PATTERN ENERGY GROUP INC. (NASDAQ:PEGI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Amended and Restated Pattern Development 1.0 Purchase
Rights Agreement
On June 16, 2017, Pattern Energy Group Inc. (the
Company, we or
us) entered into the Amended and Restated
Purchase Rights Agreement (the AR 1.0 PRA) that
amends and restates that certain Purchase Rights Agreement, dated
as of October 2, 2013, by and among Pattern Energy Group LP
(Pattern Development 1.0), the Company, Pattern
Energy Group Holdings LP (solely with respect to Article IV
therein) and Pattern Energy GP LLC (the Original 1.0
PRA), which was filed as Exhibit 10.3 to the Companys
Current Report on Form 8-K (File No. 001-36087) filed on October
2, 2013 (the Original 1.0 PRA 8-K) and is
incorporated by reference herein.
The AR 1.0 PRA modifies certain terms of the Original 1.0 PRA by,
among other things, (a) expanding our first offer rights with
respect to power generation or transmission facilities or
projects that Pattern Development 1.0 decides to sell (other than
certain projects that have been designated for transfer to
Pattern Energy Group 2 LP (Pattern Development
2.0 and together with Pattern Development 1.0,
Pattern Development)) (which we refer to as our
1.0 Project Rights) by allowing us to submit a
Final Rights Project Offer (as defined therein) in the event
Pattern Development 1.0 rejects a First Rights Project Offer (as
defined therein) or we decline to submit a First Rights Project
Offer; (b) allowing us to assign our right to submit a Final
Rights Project Offer to Public Sector Pension Investment Board
(PSP Investments) as contemplated by the Joint
Venture Agreement (as defined below); (c) amending the term of
our 1.0 Project Rights so that such rights survive until either
(i) we deliver to Pattern Development 1.0 three First Rights
Project Declinations (as defined therein) with respect to
operational or construction-ready projects (other than the Conejo
Project (as defined therein)) for which no Final Rights Project
Offer is made or (ii) Pattern Development 1.0 is wound up in
accordance with its governing documents; (d) specifying that, if
Pattern Development 1.0 rejects our offer to acquire a project,
such project can only be sold to a third party at a price that,
in addition to being greater than or equal to 105% of our offer
price (which was an existing requirement under the Original 1.0
PRA), is also greater than the Final Offer Price (as defined
therein), if any and (e) setting forth a form of Purchase and
Sale Agreement for acquisitions of projects to the AR 1.0 PRA.
The AR 1.0 PRA was recommended by the Conflicts Committee of our
Board of Directors, which is comprised solely of independent
directors, for approval by our Board of Directors, and was
subsequently approved by our Board of Directors.
A copy of the AR 1.0 PRA is attached as Exhibit 10.1 hereto and
is incorporated by reference herein. The foregoing descriptions
of the Original 1.0 PRA and the AR 1.0 PRA do not purport to be
complete and are qualified in their entirety by reference to the
Original 1.0 PRA 8-K and Exhibit 10.1 hereto, respectively.
Amended and Restated Pattern Development 2.0 Purchase
Rights Agreement
On June 16, 2017, we entered into the Amended and Restated
Purchase Rights Agreement (the AR 2.0 PRA and
together with the AR 1.0 PRA, the AR PRAs) that
amends and restates that certain Purchase Rights Agreement, dated
as of December 8, 2016, by and among Pattern Development 2.0, the
Company, Pattern Energy Group Holdings 2 LP (PEGH
2) (solely with respect to Article III therein) and
Pattern Energy Group Holdings GP 2 LLC (the Original 2.0
PRA), which was filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 001-36087) filed on December
14, 2016 (the Original 2.0 PRA 8-K) and is
incorporated by reference herein.
The AR 2.0 PRA modifies certain terms of the Original 2.0 PRA by,
among other things, (a) expanding our first offer rights with
respect to power generation, storage or transmission facilities
or projects that Pattern Development 2.0 decides to sell (which
we refer to as our 2.0 Project Rights and,
together with the 1.0 Project Rights, the Project
Rights) by allowing us to submit a Final Rights Project
Offer (as defined therein) in the event Pattern Development 2.0
rejects a First Rights Project Offer (as defined therein) or we
decline to submit a First Rights Project Offer; (b) allowing us
to assign our right to submit a Final Rights Project Offer to PSP
Investments as contemplated by the Joint Venture Agreement; (c)
modifying Pattern Development 2.0s right to transfer a project
to, and PEGH 2s or Pattern Development 2.0s, as applicable, right
to transfer a material portion of the equity interests or all or
substantially all of the assets of Pattern Development 2.0 (a
PEG 2.0 Interest) to a third party if Pattern
Development 2.0 or PEGH 2, as applicable, rejects our offer to
acquire the applicable project or PEG 2.0
Interest, by, among other things, (i) increasing the clearing
price at which the project or PEG 2.0 Interest can be sold to
110% (as opposed to 105%) of the applicable Project Offer Price
or PEG 2 LP Offer Price (as such terms are defined therein), (ii)
in the case of a project, requiring that it be sold at a price
greater than 100% of the Final Offer Price (as defined therein),
if any and (iii) obligating Pattern Development 2.0 or PEGH 2, as
applicable, to, subject to certain exceptions, sell the
applicable project or PEG 2.0 Interest to us at a price equal to
96% of the Project Offer Price or PEG 2 LP Offer Price, as
applicable, if Pattern Development 2.0 or PEGH 2, as applicable,
does not enter into a definitive agreement to sell such project
or PEG 2.0 Interest to a third party at a price equal to or
greater than the clearing price within six months following its
rejection of our offer (or does not consummate such transaction
within twelve months following its rejection of our offer); (d)
amending the term of our 2.0 Project Rights so that such rights
survive until Pattern Development 2.0 is wound up in accordance
with its governing documents; (e) giving us the right to acquire
any Early Stage Project or Mid-Stage Project (as such terms are
defined therein) that is abandoned by Pattern Development 2.0 at
a price equal to Pattern Development 2.0s cost basis in such
project (as well as, in the case of a Mid-Stage Project, an
earn-out payment to be paid to Pattern Development 2.0 if we
subsequently sell such project to a third party) and requiring
that Pattern Development 2.0 promptly sell (subject to our 2.0
Project Rights) any Advanced Project (as defined therein) that it
abandons; (f) setting forth a form of Purchase and Sale Agreement
for acquisitions of projects to the AR 2.0 PRA and (g) providing
us the option, if Pattern Development 2.0 rejects a development
project that is offered for sale by a third party, to acquire
such project directly from such third party.
The AR 2.0 PRA was recommended by the Conflicts Committee of our
Board of Directors, which is comprised solely of independent
directors, for approval by our Board of Directors, and was
subsequently approved by our Board of Directors.
A copy of the AR 2.0 PRA is attached as Exhibit 10.2 hereto and
is incorporated by reference herein. The foregoing descriptions
of the Original 2.0 PRA and the AR 2.0 PRA do not purport to be
complete and are qualified in their entirety by reference to the
Original 2.0 PRA 8-K and Exhibit 10.2 hereto, respectively.
Second Amended and Restated Non-Competition
Agreement
On June 16, 2017, we entered into the Second Amended and Restated
Non-Competition Agreement, by and among Pattern Development 1.0,
the Company and Pattern Development 2.0 (the Second AR
Non-Competition Agreement), which further amends and
restates the Amended and Restated Non-Competition Agreement,
dated as of December 8, 2016, by and among Pattern Development
1.0, the Company and Pattern Development 2.0 (the
Original Non-Competition Agreement), which was
filed as Exhibit 10.3 to the Companys Current Report on Form 8-K
(File No. 001-36087) filed on December 14, 2016 (the
Original Non-Competition Agreement 8-K) and is
incorporated by reference herein. The Second AR Non-Competition
Agreement, among other things, grants Pattern Development 2.0 the
exclusive right to pursue all power generation, storage or
transmission development projects in the US, Canada and Mexico
that have not completed construction, other than (a) development
activities related to the expansion, improvement, enhancement, or
protection of an existing power generation, transmission or
storage facility that we may, directly or indirectly, manage or
majority own from time to time; (b) continued development by
Pattern Development 1.0 of projects not transferred to Pattern
Development 2.0; (c) development projects acquired by us or PSP
Investments to the AR PRAs and (d) projects that have achieved or
issued, or are likely to achieve or issue within thirty days of
closing an acquisition of such project, readiness for
construction financing or issuance of full notice to proceed. The
Second AR Non-Competition Agreement does not restrict us from
acquiring any company or business that is principally engaged in
the business of owning and operating renewable energy facilities.
However, if we desire to purchase a portfolio of projects that
contains a mix of development, construction and/or operating
projects, we are required to reasonably cooperate with Pattern
Development 2.0 to divide such portfolio so that Pattern
Development 2.0 may acquire the development projects in such
portfolio and we may acquire the construction and operating
projects in such portfolio. At any time that Tokyo, Japan-based
Green Power Investment Corporation (Green Power)
is majority owned by either us, Pattern Development 1.0 or
Pattern Development 2.0, the Second AR Non-Competition Agreement
grants such majority owner exclusive development rights over
power generation, storage or transmission projects in Japan
(subject to the same exceptions set forth above in clauses (a)
through (d) and the above provisions regarding operating
businesses and the division of project portfolios). Pattern
Development 1.0 currently owns a majority interest in Green
Power.
The Second AR Non-Competition Agreement shall terminate (a) with
respect to Pattern Development 1.0, upon the termination of our
collective purchase rights under the AR 1.0 PRA and (b) with
respect to Pattern Development 2.0, upon the termination of our
collective purchase rights under the AR 2.0 PRA or the earlier
wind-up of Pattern Development 2.0 or the valid rejection by
Pattern Development 2.0 of three or more First Rights Project
Offers (as defined in the AR 2.0 PRA) representing a cumulative
net capacity of at least 600 megawatts.
The Second AR Non-Competition Agreement was recommended by the
Conflicts Committee of our Board of Directors, which is comprised
solely of independent directors, for approval by our Board of
Directors, and was subsequently approved by our Board of
Directors.
A copy of the Second AR Non-Competition Agreement is attached as
Exhibit 10.3 hereto and is incorporated by reference herein. The
foregoing description of the Original Non-Competition Agreement
and the Second AR Non-Competition Agreement do not purport to be
complete and are qualified in their entirety by reference to the
Original Non-Competition Agreement 8-K and Exhibit 10.3 hereto,
respectively.
Amended and Restated Multilateral Management Services
Agreement
On June 16, 2017, we entered into the Amended and Restated
Multilateral Management Services Agreement (the AR
MMSA) that amended and restated that certain
Multilateral Management Services Agreement, dated as of December
8, 2016, by and among the Company, Pattern Development 1.0 and
Pattern Development 2.0 (the Original MMSA),
which was filed as Exhibit 10.2 to the Companys Current Report on
Form 8-K (File No. 001-36087) filed on December 14, 2016 (the
Original MMSA 8-K) and is incorporated by
reference herein.
The AR MMSA amends certain provisions of the Original MMSA in
order to, among other things, (a) allow Pattern Development 2.0
to, in the event of a failure by the service provider to provide
adequate resources and services as set forth therein, (i) in the
case of a failure by Pattern Development 1.0, take over the
performance of the management services contemplated to be
performed by Pattern Development 1.0 thereby, (ii) cause the
service provider to hire additional development personnel, (iii)
in the case of a failure by us, suspend us from taking on certain
further developments or (iv) initiate a wind down of Pattern
Development 2.0; (b) allow Pattern Development 2.0 to effect a
PEG 2 Transition (as defined therein) (whereby Pattern
Development 2.0 can cause Pattern Development 1.0 to cause its
employees to become employees of Pattern Development 2.0),
provided that Pattern Development 2.0 shall not exercise such
right if we have provided Pattern Development 2.0 with written
notice that we intend to effect a PEG 1 Employee Reintegration
(as defined therein and described below) within six months, (c)
amend the circumstances in which we can effect a PEG 1 Employee
Reintegration (whereby we can cause Pattern Development 1.0 to
cause its employees to become our employees) by removing the
December 31, 2017 expiration date for such right and instead
allowing us to effect a PEG 1 Employee Reintegration after the
earliest to occur of (x) the date that Pattern Development 1.0
provides us with written notice that it will complete a wind-down
within six months, (y) June 16, 2020 and (z) a PEG 1 Services
Failure (as defined therein); (d) allow us to effect a PEG 2
Employee Reintegration (as defined therein) (whereby we can
require Pattern Development 2.0 to cause its employees to become
our employees) at any time after the earliest to occur of (A) the
date Pattern Development 2.0 notifies Pattern Development 1.0 it
will exercise its right to cause a PEG 2 Transition (as described
above) but before such PEG 2 Transition occurs, (B) June 16,
2020, (C) a PEG 2 Services Failure (as defined therein) and (D)
the initiation of a wind-up of Pattern Development 2.0; (e)
provide us the exclusive right, but not the obligation, to
provide services to the MOMAs and PAAs (each as defined therein)
for projects developed by Pattern Development 1.0 or Pattern
Development 2.0 and (f) amend the term of the agreement such that
the AR MMSA survives, with respect to each of Pattern Development
1.0 and Pattern Development 2.0, until a wind-up of the
applicable entity to its governing documents, unless terminated
earlier to the terms of the AR MMSA.
The AR MMSA was recommended by the Conflicts Committee of our
Board of Directors, which is comprised solely of independent
directors, for approval by our Board of Directors, and was
subsequently approved by our Board of Directors.
A copy of the AR MMSA is attached as Exhibit 10.4 hereto and is
incorporated by reference herein. The foregoing description of
the Original MMSA and AR MMSA do not purport to be complete and
are qualified in their entirety by reference to the Original MMSA
8-K and Exhibit 10.4 hereto, respectively.
Investment in PEGH 2
On June 16, 2017, we entered into the Second Amended and Restated
Agreement of Limited Partnership of PEGH 2, dated as of June 16,
2017, by and among PEGH 2, the Class A Limited Partners set forth
therein and the
Class B Limited Partners set forth therein (the AR PEGH 2
LPA). Pattern Development 2.0 is a wholly owned
subsidiary of PEGH 2. In July 2017, PEGH 2 is expected to receive
funds to a capital call under the AR PEGH 2 LPA (the
Initial PEGH 2 Capital Call) from new limited
partners (including us) in PEGH 2 (the New PEGH 2
Investors) to, among other things, (a) redeem
approximately 49% of the total ownership interests held by
existing limited partners in PEGH 2 (the Legacy PEGH 2
Investors), (b) acquire certain development assets from
Pattern Development 1.0, and (c) provide working capital for
general business purposes. After the funding of the Initial PEGH2
Capital Call (in which only the New PEGH 2 Investors will
participate) and the consummation of the foregoing redemption of
the Legacy PEGH 2 Investors ownership interests, the Legacy PEGH
2 Investors will hold approximately 31% of the total ownership
interests in PEGH 2 (with the remaining approximately 69% of the
total ownership interests in PEGH 2 being held by the New PEGH 2
Investors). In connection with the Initial PEGH2 Capital Call, we
anticipate making an initial capital contribution to PEGH 2 of
approximately $60,000,000 (equating to approximately 29% of the
total Initial PEGH 2 Capital Call), in exchange for an
approximately 20% ownership interest in PEGH 2 (equating to
approximately 29% of the 69% ownership interest in PEGH 2 held by
the New PEGH 2 Investors immediately after the Initial PEGH 2
Capital Call). Under the AR PEGH 2 LPA, we have also committed to
contribute up to an additional approximately $240,000,000 to PEGH
2 in one or more subsequent rounds of financing, which could
result in our ownership interest in PEGH 2 increasing to up to
approximately 29%. If we do not participate in such subsequent
rounds of financing, our ownership interest in PEGH 2 may be
diluted on a pro rata basis based on fair market value.
We also have certain rights under the AR PEGH 2 LPA to cause the
dissolution of PEGH 2, including (a) at any time following the
fifth anniversary of the date PEGH 2 issues its first capital
call on or after June 16, 2017 and (b) at any time following PEGH
2s board of directors rejection of three or more of our First
Rights Project Offers or First Rights PEG 2 LP Offers (each as
defined in the AR 2.0 PRA) representing a cumulative net capacity
of at least 600 megawatts.
The entry into the AR PEGH 2 LPA was recommended by the Conflicts
Committee of our Board of Directors, which is comprised solely of
independent directors, for approval by our Board of Directors,
and was subsequently approved by our Board of Directors.
A copy of the AR PEGH 2 LPA is attached as Exhibit 10.5 hereto
and is incorporated by reference herein. The foregoing
description of the AR PEGH 2 LPA does not purport to be complete
and is qualified in its entirety by reference to such exhibit.
Joint Venture Agreement
On June 16, 2017, we entered into a Joint Venture Agreement (the
Joint Venture Agreement) with PSP Investments,
to which, among other things, (a) PSP Investments will have the
right to co-invest up to an aggregate amount of approximately
$500,000,000 (the PSP Investments Co-Investment
Amount) alongside us in energy projects we may acquire
to our rights under the AR PRAs (with PSP Investments acquiring,
at its election on a project-by-project basis, either (x) 30% or
(y) a greater percentage that we may elect to offer to PSP
Investments, of our combined ownership interest in such project);
(b) PSP Investments will reasonably cooperate with us to complete
third party acquisitions and to arrange for or provide bridge
loans and construction financing for certain projects that PSP
Investments will invest in alongside us (although PSP Investments
has no commitment to provide any such financing) and (c) we may
add a person that has been designated by PSP Investments to our
Board of Directors promptly following the PSP Compliance Date (as
defined therein). The purchase price paid by PSP Investments
under each of the Meikle PSA, the MSM PSA and the PH2 PSA (each
defined below) will be applied towards the PSP Investments
Co-Investment Amount. Under the Joint Venture Agreement we have
also agreed to, in certain limited circumstances, allow PSP
Investments to cause the early termination of contracts between
PEGI and a jointly owned project, including the Sponsor Services
Agreement (defined below) and the applicable MOMAs and PAAs (as
defined therein) and have waived any early termination fees in
those circumstances. In connection with the Joint Venture
Agreement and the PEGI Share Acquisition (defined below), PSP
Investments also agreed to a customary standstill for a period of
twelve months.
The Joint Venture Agreement was recommended by the Conflicts
Committee of our Board of Directors, which is comprised solely of
independent directors, for approval by our Board of Directors,
and was subsequently approved by our Board of Directors.
A copy of the Joint Venture Agreement is attached as Exhibit 10.6
hereto and is incorporated by reference herein. The foregoing
description of the Joint Venture Agreement does not purport to be
complete and is qualified in its entirety by reference to such
exhibit.
Sponsor Services Agreement
On June 16, 2017, we entered into a Sponsor Services Agreement
with PSP Investments (the Sponsor Services
Agreement), to which we will provide certain mutually
agreed services to PSP Investments and its affiliates with
respect to the administration of the joint ownership of the
project companies that PSP Investments invests in alongside us to
the Joint Venture Agreement in exchange for certain fees set
forth in the Sponsor Services Agreement.
The Sponsor Services Agreement was recommended by the Conflicts
Committee of our Board of Directors, which is comprised solely of
independent directors, for approval by our Board of Directors,
and was subsequently approved by our Board of Directors.
A copy of the Sponsor Services Agreement is attached as Exhibit
10.7 hereto and is incorporated by reference herein. The
foregoing description of the Sponsor Services Agreement does not
purport to be complete and is qualified in its entirety by
reference to such exhibit.
Meikle and MSM Purchase and Sale
Agreements
On June 16, 2017, we entered into (a) a Purchase and Sale
Agreement (the Meikle PSA) by and among the
Company, Vertuous Energy Canada Inc. (Vertuous
Canada) (a wholly owned subsidiary of PSP Investments)
and Pattern Development 1.0 and (b) a Purchase and Sale Agreement
(the MSM PSA) by and among the Company, Vertuous
Canada and Pattern Development 1.0.
Upon the terms and subject to the conditions set forth in the
Meikle PSA, at the closing (a) we (or one of our wholly owned
subsidiaries) will purchase from affiliates of Pattern
Development 1.0 a 50.99% limited partner interest in Meikle Wind
Energy Limited Partnership (the Meikle Project
Company) and 70% of the issued and outstanding shares of
Meikle Wind Energy Corp. (Meikle Corp) (which
holds a 0.02% general partner interest in the Meikle Project
Company) in exchange for aggregate consideration of CAD
$85,425,000 (subject to certain adjustments) and (b) Vertuous
Canada will purchase from affiliates of Pattern Development 1.0 a
48.99% limited partner interest in the Meikle Project Company and
30% of the issued and outstanding shares of Meikle Corp in
exchange for aggregate consideration of CAD $82,075,000 (subject
to certain adjustments). The Meikle Project Company operates the
approximately 179 megawatt wind farm located in the Peace River
Regional District of British Columbia, Canada, which achieved
commercial operations in the first quarter of 2017. Immediately
after the closing, our owned capacity with respect to the wind
farm will be approximately 91 megawatts.
Upon the terms and subject to the conditions set forth in the MSM
PSA, at the closing (a) we (or one of our wholly owned
subsidiaries) will purchase from affiliates of Pattern
Development 1.0 (i) a 50.99% limited partner interest in a
newly-formed limited partnership (New MSM LP
Holdco) (which, following closing, will hold 100% of the
economic interests in Mont Sainte-Marguerite Wind Farm LP (the
MSM Project Company)), (ii) 70% of the issued
and outstanding shares of Pattern MSM GP Holdings Inc.
(MSM Corp) (which, following the closing, will
hold a 0.02% general partner interest in New MSM LP Holdco) and
(iii) a 70% interest in Pattern Development MSM Management ULC
(MSM ULC), in exchange for aggregate
consideration of CAD $53,040,000 (subject to certain adjustments)
and (b) Vertuous Canada will purchase from affiliates of Pattern
Development 1.0 (i) a 48.99% limited partner interest in New MSM
LP Holdco, (ii) 30% of the issued and outstanding shares of MSM
Corp and (iii) a 30% interest in MSM ULC, in exchange for
aggregate consideration of CAD $50,960,000 (subject to certain
adjustments). The MSM Project Company operates the approximately
143 megawatt wind farm located in the Chaudire-Appalaches region
south of Qubec City, Canada, which is expected to achieve
commercial operation in late 2017. Immediately after the closing,
our owned capacity with respect to the wind farm will be
approximately 73 megawatts.
The parties obligations to consummate the transactions
contemplated by each of the Meikle PSA and the MSM PSA,
respectively, are subject to the satisfaction or waiver of
various customary conditions, including, among others (a)
approval under the Competition Act (Canada) and of the
counterparties to power purchase agreements to which the Meikle
Project Company and the MSM Project Company are parties, (b) no
violation of governmental rules, and no order of any court or
administrative agency being in effect which restrains or
prohibits the transactions contemplated thereby and (c) subject
to certain exceptions, the accuracy of the representations of the
parties set forth therein.
Each of the Meikle PSA and the MSM PSA, respectively, includes
customary representations by the parties thereto, including as to
due authorization, non-contravention, governmental consents and
approvals, enforceability, ownership and title, no litigation or
adverse claims, tax matters and with respect to the underlying
wind farm. Each of the Meikle PSA and the MSM PSA, respectively,
provides for customary indemnification by the parties thereto for
breaches of representations or covenants, which indemnification
is subject to customary limitations including, among other
things, a cap and time limits.
Each of the Meikle PSA and the MSM PSA, respectively, was
recommended by the Conflicts Committee of our Board of Directors,
which is comprised solely of independent directors, for approval
by our Board of Directors, and was subsequently approved by our
Board of Directors.
A copy of the Meikle PSA is attached as Exhibit 10.8 hereto and
is incorporated by reference, and a copy of the MSM PSA is
attached as Exhibit 10.9 hereto and is incorporated by reference.
The foregoing description of each of the Meikle PSA and the MSM
PSA, respectively, does not purport to be complete and is
qualified in its entirety by reference to the applicable exhibit.
PH2 Purchase and Sale Agreement
On June 16, 2017, we entered into a Purchase and Sale Agreement
(the PH2 PSA) with Vertuous Energy LLC
(Vertuous) (a wholly owned subsidiary of PSP
Investments).
Upon the terms and subject to the conditions set forth in the PH2
PSA, at the closing, we (or one or more of our affiliates) will
sell to Vertuous a 98% membership interest in a newly-formed
limited liability company that will hold 50% of the Class B
membership interests in Panhandle Wind Holdings 2 LLC
(PH2 Holdings) (which holds 100% of the
membership interests in Pattern Panhandle Wind 2 LLC (the
PH2 Project Company)) for consideration of
$58,800,000 (subject to certain adjustments). The PH2 Project
Company operates the approximately 182 megawatt wind farm located
in Carson County, Texas, which achieved commercial operation in
the fourth quarter of 2014. Immediately after the closing, our
owned capacity with respect to the wind farm will be
approximately 75 megawatts.
The parties obligations to consummate the transactions
contemplated by the PH2 PSA are subject to the satisfaction or
waiver of various customary conditions, including, among others
(a) approval by the Committee on Foreign Investment in the United
States and the Public Utility Commission of Texas and the holders
of the Class A membership interests in PH2 Holdings, (b) no
violation of governmental rules, and no order of any court or
administrative agency being in effect which restrains or
prohibits the transactions contemplated thereby and (c) subject
to certain exceptions, the accuracy of the representations of the
parties set forth therein.
The PH2 PSA includes customary representations by the parties
thereto, including as to due authorization, non-contravention,
governmental consents and approvals, enforceability, ownership
and title, no litigation or adverse claims, tax matters and with
respect to the underlying wind farm. The PH2 PSA provides for
customary indemnification by the parties thereto for breaches of
representations or covenants, which indemnification is subject to
customary limitations including, among other things, a cap and
time limits.
The PH2 PSA was recommended by the Conflicts Committee of our
Board of Directors, which is comprised solely of independent
directors, for approval by our Board of Directors, and was
subsequently approved by our Board of Directors.
A copy of the PH2 PSA is attached as Exhibit 10.10 hereto and is
incorporated by reference. The foregoing description of the PH2
PSA does not purport to be complete and is qualified in its
entirety by reference to such exhibit.
Item 5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
During the course of planning and structuring the transactions
contemplated by the agreements described in Item 1.01, in light
of the additional workload required by each of Michael J. Lyon
and Esben W. Pedersen, who serve as the Companys chief financial
officer and chief investment officer, respectively, the
Nominating, Governance, and Compensation Committee and our Board
of Directors initiated a review of such officers compensation
arrangements. Such review considered the following factors:
|
A consideration of the base salaries of Mr. Lyon and Mr. Pedersen compared to persons holding comparable positions at the Companys peers; |
|
The leadership efforts and additional workload placed upon Mr. Lyon and Mr. Pedersen in connection with the planning, structuring, negotiation, and execution of the agreements described under Item 1.01 and the consummation of the transactions contemplated thereby; and |
|
A desire to continue to motivate and retain Mr. Lyon and Mr. Pedersen. |
After consideration, a determination was made to make the
following adjustments for each of Mr. Lyon and Mr. Pedersen
effective and contingent upon the execution of the agreements
described under Item 1.01 of this Current Report on Form 8-K:
| An increase in base salary to $330,000 per annum; |
|
A special one-time award of vested restricted shares amounting to $250,000 to be issued under the Companys Equity Incentive Award Plan. The number of shares is determined based upon the Companys trailing 20 trading day volume weighted average share price for the period ending on and including one trading day prior to the execution of the agreements described under Item 1.01; and |
| A special one-time cash bonus of $250,000. |
Item 7.01. Regulation FD Disclosure.
On June 19, 2017, we issued a press release and made available
supplemental slides. A copy of the press release is furnished as
Exhibit 99.1 to this Current Report on Form 8-K, and a copy of
the supplemental slides is furnished as Exhibit 99.2 to this
Current Report on Form 8-K.
The information included in this Current Report on Form 8-K under
this Item7.01 (including Exhibit 99.1 and Exhibit 99.2 hereto) is
being furnished and shall not be deemed to be filed for the
purposes of Section18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liabilities of Section18,
nor shall it be incorporated by reference into a filing under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except as shall be expressly set forth
by specific reference in such filing. The information included in
this Current Report on Form 8-K under this Item7.01 (including
Exhibit 99.1 and Exhibit 99.2 hereto) will not be deemed an
admission as to the materiality of any information required to be
disclosed solely to satisfy the requirements of Regulation FD.
Item 8.01. Other Events.
Share Purchase Agreement and Assignment of
Registration Rights
On June 16, 2017, PSP Investments acquired 8.7 million shares, or
approximately 9.9%, of the Companys outstanding Class A common
stock from Pattern Development Finance Company LLC, a wholly
owned subsidiary of Pattern Development 1.0 (the PEGI
Share Acquisition). In connection with the PEGI Share
Acquisition, Pattern Development 1.0 assigned to PSP Investments
its existing piggyback registration rights with respect to such
shares under the Registration Rights Agreement between Pattern
Development 1.0 and the Company, which was filed as Exhibit 10.1
to the Companys Current Report on Form 8-K (File No. 001-36087)
filed on October 2, 2013 and is incorporated by reference herein.
Expanded Identified Right of First Offer
Projects
Pattern Development has expanded its pipeline to 10 GW of
development projects, which are subject to our Project Rights.
From Pattern Developments expanded pipeline, an additional 275 MW
of owned capacity has been added to the identified right of first
offer list as of June 16, 2017, for a total of 910 MW.
Since its initial public offering, we have purchased, or agreed
to purchase, 1,358 MW from Pattern Development 1.0 and in
aggregate grown the identified right of first offer list from 746
MW to more than 2 GW (including projects that have already been
acquired). Below is the current updated list of the identified
right of first offer projects owned by Pattern Development that
we expect to acquire from Pattern Development 1.0 and Pattern
Development 2.0, as applicable, in connection with our Project
Rights:
| Capacity (MW) | |||||||||||||||
| Identified ROFO Projects | Status | Location |
Construction Start (1) |
Commercial Operations(2) |
Contract Type | Rated (3) |
Pattern Development- Owned (4) |
||||||||
| Pattern Development 1.0 Projects | |||||||||||||||
| Kanagi Solar | Operational | Japan | PPA | ||||||||||||
| Futtsu Solar | Operational | Japan | PPA | ||||||||||||
| Conejo Solar(5) | Operational | Chile | PPA | ||||||||||||
| Belle River | In construction | Ontario | PPA | ||||||||||||
| Ohorayama | In construction | Japan | PPA | ||||||||||||
| North Kent | In construction | Ontario | PPA | ||||||||||||
| Henvey Inlet | Latestage development | Ontario | PPA | ||||||||||||
| Tsugaru | Late stage development | Japan | PPA | ||||||||||||
| El Cabo | Late stage | U.S. | PPA | ||||||||||||
| Sumita | Late stage | Japan | PPA | ||||||||||||
| Pattern Development 2.0 Projects | |||||||||||||||
| Crazy Mountain | Late stage | U.S. | PPA | ||||||||||||
| Grady | Late stage development | New Mexico | PPA | ||||||||||||
| 1,513 | |||||||||||||||
| (1) |
Represents year of actual or anticipated commencement of construction. |
| (2) |
Represents year of actual or anticipated commencement of commercial operations. |
| (3) |
Rated capacity represents the maximum electricity generating capacity of a project in MW. As a result of wind and other conditions, a project or a turbine will not operate at its rated capacity at all times and the amount of electricity generated will be less than its rated capacity. The amount of electricity generated may vary based on a variety of factors. |
| (4) |
Pattern Development-Owned capacity represents the maximum, or rated, electricity generating capacity of the project in MW multiplied by Pattern Development 1.0s or Pattern Development 2.0s percentage ownership interest in the distributable cash flow of the project. |
| (5) |
From time to time, we conduct strategic reviews of our markets.We have been conducting a strategic review of the market, growth, and opportunities in Chile.In the event we believe we can utilize funds that have already been invested in Chile or funds that might otherwise be invested in Chile in a more productive manner elsewhere that could generate a higher return on investment, we may decide to exit Chile for other opportunities with greater potential. In addition, Pattern Development 1.0 is also concurrently exploring strategic alternatives for its assets in Chile. |
Item 9.01. Financial Statements and Exhibits.
| Exhibit Number | Description |
| 10.1 |
Amended and Restated Purchase Rights Agreement by and among Pattern Development 1.0, the Company, Pattern Energy Group Holdings LP (solely with respect to Article IV therein) and Pattern Energy GP LLC, dated as of June 16, 2017 |
| 10.2 |
Amended and Restated Purchase Rights Agreement by and among Pattern Development 2.0, the Company, Pattern Energy Group Holdings 2 LP (solely with respect to Article III therein) and Pattern Energy Group Holdings 2 GP LLC, dated as of June 16, 2017 |
| 10.3 |
Second Amended and Restated Non-Competition Agreement by and among Pattern Development 1.0, the Company and Pattern Development 2.0, dated as of June 16, 2017 |
| 10.4 |
Amended and Restated Multilateral Management Services Agreement among by and among the Company, Pattern Development 1.0 and Pattern Development 2.0, dated as of June 16, 2017 |
| 10.5 |
Second Amended and Restated Limited Partnership Agreement of PEGH 2, dated as of June 16, 2017 |
| 10.6 |
Joint Venture Agreement between PSP Investments and the Company, dated as of June 16, 2017 |
| 10.7 |
Sponsor Services Agreement between the Company and PSP Investments, dated as of June 16, 2017 |
| 10.8 |
Purchase and Sale Agreement by and among the Company, Vertuous Canada and Pattern Development 1.0, dated as of June 16, 2017 |
| 10.9 |
Purchase and Sale Agreement by and among the Company, Vertuous Canada and Pattern Development 1.0, dated as of June 16, 2017 |
| 10.10 |
Purchase and Sale Agreement by and among Vertuous and the Company, dated as of June 16, 2017 |
| 99.1 | Press Release issued by the Company, dated June 19, 2017. |
| 99.2 | Supplemental slides, dated June 19, 2017. |
Pattern Energy Group Inc. ExhibitEX-10.1 2 dp77426_exhibit1001.htm EXHIBIT 10.1 Exhibit 10.1 AMENDED AND RESTATED PURCHASE RIGHTS AGREEMENT BY AND AMONG PATTERN ENERGY GROUP LP,…To view the full exhibit click here About PATTERN ENERGY GROUP INC. (NASDAQ:PEGI)
Pattern Energy Group Inc. is an independent power company focused on owning and operating power projects. The Company holds interests in over 18 wind power projects located in the United States, Canada and Chile with total capacity of over 2,644 megawatts (MW). Each of its projects has contracted to sell its output pursuant to a power sale agreement. The Company sells its electricity and environmental attributes, including renewable energy credits (RECs), to local utilities under long-term and fixed-price power purchase agreements (PPAs). The Company’s operating projects are Gulf Wind, Texas; Hatchet Ridge, California; St. Joseph, Manitoba; Spring Valley, Nevada; Santa Isabel, Puerto Rico; Ocotillo, California; South Kent, Ontario; El Arrayan, Chile; Panhandle 1, Texas; Panhandle 2, Texas; Grand, Ontario; Post Rock, Kansas; Lost Creek, Missouri; K2, Ontario; Logan’s Gap, Texas, Amazon Wind Farm Fowler Ridge, Indiana, and Armow Wind power facility in Ontario, Canada.