Exhibit 10.2

 

EXECUTION VERSION

 

GUARANTY AGREEMENT

 

This Guaranty Agreement (this “Guaranty”) is made as of March 31, 2015 by
Atlantic Power Corporation, a corporation continued under the laws of the
Province of British Columbia, Canada (“Guarantor”), in favor of TerraForm AP
Acquisition Holdings, LLC, a Delaware limited liability company (the
“Beneficiary”).  Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Membership Interest Purchase Agreement (defined
below).

 

RECITALS

 

WHEREAS, the Beneficiary and Atlantic Power Transmission, Inc., a Delaware
corporation (the “Seller”), have entered into that certain Membership Interest
Purchase Agreement of even date herewith (the “Membership Interest Purchase
Agreement”), pursuant to which the Beneficiary shall, subject to the terms and
conditions set forth therein, acquire from the Seller one hundred percent (100%)
of the issued and outstanding membership interests in TerraForm AP Holdings,
LLC, a Delaware limited liability company;

 

WHEREAS, Guarantor directly owns 100% of the issued and outstanding equity
interests in the Seller and will therefore receive financial and other benefits
from the transactions contemplated by the Membership Interest Purchase
Agreement;

 

WHEREAS, the Beneficiary has required as a condition, among others, to entering
into the Membership Interest Purchase Agreement that Guarantor execute and
deliver this Guaranty to the Beneficiary; and

 

WHEREAS, Guarantor has agreed to enter into this Guaranty to provide assurance
for the payment obligations of the Seller in connection with the Membership
Interest Purchase Agreement, and to induce the Beneficiary to enter into the
Membership Interest Purchase Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.                                      Guaranty.

 

(a)                                 For value received and in consideration of
the transactions contemplated by the Membership Interest Purchase Agreement,
Guarantor absolutely, unconditionally and irrevocably guarantees for the benefit
of the Beneficiary and its permitted successors and assigns, the full and prompt
payment of all payment obligations of the Seller under the Membership Interest
Purchase Agreement (collectively, the “Guaranteed Obligations”) as and when the
same shall become due in accordance with the Membership Interest Purchase
Agreement.  Guarantor hereby agrees that this Guaranty is an absolute guaranty
of payment and is not a guaranty of collection.

 

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(b)                                 Any and all payments by Guarantor hereunder
shall be made free and clear of, and without reduction for, any and all taxes,
levies, imposts, deductions, charges, withholdings, and all stamp or documentary
taxes, excise taxes, ad valorem taxes and other taxes, charges or levies which
arise from the payment of Guarantor hereunder.

 

(c)                                  Notwithstanding anything herein to the
contrary:

 

(i)                               Guarantor shall not be required to make a
payment in respect of any Guaranteed Obligation while the validity and existence
of such Guaranteed Obligation is being disputed in good faith by the Seller in
accordance with the relevant provisions of the Membership Interest Purchase
Agreement; and

 

(ii)                            Guarantor’s liability in respect of any
Guaranteed Obligation shall not exceed the liability of the Seller with respect
to such Guaranteed Obligation under the Membership Interest Purchase Agreement.

 

2.                                      Obligations Absolute and Unconditional. 
Guarantor hereby agrees that its obligations under this Guaranty shall be
irrevocable, continuing, absolute, and unconditional, irrespective of, and the
Guaranteed Obligations of Guarantor shall not be discharged or impaired or
otherwise effected by, and Guarantor hereby irrevocably waives any defenses to
enforcement it may have (now in the future) by reason of:

 

(a)                                 the illegality, lack of validity,
enforceability, avoidance, or subordination of any of the Guaranteed Obligations
or the Membership Interest Purchase Agreement;

 

(b)                                 the absence of any attempt by, or on behalf
of, the Beneficiary, to collect, or to take any other action to enforce, all or
any part of the Guaranteed Obligations whether from or against the Seller or any
other Person;

 

(c)                                  the election of any remedy available under
the Membership Interest Purchase Agreement or applicable Laws by, or on behalf
of, the Beneficiary with respect to all or any part of the Guaranteed
Obligations;

 

(d)                                 the waiver, consent, extension, forbearance
or granting of any indulgence by, or on behalf of, the Beneficiary, with respect
to any provision of the Membership Interest Purchase Agreement;

 

(e)                                  any change in the legal or beneficial
ownership, or the existence or structure as a partnership or other entity, of
the Seller or any other Person now or hereafter liable with respect to any of
the Guaranteed Obligations (including, without limitation, any consolidation or
amalgamation with, any merger with or into, or any transfer of all or
substantially all the assets of the Seller or such other Person to, another
Person);

 

(f)                                   the disallowance, under Section 502 of the
Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), of all
or any portion of the claims against the Seller held by the Beneficiary, for
payment of all or any part of the Guaranteed Obligations;

 

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(g)                                  the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code with respect to the Seller; or

 

(h)                                 to the fullest extent permitted by
applicable Law, any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.

 

3.                                      Enforcement; Application of Payments. 
In the case of any failure by the Seller to pay any Guaranteed Obligation in
accordance with the terms of the Membership Interest Purchase Agreement,
Guarantor hereby agrees that, upon receipt of written notice from the
Beneficiary of such failure, Guarantor will promptly make payment of such
Guaranteed Obligations owing to the Beneficiary without first proceeding against
the Seller or any other Person.  Any amounts received by the Beneficiary
hereunder shall be applied to the Guaranteed Obligations.

 

4.                                      Waivers and Acknowledgments.

 

(a)                                 Guarantor unconditionally and irrevocably
hereby waives any right to revoke this Guaranty, diligence, presentment, demand
of payment, filing of claims with a court in the event of receivership or
bankruptcy of the Seller or any other Person (other than Guarantor to the extent
required by the Bankruptcy Code), protest or notice with respect to the
Guaranteed Obligations, all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and notices of
acceptance of this Guaranty, and all other notices or demands whatsoever (and
shall not require that the same be made on the Seller as a condition precedent
to Guarantor’s obligations hereunder).

 

(b)                                 The Beneficiary is hereby authorized,
without notice or demand and without affecting the liability of Guarantor
hereunder, from time to time, (i) to renew, extend, accelerate or otherwise
change the time for payment of, or other terms relating to, all or any part of
the Guaranteed Obligations, or to otherwise modify, amend or change the terms of
the Membership Interest Purchase Agreement (including the addition or
substitution of any Person now or hereafter liable with respect to any
Guaranteed Obligation); (ii) to accept partial payments on all or any part of
the Guaranteed Obligations; (iii) to take and hold security or collateral for
the payment of all or any part of the Guaranteed Obligations, this Guaranty, or
any other guaranties of all or any part of the Guaranteed Obligations; (iv) to
exchange, enforce, waive and release any such security or collateral; (v) to
apply such security or collateral and direct the order or manner of sale thereof
as in its discretion it may determine; and (vi) to settle, release, exchange,
enforce, waive, compromise or collect or otherwise liquidate all or any part of
the Guaranteed Obligations or any other guaranty of all or any part of the
Guaranteed Obligations, and any security or collateral for the Guaranteed
Obligations or for any such guaranty, irrespective of the effect on the
contribution or subrogation rights of Guarantor.  Any of the foregoing may be
done in any manner, without affecting or impairing the obligations of Guarantor
hereunder.

 

5.                                      Reinstatement.  Guarantor further agrees
that, to the extent that the Seller makes a payment or payments of Guaranteed
Obligations to the Beneficiary, which payment or payments of Guaranteed
Obligations, or any part thereof are subsequently rescinded,

 

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invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to the Seller, or its trustee, receiver or any other
party, including, without limitation, Guarantor under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, the part of the Guaranteed Obligations which has been
paid, reduced or satisfied by such amount shall be reinstated and continued in
full force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.

 

6.                                      Subrogation.  Guarantor will not
exercise any rights that it may acquire by way of subrogation under this
Guaranty, by any payment made hereunder or otherwise, until all of the
Guaranteed Obligations shall have been paid in full.  If any amount shall be
paid to Guarantor on account of such subrogation rights at any time when all of
the Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of the Beneficiary and shall forthwith be paid
to the Beneficiary to be credited and applied to such Guaranteed Obligations in
accordance with the terms of the Membership Interest Purchase Agreement.  If
(i) Guarantor shall make payment to the Beneficiary of all or any part of the
Guaranteed Obligations and (ii) all of the Guaranteed Obligations shall be paid
in full, the Beneficiary will, at Guarantor’s request and expense, execute and
deliver, or will cause to be executed and delivered, to Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by Guarantor.

 

7.                                      Enforcement; Amendments; Waivers.  No
delay on the part of the Beneficiary in the exercise of any right or remedy
arising under this Guaranty, the Membership Interest Purchase Agreement or
otherwise with respect to all or any part of the Guaranteed Obligations shall
operate as a waiver thereof, and no single or partial exercise by the
Beneficiary of any such right or remedy shall preclude any further exercise
thereof.  No modification or waiver of any of the provisions of this Guaranty
shall be binding upon the Beneficiary or Guarantor, except as expressly set
forth in a writing duly signed and delivered by the Beneficiary and Guarantor. 
Failure by the Beneficiary at any time or times hereafter to require strict
performance by the Seller of all or any part of the Guaranteed Obligations or
any other Person of any of the provisions, warranties, terms and conditions
contained in the Membership Interest Purchase Agreement shall not waive, affect
or diminish any right of the Beneficiary at any time or times hereafter to
demand strict performance thereof and such right shall not be deemed to have
been waived by any act or knowledge of the Beneficiary (or its agents, officers
or employees), unless such waiver is contained in an instrument in writing from
the Beneficiary directed and delivered to the Seller or Guarantor, as
applicable, specifying such waiver, and is signed by the Beneficiary.  No waiver
of any default in the Guaranteed Obligations by the Beneficiary shall operate as
a waiver of any other default of the Guaranteed Obligations or the same default
of the Guaranteed Obligations on a future occasion.

 

8.                                      Effectiveness; Termination.  This
Guaranty shall become effective against Guarantor upon its execution by
Guarantor and shall continue in full force and effect and may not be terminated
or otherwise revoked until (and, notwithstanding anything contrary continued
herein, Guarantor shall be automatically released and this Guaranty shall be
automatically terminated without further act of Guarantor or the Beneficiary
upon) the earliest to occur of (i) payment in full of the Guaranteed
Obligations, subject to automatic reinstatement if any

 

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payment by the Seller in respect of the Guaranteed Obligations is rescinded or
returned, (ii) the date on which all indemnification obligations of the Seller
have been terminated pursuant to the terms of the Membership Interest Purchase
Agreement, (iii) the date of termination of the Membership Interest Purchase
Agreement if terminated pursuant to Section 10.1 thereof, (iv) the date of
termination of this Guaranty in writing by and among Guarantor and the
Beneficiary, and (v) the date that is five (5) years after the Closing Date.

 

9.                                      Successors and Assigns.  This Guaranty
shall be binding upon Guarantor and upon the successors and permitted assigns of
Guarantor and shall inure to the benefit of the Beneficiary and its respective
successors and permitted assigns under and in accordance with the terms of the
Membership Interest Purchase Agreement.

 

10.                               Consent to Assignment; Exceptions.  Guarantor
may not assign its rights or delegate its obligations under this Guaranty, in
whole or in part, without the prior written consent of the Beneficiary, and any
purported assignment or delegation absent such consent is void, except for an
assignment and delegation of all of Guarantor’s rights and obligations hereunder
in whatever form Guarantor determines may be appropriate to a partnership,
corporation, trust or other organization in whatever form that succeeds to all
or substantially all of Guarantor’s assets and business and that assumes such
obligations by contract, operation of law or otherwise.  Upon any such
delegation and assumption of obligations, Guarantor shall be relieved of and
fully discharged from all obligations hereunder, whether such obligations arose
before or after such delegation and assumption.

 

11.                               Governing Law. This Guaranty shall be governed
by and construed in accordance with the Laws of the State of New York, without
regard to any conflict of laws provisions thereof that would result in the
application of the Law of another Jurisdiction.

 

12.                               Certain Consents and Waivers.

 

(a)                                 Jurisdiction and Venue.  Each of Guarantor
and the Beneficiary hereby irrevocably and unconditionally submits, for itself
and its property, to the non-exclusive jurisdiction of any state or federal
court in the Borough of Manhattan, New York, New York, in any action or
proceeding arising out of or relating to this Guaranty.  Each of Guarantor and
the Beneficiary waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto.  Each
of Guarantor and the Beneficiary agrees that service of summons and complaint or
any other process that might be served in any action or proceeding may be made
on such party by sending or delivering a copy of the process to the party to be
served at the address of the party and in the manner provided for the giving of
notices in Section 13.  Nothing in this Section 12, however, shall affect the
right of any party to serve legal process in any other manner permitted by Law. 
Each of Guarantor and the Beneficiary agrees that a final, non-appealable
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by Law.

 

(b)                                 Waiver of Jury Trial.  EACH OF GUARANTOR AND
THE BENEFICIARY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY

 

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RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

13.                               Notices.  All notices and other communications
required or desired to be served, given or delivered hereunder shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered United States mail or sent by telecopier or other
electronic means as follows:

 

(i)                                     if to Guarantor, to:

 

Atlantic Power Corporation
One Federal Street, 30th Floor

Boston, MA 02110

Facsimile No.: 617-977-2410

Attention:  Jeffrey S. Levy, Senior Vice President,

Legal

Email: jlevy@atlanticpower.com

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

One Federal Street

Boston, MA 02110

Facsimile No.: 617-341-7701

Attention: Mitchell D. Carroll

Email: mcarroll@morganlewis.com

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, NY 10178-0060

Facsimile No.: 212-309-6001

Attention: Lisa M. Campisi

Email: lcampisi@morganlewis.com

 

(ii)                                  if to the Beneficiary, to:

 

TerraForm Power

7550 Wisconsin Ave, 9th Floor

Bethesda, MD 20814

Facsimile No.: 240-762-7900

Attention: Legal Department, Anne Marie DeMent

E-mail address: ADeMent@terraform.com

 

with a copy (which shall not constitute notice) to:

 

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Chadbourne & Parke LLP

1200 New Hampshire Ave NW

Washington, DC 20026

Facsimile No.: 202-974-6774

Attention: Keith Martin

E-mail Address: kmartin@chadbourne.com

 

or, as to each party, at such other address as designated by such party in a
written notice to the other party.  Notice given by personal delivery, mail or
overnight courier pursuant to this Section 13 shall be effective upon physical
receipt.  Notice given by facsimile or electronic means pursuant to this Section
13 shall be effective as of (i) the date of confirmed delivery if delivered
before 5:00 p.m. Eastern Time on any Business Day or (ii) the next succeeding
Business Day if confirmed delivery is after 5:00 p.m. Eastern Time on any
Business Day or during any non-Business Day; provided, in each case, such
transmission is promptly confirmed by either personal delivery, mail or
overnight courier.

 

14.                                    Severability.  Wherever possible, each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision of this Guaranty
shall be prohibited by or invalid under such Law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Guaranty.

 

15.                                    Merger.  This Guaranty represents the
final agreement of Guarantor and the Beneficiary with respect to the matters
contained herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, by and among
Guarantor and the Beneficiary.

 

16.                                    Execution in Counterparts.  This Guaranty
may be executed by the parties hereto in multiple counterparts and shall be
effective as of the date set forth above when each party shall have executed and
delivered a counterpart hereof, whether or not the same counterpart is executed
and delivered by each party.  When so executed and delivered, each such
counterpart shall be deemed an original, and all such counterparts shall be
deemed one and the same document.  Transmission of images of signed signature
pages by facsimile, e-mail or other electronic means shall have the same effect
as the delivery of manually signed documents in person.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, this Guaranty has been duly executed as of the date and year
first set forth above.

 

 

GUARANTOR:

 

 

 

 

 

ATLANTIC POWER CORPORATION

 

 

 

 

By:

/s/ Terrence Ronan

 

 

 

Name: Terrence Ronan

 

 

 

Title: Chief Financial Officer

 

[Signature Page to Atlantic Power Corporation Guaranty]

 

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ACCEPTED AND AGREED TO BY THE BENEFICIARY:

 

 

 

 

 

TERRAFORM AP ACQUISITION HOLDINGS, LLC

 

 

 

By:

/s/ Carlos Domenech

 

Name:

Carlos Domenech

 

Title:

President & CEO

 

 

 

[Signature Page to Atlantic Power Corporation Guaranty]

 

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