Standard & Poor’s Ratings Group or P-l by Moody’s Investors Service, Inc., (d) any certificate of deposit (or time deposit represented by a certificate of deposit) or banker’s acceptance maturing not more than one year after the acquisition thereof, or any overnight Federal Funds transaction that is issued or sold by any Lender (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (e) any repurchase agreement with a term of not more than seven (7) days

 

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entered into with any Lender (or commercial banking institution of the nature referred to in clause (d) above) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (d) above, and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder and (f) money market accounts or mutual funds which invest exclusively in assets in securities of the types described in clauses (a) through (e) above. [ASA, CA]

“ Cash Difference ” has the meaning set forth in Section 6.5(d) of the LLC Operating Agreement . [LLCA]

“ Cash Proceeds ” means, collectively, all proceeds of any Collateral received by the Company consisting of cash, checks and other near-cash items. [ASA]

“ Casualty Event ” means any loss, casualty or other damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Company. [ASA, CA, EPC, O&M, Schedule Z]

“ Certificate of Formation ” has the meaning set forth in the preliminary statements of the LLC Operating Agreement . [LLCA]

“ Change in Law ” means (a) the adoption of any law, rule or regulation after the Effective Date, (b) any change in any Applicable Law or in the interpretation or application thereof by any Governmental Authority after the Effective Date, or (c) a request, guideline or directive (whether or not having the force of law) of a Governmental Authority made or issued after the Effective Date which requires compliance by the affected Party. [CA]

“ Change of Control ” means the occurrence of any of the following events:

(a) before the Facility Substantial Completion Date:

(i) the consummation of a merger or consolidation of Raser with any other company, other than a merger or consolidation which would result in the voting securities of Raser outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of Raser or such surviving entity outstanding immediately after such merger or consolidation;

(ii) the consummation of a plan of liquidation of Raser;

(iii) the consummation of the sale or disposition by Raser of all or substantially all of Raser’s assets;

(iv) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of Raser representing more than fifty percent (50%) of the total voting power represented by Raser’s then outstanding voting securities;

 

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(v) Raser shall cease to own, directly or indirectly, 100% of the Equity Interests of IRP;

(vi) Raser shall cease to possess, directly or indirectly, the power to Control and direct the management of the Company pursuant to the LLC Operating Agreement ; provided , however , no Change of Control shall be deemed to occur under this clause (vi) if (A) (1) the Class A Investors replace IRP as the managing member pursuant to the exercise of remedies by such Class A Investors under the LLC Operating Agreement and (2) the Class A Investors have and continue to have experience reasonably acceptable to the Required Lenders in the management of entities owning geothermal energy generating facilities in the United States or retain the services of an Affiliate or Person to act as managing member having and continuing to have such experience; provided that in the case of a Person which is not an Affiliate of the Class A Investors, such Person shall be reasonably acceptable to the Required Lenders, (B) solely as a result of the Class A Investors having exercised their cure rights under Section 4.4 under the LLC Operating Agreement and receiving Class C Interests in accordance with the LLC Operating Agreement , or (C) solely as a result of UTC exercising its rights to direct Raser and Company in accordance with Section 2 of the UTC Step-In Agreement; or

(b) before or after the Facility Substantial Completion Date:

(i) IRP shall cease to own, directly or indirectly, one hundred percent (100%) of the Class B Interests, except in the case of a transfer to an Approved Transferee or a transferee that has been approved by the Class A Investors and, in each case which transferee has executed and delivered a pledge agreement substantially in the form of the Class B Pledge Agreement, or as otherwise acceptable to the Required Lenders, and, after giving effect to such transfer, IRP shall own, directly or indirectly, at least fifty percent (50%) of the Class B Interests; or

(ii) IRP shall cease to possess the power, directly or indirectly, to Control and direct the management of the Company pursuant to the LLC Operating Agreement ; provided , however , no Change of Control shall be deemed to occur under this clause (ii) if (A) (1) the Class A Investors replace IRP as the managing member pursuant to the exercise of remedies by such Class A Investors under the LLC Operating Agreement and (2) the Class A Investors have and continue to have experience reasonably acceptable to the Required Lenders in the management of entities owning geothermal energy generating facilities in the United States or retain the services of an Affiliate or Person to act as managing member having and continuing to have such experience; provided that in the case of a Person which is not an Affiliate of the Class A Investors, such Person shall be reasonably acceptable to the Required Lenders or (B) solely as a result of the Class A Investors having exercised their cure rights under Section 4.4 under the LLC Operating Agreement and receiving Class C Interests in accordance