Name: ____________
Date: _____________
Credit Agreement Summary Term Sheet
| Borrower | Redacted |
| Lender | Redacted |
| Secured Parties | A secured party is any party who holds an asset as a pledge or collateral associated with a debt owed to that party. In this agreement, the secured party is the lender. |
| Independent Engineer | Independent engineers provide technical assistance to the lenders. In this agreement, the Independent Engineer is Garrad Hassan or the successor thereof. |
| Recourse to parties other than Borrower | In the event the Borrower defaults in payment of the loan, the Lender may pursue the Collateral agent. The Lender may also seek redress from any Borrower’s financier. |
| Term/Maturity | Term, under the agreement, means the period in which the Borrower will remain obligated for a loan. The Term loans shall mature upon the Term Conversion Date, which is the date the Lender converts the Construction loan to a Term loan. The term Loan shall earn interest until the Borrower settles it. |
| Interest Rates and Compounding mechanics | The Borrower shall pay interest on the principle amount of every Term Loan. The interest rate shall be paid pursuant to the LIBO rate as it appears on the BBAMI page of the Bloomberg Professional Service, or the arithmetic mean of the Reuters Monitor Money Rates Service. |
| Commitment Fee | This is the amount of money that the Borrower will pay the Lender based on the Lender’s share of the Construction Loan. It shall be (0.50%) x (daily average unused amount of construction loan) x (number of days of the period/360) |
| Default interest rate | The interest rate is the rate charged in the event of a default, which rate is set at 2% of the interest rate of the Construction Loan Period. |
| Principal Amount |
This refers to the principal amount of the loans. The Borrower determines the principal amount and issues a certificate thereof. The principal amount of any loan obligation(s) should not exceed the Lender’s Proportionate Share of the Total Term Loan Commitment. |
| Principal Amortization | This refers to all amounts which Borrower is required to pay in reduction of indebtedness. The Amortization schedule is found in Exhibit V of the Agreement. |
| Prepayment Penalty | In the event the Borrower prepays the loan, the Borrower shall pay all accrued interest, all accrued fees, and make-whole amounts. |
| Conditions precedent to Term Loan Conversion | The Borrower shall deliver an annual operating budget to the Lender; the Borrower shall deliver an Amortization schedule to the Lender; the Borrower shall deliver to the Lender, a Notice of Term Conversion; there should be no fault on the part of the Borrower; the Borrower should have paid Construction Loans; the Bond-holders must have redeemed the bonds issued; there should be no adverse effect; the Borrower must submit a certificate to the lender; borrower should have delivered applicable permits; there must have been inspection and a release of liens; there must be no litigation pending; the Borrower must also make other relevant deliveries; the Borrower must submit manuals to the Independent Engineer; the Buyer must submit completion certificates, and a survey of the project site to the lender; the lender and collateral agent must receive title policy endorsements; the work on the project must have been done professionally; borrower must have deposited amounts to the Debt Service Reserve Account; the Buyer must have delivered to the lenders and the collateral agents legal opinions; insurance should be in effect; there must have been equity capital funding; there must have been no tax law change; and lastly, the Borrower must submit such other documents that are needed. |
| Cash waterfall |
A cash waterfall outlines how the cash shall be distributed according to a pre-agreed order. The Depository Agreement outlines the cash waterfall.
Equity investors shall be paid from the Construction Account. |
| Representations of the Borrower | The Borrower makes several representations including: it is duly organized under applicable laws; borrower is duly authorized to transact; borrower is not engaged in any unfair labor practice; borrower has met its tax obligations; borrower conducts the business outlined in its operative documents; the loans sought are for commercial purposes; borrower is not n investment company; borrower’s proceeds shall not be used to further an illegality; and the Borrower will adhere to applicable law. |
|
Key Affirmative Covenants:
|
These include the Borrower agreeing to reporting requirements.
These include that, the Borrower: shall maintain its existence; shall comply with applicable law; shall procure necessary insurance; shall pay taxes; shall maintain adequate books, and accounts and records. |
| Key Negative Covenants | Negative covenants include that the Borrower: shall not make any fundamental change(s); shall not establish a new location; shall not create, or cause any lien on any Borrower’s property; and shall not become liable with regard to indebtedness. |
|
Transfer of Ownership of Borrower/Sponsor/Pledgor
tightly restricted?
transferees |
|
| Waiver of Compliance with Covenants | The Majority Lenders may waive the Borrower’s compliance with the Covenants in the Agreement. Majority Lenders are those Lenders holding over 50% of the unpaid principal. The waiver must be in writing. |
|
Financial Ratios Provide calculation methodologies for: (1) Cash Available for Debt Service (2) DSCR |
The Cash available for Debt service is arrived at by considering the lesser of $57,351,241 and the maximum principal amount of Term loans, in which the Borrower can keep a certain amount based on a 20 year production level/projection. The parties may use a Debt Service Coverage Ratio of 1.4 to 1.0 during every year from the Term Conversion date to maturity thereof, for a P50 production level; and Debt Service Coverage Ratio of 1.4 to 1.0 during every year from the Term Conversion date to maturity thereof for P99 production level. |
|
Events of Default (1) Try to specify cure periods, if any (2) You may have to look up some of the covenants listed by section number |
Events of default include: failure by the Borrower to make payments- cure period of 5 business days; any misrepresentation done by the Borrower- cure period of 30 days; Bankruptcy event experienced by the Borrower; a default beyond any acceptable grace period; breach and/or loss of major project documents, by the Borrower- cure period of 60 days, in which such project document needs to be replaced; breach of the terms of the Credit Agreement- cure period of 10 days after the Borrower knows of such breach; Borrower’s loss of applicable permits- cure period of 45 days to obtain new permits; Borrower’s loss of collateral; Borrower’s abandonment of the project; or term conversion. |
|
Remedies (1) What is discretionary? (2) What is automatic? |
In the Lender’s discretion, any Lender may suspend the right of the Borrower to borrow or continue a loan on the basis of a LIBO Rate; the Lenders may also exercise any right under financial documents.
The Lenders may cancel their Commitments to the Borrower; the Lenders may advance loans to Borrower to help cure a default; the Lenders may make all sums immediately due payable by the Borrower; or the Lenders may possess the project. |
|
Amendments (What is procedure? Are there special exceptions?) |
For an amendment to be valid, the Majority Lenders and the Borrower must enter Agreements to that effect. No supplemental Agreement shall not: extend the loan maturity date; modify certain sections of the Agreement; reduce/extend the date of payment of an due amount; increase amount of any Lender’s commitments; reduce the percentages specified in in the definition of Majority Lenders; amend section 11.9; or release the collateral from lien; without the Lenders’ consent. |
| Governing Law | The law that shall be applicable in construing the Agreement shall be the law of the State of New York. |
Name: ____________
Date: _____________
Credit Agreement Summary Term Sheet
| Borrower | Redacted |
| Lender | Redacted |
| Secured Parties | A secured party is any party who holds an asset as a pledge or collateral associated with a debt owed to that party. In this agreement, the secured party is the lender. |
| Independent Engineer | Independent engineers provide technical assistance to the lenders. In this agreement, the Independent Engineer is Garrad Hassan or the successor thereof. |
| Recourse to parties other than Borrower | In the event the Borrower defaults in payment of the loan, the Lender may pursue the Collateral agent. The Lender may also seek redress from any Borrower’s financier. |
| Term/Maturity | Term, under the agreement, means the period in which the Borrower will remain obligated for a loan. The Term loans shall mature upon the Term Conversion Date, which is the date the Lender converts the Construction loan to a Term loan. The term Loan shall earn interest until the Borrower settles it. |
| Interest Rates and Compounding mechanics | The Borrower shall pay interest on the principle amount of every Term Loan. The interest rate shall be paid pursuant to the LIBO rate as it appears on the BBAMI page of the Bloomberg Professional Service, or the arithmetic mean of the Reuters Monitor Money Rates Service. |
| Commitment Fee | This is the amount of money that the Borrower will pay the Lender based on the Lender’s share of the Construction Loan. It shall be (0.50%) x (daily average unused amount of construction loan) x (number of days of the period/360) |
| Default interest rate | The interest rate is the rate charged in the event of a default, which rate is set at 2% of the interest rate of the Construction Loan Period. |
| Principal Amount |
This refers to the principal amount of the loans. The Borrower determines the principal amount and issues a certificate thereof. The principal amount of any loan obligation(s) should not exceed the Lender’s Proportionate Share of the Total Term Loan Commitment. |
| Principal Amortization | This refers to all amounts which Borrower is required to pay in reduction of indebtedness. The Amortization schedule is found in Exhibit V of the Agreement. |
| Prepayment Penalty | In the event the Borrower prepays the loan, the Borrower shall pay all accrued interest, all accrued fees, and make-whole amounts. |
| Conditions precedent to Term Loan Conversion | The Borrower shall deliver an annual operating budget to the Lender; the Borrower shall deliver an Amortization schedule to the Lender; the Borrower shall deliver to the Lender, a Notice of Term Conversion; there should be no fault on the part of the Borrower; the Borrower should have paid Construction Loans; the Bond-holders must have redeemed the bonds issued; there should be no adverse effect; the Borrower must submit a certificate to the lender; borrower should have delivered applicable permits; there must have been inspection and a release of liens; there must be no litigation pending; the Borrower must also make other relevant deliveries; the Borrower must submit manuals to the Independent Engineer; the Buyer must submit completion certificates, and a survey of the project site to the lender; the lender and collateral agent must receive title policy endorsements; the work on the project must have been done professionally; borrower must have deposited amounts to the Debt Service Reserve Account; the Buyer must have delivered to the lenders and the collateral agents legal opinions; insurance should be in effect; there must have been equity capital funding; there must have been no tax law change; and lastly, the Borrower must submit such other documents that are needed. |
| Cash waterfall |
A cash waterfall outlines how the cash shall be distributed according to a pre-agreed order. The Depository Agreement outlines the cash waterfall.
Equity investors shall be paid from the Construction Account. |
| Representations of the Borrower | The Borrower makes several representations including: it is duly organized under applicable laws; borrower is duly authorized to transact; borrower is not engaged in any unfair labor practice; borrower has met its tax obligations; borrower conducts the business outlined in its operative documents; the loans sought are for commercial purposes; borrower is not n investment company; borrower’s proceeds shall not be used to further an illegality; and the Borrower will adhere to applicable law. |
|
Key Affirmative Covenants:
|
These include the Borrower agreeing to reporting requirements.
These include that, the Borrower: shall maintain its existence; shall comply with applicable law; shall procure necessary insurance; shall pay taxes; shall maintain adequate books, and accounts and records. |
| Key Negative Covenants | Negative covenants include that the Borrower: shall not make any fundamental change(s); shall not establish a new location; shall not create, or cause any lien on any Borrower’s property; and shall not become liable with regard to indebtedness. |
|
Transfer of Ownership of Borrower/Sponsor/Pledgor
tightly restricted?
transferees |
|
| Waiver of Compliance with Covenants | The Majority Lenders may waive the Borrower’s compliance with the Covenants in the Agreement. Majority Lenders are those Lenders holding over 50% of the unpaid principal. The waiver must be in writing. |
|
Financial Ratios Provide calculation methodologies for: (1) Cash Available for Debt Service (2) DSCR |
The Cash available for Debt service is arrived at by considering the lesser of $57,351,241 and the maximum principal amount of Term loans, in which the Borrower can keep a certain amount based on a 20 year production level/projection. The parties may use a Debt Service Coverage Ratio of 1.4 to 1.0 during every year from the Term Conversion date to maturity thereof, for a P50 production level; and Debt Service Coverage Ratio of 1.4 to 1.0 during every year from the Term Conversion date to maturity thereof for P99 production level. |
|
Events of Default (1) Try to specify cure periods, if any (2) You may have to look up some of the covenants listed by section number |
Events of default include: failure by the Borrower to make payments- cure period of 5 business days; any misrepresentation done by the Borrower- cure period of 30 days; Bankruptcy event experienced by the Borrower; a default beyond any acceptable grace period; breach and/or loss of major project documents, by the Borrower- cure period of 60 days, in which such project document needs to be replaced; breach of the terms of the Credit Agreement- cure period of 10 days after the Borrower knows of such breach; Borrower’s loss of applicable permits- cure period of 45 days to obtain new permits; Borrower’s loss of collateral; Borrower’s abandonment of the project; or term conversion. |
|
Remedies (1) What is discretionary? (2) What is automatic? |
In the Lender’s discretion, any Lender may suspend the right of the Borrower to borrow or continue a loan on the basis of a LIBO Rate; the Lenders may also exercise any right under financial documents.
The Lenders may cancel their Commitments to the Borrower; the Lenders may advance loans to Borrower to help cure a default; the Lenders may make all sums immediately due payable by the Borrower; or the Lenders may possess the project. |
|
Amendments (What is procedure? Are there special exceptions?) |
For an amendment to be valid, the Majority Lenders and the Borrower must enter Agreements to that effect. No supplemental Agreement shall not: extend the loan maturity date; modify certain sections of the Agreement; reduce/extend the date of payment of an due amount; increase amount of any Lender’s commitments; reduce the percentages specified in in the definition of Majority Lenders; amend section 11.9; or release the collateral from lien; without the Lenders’ consent. |
| Governing Law | The law that shall be applicable in construing the Agreement shall be the law of the State of New York. |
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