13D Filing: Brookfield Asset Management Inc. and Terraform Power Inc. (TERP)

Sponsorship Arrangements

Pursuant to the Transaction Agreement, in connection with the consummation of the Merger, the Issuer and Orion US LP (or one of its affiliates), among other parties, entered into a suite of agreements providing for sponsorship arrangements pursuant to a master services agreement, a relationship agreement and a sponsor line agreement (the “Sponsorship Arrangements”).

On October 16, 2017, in connection with the consummation of the Merger, Brookfield entered into a Master Services Agreement (the “MSA”), with the Issuer, BRP Energy Group L.P., BAMPIC Canada, Brookfield Global Renewable Energy Advisor Limited, TERP LLC and TERP Operating LLC, pursuant to which Brookfield and certain of its affiliates (the “Service Providers”) will provide certain management and administrative services, including the provision of strategic and investment management services, to the Issuer and its subsidiaries.

On October 16, 2017, in connection with the consummation of the Merger, Brookfield entered into a Relationship Agreement (the “Relationship Agreement”) with the Issuer, TERP LLC and TERP Operating LLC, which governs certain aspects of the relationship between Brookfield and the Issuer and its subsidiaries.  Pursuant to the Relationship Agreement, during the term of the agreement, the Issuer and its subsidiaries will serve as the primary vehicle through which Brookfield and its affiliates will acquire operating solar and wind assets in certain countries in North America and Western Europe, and Brookfield will grant the Issuer a right of first offer on any proposed transfer of certain existing projects and all future operating solar and wind projects located in such countries developed by persons sponsored by or under the control of Brookfield.

On October 16, 2017, the Issuer entered into a credit agreement (the “Sponsor Line Agreement”), between the Issuer, as Borrower, on the one hand, and Brookfield and Brookfield Finance Luxembourg S.À R.L., a société à responsabilité limitée organized under the laws of the Grand Duchy of Luxembourg (together with Brookfield, the “Lenders”), as Lenders, on the other hand.  The Sponsor Line Agreement establishes a $500,000,000 revolving credit facility by the Lenders to the Issuer and provides for the Lenders to commit to make LIBOR loans to the Issuer during a period not to exceed three years from the effective date of the Sponsor Line Agreement (subject to acceleration for certain specified events).  The Issuer may only use the revolving credit facility to fund all or a portion of certain funded acquisitions or growth capital expenditures.  The Sponsor Line Agreement will terminate, and all obligations thereunder will become payable, no later than October 16, 2022.

The foregoing descriptions of the MSA, Relationship Agreement and Sponsor Line Agreement do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the MSA, Relationship Agreement and Sponsor Line Agreement, respectively, which are attached hereto as Exhibits 99.8, 99.9 and 99.10, respectively, and incorporated herein by reference.

Governance Arrangements

Pursuant to the Transaction Agreement, and in connection with the consummation of the Merger, the Reporting Persons received certain governance rights (the “Governance Arrangements”), which were reflected in amendments and restatements to the Company’s governing documents, including its certificate of incorporation (as so amended and restated, the “Charter”) and bylaws (as so amended and restated, “the Bylaws”), and a governance agreement by and among the Issuer and Orion US LP and any controlled affiliate of Brookfield (other than the Issuer and its controlled affiliates) (together with Brookfield, the “Sponsor Group”) that by the terms of the Governance Agreement from time to time becomes a party thereto (the “Governance Agreement”).

Pursuant to the Governance Arrangements, the size of the board of directors of the Issuer was set at seven members, of whom four were designated by Orion US LP and three of whom are independent directors pursuant to Nasdaq’s independence standards (such directors, “independent directors”).  On October 16, 2017, Orion US LP designated Brian Lawson, Harry Goldgut, Richard Legault and Sachin Shah, each of whom is affiliated with Brookfield, to serve as the four directors of the Issuer appointed by Orion US LP.  At Orion US LP’s request, the Company appointed Mr. Mark “Mac” McFarland as one of the three initial independent directors of the Issuer.  Pursuant to the Governance Agreement, the board of directors established a new conflicts committee of the board of directors comprised of independent directors, which will consider, among other things, matters in which a conflict of interest exists between the Issuer, on the one hand, and Orion US LP and its affiliates, on the other hand. The board of directors also established a new nominating and corporate governance committee of the board of directors (the “Nominating Committee”) comprised of three directors, at least one of whom is a director designated by Orion US LP and at least one of whom is one of the three independent directors.  On October 16, 2017, Orion US LP designated Mr. Harry Goldgut to the Nominating Committee in accordance with the Governance Agreement.