Exhibit 10.7

 

 EXECUTION VERSION

 

 

 

SPONSOR SERVICES AGREEMENT

between

PATTERN ENERGY GROUP INC.

and

PUBLIC SERVICE PENSION INVESTMENT BOARD

Dated as of June 16, 2017

 

 

 EXECUTION VERSION

 

TABLE OF CONTENTS

 

 

 

Page

 

Article 1

Definitions

Section 1.01.   Definitions. 1 Section 1.02.   Construction. 1

Article 2

Engagement of PEGI

Section 2.01.   Engagement of PEGI. 2 Section 2.02.   Relationship. 2 Section
2.03.   PSP Project Entities. 2

Article 3

Term and Renewal

Section 3.01.   Term. 3 Section 3.02.   Renewal. 3

Article 4

Scope of Services

Section 4.01.   Services. 3 Section 4.02.   Third Party Service Providers. 3
Section 4.03.   Service Changes. 4

Article 5

Representation and Warranties

Section 5.01.   General. 4 Section 5.02.   PEGI Representations. 5

Article 6

Fees and Cost Reimbursement

Section 6.01.   Remuneration. 5 Section 6.02.   Reimbursable Expenses. 6 Section
6.03.   Payment Procedure. 7 Section 6.04.   PSP Access and Audit Rights. 8
Section 6.05.   Set-Off. 8

Article 7

PEGI Property

Section 7.01.   PEGI Property. 9 Section 7.02.   Further Assurances. 9

 

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Article 8

Indemnification

Section 8.01.   Indemnification by PEGI. 9 Section 8.02.   Indemnification by
PSP. 10 Section 8.03.   Indemnification Procedure. 10 Section 8.04.   Trustee
and Agent. 11 Section 8.05.   Survival. 11

Article 9

Termination

Section 9.01.   Termination by Either Party. 11 Section 9.02.   Termination by
PSP. 12 Section 9.03.   Termination by PEGI. 13 Section 9.04.   Termination for
Convenience. 13 Section 9.05.   Completion of Services at End of Term. 14

Article 10

Standard of Performance

Section 10.01.   Prudent Service Provider Standard. 14

Article 11

Limitations of Liability

Section 11.01.   Total Limitation of Liability. 14 Section 11.02.   Waiver of
Consequential Damages. 15 Section 11.03.   General. 15

Article 12

Notices

Article 13

Confidentiality

Section 13.01.   General Confidential Information. 16 Section 13.02.   Limited
Disclosure of Confidential Information. 17

Article 14

Dispute Resolution

Section 14.01.   Procedure. 17

Article 15

Miscellaneous

Section 15.01.   Execution. 18 Section 15.02.   Governing Law. 18 Section
15.03.   Amendments, Supplements, Etc. 19

 

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Section 15.04.   Headings. 19 Section 15.05.   Assignment. 19 Section
15.06.   Successors and Assigns. 20 Section 15.07.   Waiver. 20 Section
15.08.   Severability. 20 Section 15.09.   Construction. 20 Section
15.10.   Entire Agreement. 20 Section 15.11.   No Third-Party Beneficiaries. 20
Section 15.12.   Currency. 20 Section 15.13.   Survival. 20 Section
15.14.   Change in Law or Agreement. 20

 

A - Schedule of Definitions B - Services C - Jointly Owned Companies D - Form of
Accession Agreement

 

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SPONSOR SERVICES AGREEMENT

 

This SPONSOR SERVICES AGREEMENT (this “Agreement”), dated as of June 16, 2017 is
between PATTERN ENERGY GROUP INC., a Delaware corporation (“PEGI”), PUBLIC
SERVICE PENSION INVESTMENT BOARD, an Entity having its registered office at 1250
Rene-Levesque Blvd. West, Suite 1400, Montreal, Quebec, H3B 5E9, Canada (“PSP”)
and each PSP Project Entity that may become a party to this Agreement from time
to time in accordance with the terms hereof. PSP, PEGI and each PSP Project
Entity are sometimes referred to in this Agreement individually as a “Party” and
collectively as the “Parties”.

 

R E C I T A L S

 

WHEREAS, Public Sector Pension Investment Board and PEGI have entered into that
certain Joint Venture Agreement (the “Joint Venture Agreement”), dated as of the
date hereof, pursuant to which, among other things, PSP and PEGI have agreed to
a framework (the “Joint Acquisition Framework”) governing the acquisition and/or
ownership of certain Subject Project Companies (as defined in the Joint Venture
Agreement) that may from time to time be jointly owned by PEGI or its
Affiliates, on the one hand, and a PSP Project Entity on the other (each, a
“Jointly Owned Company”);

 

WHEREAS, PSP, for and on behalf of each PSP Project Entity, wishes to engage
PEGI, and PEGI wishes to accept such engagement, to provide certain mutually
agreed services to each PSP Project Entity with respect to the administration of
the Joint Acquisition Framework and the Jointly Owned Companies, in each case in
accordance with the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Parties, intending to be legally
bound, agree as follows:

 

Article 1
Definitions

 

Section 1.01.      Definitions. As used in this Agreement, including the
Recitals, all capitalized terms shall have the respective meanings given to them
in this Agreement and in the Schedule of Definitions attached as Exhibit
A.Section 1.02.      Construction. All references herein to any agreement shall
be to such agreement as amended, supplemented or modified from time to time in
accordance with its terms. All references to a particular Entity shall include a
reference to such Entity’s successors and permitted assigns. The words “herein”,
“hereof” and “hereunder” shall refer to this Agreement as a whole and not to any
particular section or subsection of this Agreement. The singular shall include
the plural and the masculine shall include the feminine and neuter, and vice
versa. The words “includes” or “including” shall be deemed to mean “including,
without limitation” or the correlative meaning. All exhibits and schedules to
this Agreement are

 

 

hereby incorporated herein by reference and considered a part of this Agreement
for all purposes.

 

Article 2
Engagement of PEGI

 

Section 2.01.      Engagement of PEGI. PSP, for and on behalf of each PSP
Project Entity, hereby engages PEGI as an independent contractor to provide the
Services as set forth in this Agreement with respect to each of the Jointly
Owned Companies listed on Exhibit C. PEGI accepts such engagement and agrees to
perform such duties in accordance with the terms and conditions hereof. The
Parties agree that Exhibit C shall automatically be amended to include any newly
acquired or Jointly Owned Companies or any additional Projects acquired by any
Jointly Owned Company. If any Project is held by a PSP Project Entity indirectly
through more than one intermediary entity, then the definition of “Jointly Owned
Company” shall be deemed to include such intermediary entities and the
definition of Services shall be deemed to include services to such intermediary
entities, to the extent reasonably required.

 

Section 2.02.      Relationship. This Agreement is intended to create certain
contractual rights and obligations between the Parties and is not intended, and
the Parties agree that it does not, constitute any Party as the partner, agent
or fiduciary of the other Party for any purpose or create any partnership,
agency, fiduciary or other similar relationship or association of profit among
the Parties or any of their respective Affiliates, employees, subcontractors,
vendors or suppliers, or any of their respective employees, and neither Party
shall have any partnership, agency, fiduciary or other similar duties,
liabilities or obligations to the other Party or any of its Affiliates,
employees, subcontractors, vendors or suppliers, or any of their respective
employees, relating to or arising from this Agreement. Neither PEGI nor any of
its Affiliates, employees, subcontractors, vendors or suppliers, or any of their
respective employees shall be deemed to be employees or servants of PSP or any
PSP Project Entity as a result of this Agreement or of performing any Services
hereunder, and no such Person shall, as a result of entering into this Agreement
or of performing any Services hereunder, have the right, authority, obligation
or duty to assume, create or incur any liability or obligation, express or
implied, against, in the name of, or on behalf of PSP or any PSP Project Entity,
except to the extent expressly contemplated by and in accordance with this
Agreement. To the fullest extent permitted by applicable Law, except as
contemplated by the Joint Venture Agreement and any ancillary agreements
contemplated thereby, each Party, on behalf of itself and its Affiliates, waives
and renounces any right, interest or expectancy in, or in being offered an
opportunity to participate in, business opportunities that are from time to time
presented to it or its Affiliates or of which it or its Affiliates gains
knowledge.

 

Section 2.03.      PSP Project Entities. The PSP Project Entity that holds a
direct interest in a Jointly Owned Company shall execute and deliver to PEGI an
accession agreement, in the form attached to this Agreement as Exhibit D,
pursuant to which such PSP Project Entity agrees to be bound as a PSP Project
Entity pursuant to this Agreement (an “Accession Agreement”). If a PSP Project
Entity executes an Accession Agreement, then PSP shall have no obligations or
liabilities relating to such Jointly Owned Company,

 

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whether such obligations and liabilities arose prior to or after the date that
the Accession Agreement was executed and delivered to PEGI.

 

Article 3
Term and Renewal

 

Section 3.01.      Term. The term of this Agreement (the “Term”) shall commence
on the date first set forth above (“Commencement Date”) and, subject to
termination pursuant to Article 9, shall continue with respect to PSP and PEGI
until the expiration of the last Jointly Owned Company Service Period and, with
respect to a PSP Project Entity, shall continue until the expiration of the
Jointly Owned Company Service Period for the Jointly Owned Company in which such
PSP Project Entity holds an interest. PEGI shall provide the Services to each
Jointly Owned Company for the period commencing on the closing of a transaction
resulting in the acquisition or formation of a Jointly Owned Company or the
closing of an acquisition of a Project by a Jointly Owned Company and ending on
the latter of (x) the twenty-fifth anniversary of such date and (y) the
twenty-fifth anniversary of the commercial operation date of the Project held by
such Jointly Owned Company (an “Initial Jointly Owned Company Service Period”);
provided that in no case shall an Initial Jointly Owned Company Service Period
extend beyond the estimated useful life of the relevant Project as set forth in
the applicable Financial Model.

 

Section 3.02.      Renewal. Upon a written notice of renewal delivered by PSP or
the relevant PSP Project Entity to PEGI at least twelve (12) months prior to the
scheduled expiration of any Initial Jointly Owned Company Service Period, such
period shall be extended on the same terms and conditions for a five (5) year
period or such shorter period as may determined by PSP or the relevant PSP
Project Entity, subject to termination pursuant to Article 9 (the Initial
Jointly Owned Company Service Period plus any such extension being the “Jointly
Owned Company Service Period”). For the avoidance of doubt, if multiple Projects
are held by a Jointly Owned Company, a separate Jointly Owned Company Service
Period shall apply to each such Project.

 

Article 4
Scope of Services

 

Section 4.01.      Services. PEGI agrees to provide the services described in
Exhibit B to each PSP Project Entity with respect to each Jointly Owned Company
and, subject to Section 4.03, such other services as mutually agreed by the
Parties (collectively the “Services”), during each applicable Jointly Owned
Company Service Period or for such lesser period of time during the Term as
specified in Exhibit B.

 

Section 4.02.      Third Party Service Providers. The Parties acknowledge that,
in connection with the Services, PEGI may engage certain third party service or
other providers that any Jointly Owned Company would otherwise directly engage
(i) if less than $25,000 (or the equivalent thereof if such amount is not
expressed in U.S. dollars) in value (and, in case of agreements to be made on a
regular and periodic basis with the same Person, $25,000 (or the equivalent
thereof if such amount is not expressed in U.S. dollars) in accumulative value
of such agreements covering any 12-month period),

 

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subject to an aggregate cap of $100,000 (or the equivalent thereof if any such
amounts are not expressed in U.S. dollars) in any 12-month period for services
provided to any individual Jointly Owned Company or (ii) upon receipt of written
approval from PSP or a PSP Project Entity (which approval shall be at PSP’s or
such PSP Project Entity’s sole and absolute discretion); provided that in each
of cases (i) and (ii), PEGI will enter into such agreements (collectively under
this Section 4.02, the “JV Contractor Agreements”) only as agent for and on
behalf of the Jointly Owned Company, and not in PEGI’s own capacity and without
any liability on the part of PEGI, provided, that PEGI shall select such third
party service or other provider with reasonable care, and provided, further,
that nothing in this Section 4.02 shall derogate from PEGI’s liabilities and
obligations pursuant to Article 8.

 

Section 4.03.      Service Changes. Any change to the Services must be specified
in a written statement of work (a “Statement of Work”) to be mutually agreed and
executed by PEGI, on the one hand, and PSP or the relevant PSP Project Entity,
on the other hand. Each Statement of Work shall reference this Agreement and
shall specify (i) the change to the Services to be performed by PEGI, and an
amended Exhibit B to incorporate such change to the Services and to specify the
term in which such services are to be provided, (ii) any change in the
compensation payable to PEGI and (iii) other mutually agreed upon terms.

 

Article 5
Representation and Warranties

 

Section 5.01.      General. Each Party that is a party to this Agreement on the
date hereof represents and warrants to the other Party on the date hereof
that:(a)             it is duly formed and existing under the Laws of the
jurisdiction of its formation and is duly qualified to do business in each
jurisdiction where the nature of its business or its operations requires such
qualification;

 

(b)             the execution, delivery and performance of this Agreement is
within its company, corporate or partnership, as the case may be, powers, have
been duly authorized by all necessary company, corporate or partnership, as the
case may be, action and does not require any approval or consent of any Person
that has not been obtained and does not contravene, conflict with or constitute
a default under any of the terms or conditions in its governing documents, any
contracts to which it is a party or any Law, judgment, injunction, decree, rule,
regulation, order or the like binding upon such Party or its property;

 

(c)             this Agreement constitutes its legally valid and binding
obligation enforceable against it in accordance with its terms; subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws effecting creditors’ rights and remedies generally and to the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity);

 

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(d)             it is not bankrupt and there are no proceedings pending or being
contemplated by it or, to its knowledge, threatened against it which would
result in it being or becoming bankrupt; and

 

(e)             no legal proceeding is pending or threatened against it or, to
its knowledge, any of its Affiliates that could materially adversely affect its
ability to perform its obligations under this Agreement.

 

Section 5.02.      PEGI Representations. In addition to the representations and
warranties in Section 5.01, PEGI represents and warrants to PSP on the date
hereof that PEGI:

 

(a)             to the best of its knowledge is in compliance in all material
respects with all Laws as required for its performance of the Services under
this Agreement;

 

(b)             has adequate resources for the performance of the Services; and

 

(c)             has experience in performing services such as the Services, is
fully qualified to and holds all material licenses, permits, registrations and
authorizations required to perform the Services hereunder.

 

Article 6
Fees and Cost Reimbursement

 

Section 6.01.      Remuneration.

 

(a)             Fees. For each Project that is held by each Jointly Owned
Company, the relevant PSP Project Entity shall pay PEGI or its designee an
annual fee (invoiced on a quarterly basis) as shown in Exhibit C (each, a “Fixed
Fee”) and escalating pursuant to the CPI Adjustment. The Fixed Fee for each
Project that is held by each Jointly Owned Company will be established at the
commencement of the applicable Jointly Owned Company Service Period and shall
initially equal (x) an amount that corresponds to a 40 basis points reduction to
the Project Rate of Return, multiplied by (y) the applicable PSP Project
Entity’s ownership percentage in the applicable Project, expressed in the
functional currency of the applicable Project that is owned by the applicable
Jointly Owned Company. In addition to the Fixed Fee, each PSP Project Entity
shall pay PEGI or its designee an amount equal to all Reimbursable Expenses in
respect of the relevant Jointly Owned Company. The Fixed Fees shall be payable
quarterly in arrears in accordance with Section 6.03 at the rate of one fourth
(1/4th) of the annual amount, as applicable. The Reimbursable Expenses shall be
payable quarterly in arrears in accordance with Section 6.03.

 

(b)             Sales Taxes. All fees paid by a PSP Project Entity to PEGI or
its designee as consideration for the Services shall be exclusive of all sales
and transfer taxes, registration charges and transfer fees, and any other
applicable local taxes (collectively “Sales Taxes”). Each PSP Project Entity
shall be liable for and shall direct, pursuant to a Project Distribution Payment
Direction, the relevant Jointly Owned Company to pay to

 

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PEGI or its designee an amount equal to the Sales Taxes required to be collected
by PEGI or its designee from such PSP Project Entity in respect of the provision
of the Services that are reflected in any Invoice. Any such payment made by a
Jointly Owned Company in accordance with this Section 6.01(b) shall constitute a
payment by such PSP Project Entity to PEGI or its designee of the amount of such
Sales Taxes.

 

(c)             Withholding Taxes. Any and all payments made by a PSP Project
Entity to PEGI or its designee shall be made without deduction or withholding
for any taxes, except as required by applicable Law. If a PSP Project Entity is
required under Law (as determined in its good faith discretion) to withhold
taxes in respect of payments made to PEGI or its designee, such PSP Project
Entity shall direct, pursuant to a Project Distribution Payment Direction, the
relevant Jointly Owned Company to withhold such taxes from any amount payable to
PEGI or its designee unless an exemption from (or a reduction of) withholding
tax applies under applicable Law or any applicable tax convention, whichever is
more advantageous to PEGI or its designee, and to pay such amount to such PSP
Project Entity. Any amount withheld pursuant to this Section 6.01(c) shall be
remitted by such PSP Project Entity to the relevant Governmental Authority
within prescribed delays and any amount so remitted shall be deemed to have been
paid to PEGI or its designee, as the case may be. A PSP Project Entity will
promptly notify PEGI of such withholding and provide any official documentation
evidencing payment of such withholding.

 

(d)             Fixed Fee Adjustment. Each Fixed Fee shall be adjusted annually
(such adjustment being the “CPI Adjustment”) as of January 1 in each year during
the applicable Jointly Owned Company Service Period, commencing on January 1 of
the year following the year in which the applicable Jointly Owned Company
Service Period commences, to reflect the percentage increase or decrease in the
CPI effective as of December 31 of the immediately preceding year over the CPI
effective as of December 31 of the second immediately preceding year (the “CPI
Percentage”). The CPI Adjustment will be made as soon as practicable after
January 1 in each year as the CPI effective as of December 31 of the immediately
preceding year is published and the CPI Adjustment shall be made effective
retroactively to January 1 of that year. The CPI Adjustment shall be made by
adding to the Fixed Fee for the current year an amount equal to the result
obtained when the CPI Percentage as of December 31 in the immediately preceding
year is multiplied by the amount of the Fixed Fee with respect to the
immediately preceding year (the amount of such Fixed Fee for the immediately
preceding year to be annualized if such immediately preceding year consists of
fewer than twelve (12) full months).

 

Section 6.02.      Reimbursable Expenses. “Reimbursable Expenses” are (i) any
and all reasonable out of pocket costs and expenses that are paid by PEGI to
third parties in performing the Services and (ii) any and all costs and expenses
paid by PEGI under any JV Contractor Agreements; provided that, in each of (i)
and (ii), with respect to any such costs and expenses relating to a
Jointly-Owned Company, Reimbursable Expenses shall be limited to the amount of
such Reimbursable Expenses multiplied by a fraction, the numerator of which is
equal to such PSP Project Entity’s ownership interest in the relevant Project
and the denominator of which is the sum of such PSP Project Entity’s

 

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ownership interest, PEGI’s ownership interest and the ownership interest of any
third party in such Project. For the avoidance of doubt Reimbursable Expenses
shall not include any fees, costs and expenses that are incurred by a Jointly
Owned Company directly, including pursuant to any JV Contractor Agreement, any
allocations of general and administrative costs, including employee
compensation, any other overhead costs and expenses or any fees, charges, costs
or expenses charged to PEGI by an Affiliate of PEGI or any amounts paid pursuant
to the relevant MOMA or PAA.

 

Section 6.03.      Payment Procedure.

 

(a)             PEGI or its designee shall submit to the relevant PSP Project
Entity (with a copy to PSP), on a quarterly basis, (i) a detailed invoice
(“Invoice”) showing the Fixed Fee and any Reimbursable Expenses, in each case
earned or incurred, as the case may be, in the just-ended quarter, in accordance
with the terms hereof and (ii) in respect of each item of Reimbursable Expenses
in respect of the Jointly Owned Company in which such PSP Project Entity holds
an interest, supporting documents including a reasonably detailed summary of the
service performed and evidence of payment, including copies of any underlying
invoices therefor.

 

(b)             Subject to Section 6.03(d) and Section 6.03(e), the relevant PSP
Project Entity shall pay the amounts set out in each Invoice concurrently with
the making of the next following Project Distribution by the Jointly Owned
Company to which the Invoice pertains. Such payment shall be made by such PSP
Project Entity delivering a payment direction (a “Project Distribution Payment
Direction”) to such Jointly Owned Company pursuant to which such PSP Project
Entity directs such Jointly Owned Company to pay a portion of such Project
Distribution to PEGI in full satisfaction of the corresponding amount of such
Invoice. Any payment by a PSP Project Entity to PEGI or its designee in
accordance with such payment direction shall constitute a payment by such PSP
Project Entity to PEGI or its designee.

 

(c)             Within sixty (60) days after the receipt of an Invoice, the
relevant PSP Project Entity shall notify PEGI or its designee of any disputed
amount in such Invoice that it asserts is not in compliance with the
requirements of this Agreement.

 

(d)             In the event of any dispute by a PSP Project Entity about any
amount invoiced by PEGI or its designee under Section 6.03(a), and any amount so
disputed which has been paid but is ultimately determined to have been not
payable shall be credited against future amounts owing to PEGI or its designee
by such PSP Project Entity under this Agreement, when so determined to have not
been payable and any disputed amount which has not been paid but is ultimately
determined to have been payable shall be paid to PEGI or its designee by the
relevant PSP Project Entity, when so determined to have been payable.

 

(e)             In no event shall a PSP Project Entity be required to make a
payment to PEGI or its designee pursuant to this Section 6.03 in excess of the
Project Distribution triggering the applicable payment; provided that any amount
payable in excess of the applicable Project Distribution shall accrue and be
payable promptly following the next

 

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Project Distribution to such PSP Project Entity. For the avoidance of doubt, any
payment by or on behalf of a PSP Project Entity shall be applied to the oldest
amount so accrued at such time.

 

Section 6.04.      PSP Access and Audit Rights.

 

(a)             Upon not less than three (3) Business Days’ written notice to
PEGI, PEGI shall allow PSP and a PSP Project Entity and their respective
authorized representatives access (solely to the extent relevant to the terms of
this Agreement) to inspect the books and records, and, with respect to
Reimbursable Expenses, Invoices, supporting documents, invoices received by PEGI
from third party service providers, proof of payment and other materials as PSP
or such PSP Project Entity may require as support thereof, maintained by PEGI in
each case solely with respect to Fixed Fees and Reimbursable Expenses under this
Agreement, and to allow PSP or such PSP Project Entity to cause an audit thereof
to be conducted for any period that is within the last eighteen (18) months (at
PSP’s or such PSP Project Entity’s own cost and expense unless the audit
discloses material errors or omissions in which case PEGI shall bear the cost of
the audit); provided, that such books and records may only be audited a maximum
of once per calendar quarter and provided, further, that PEGI’s personnel files
shall not be subject to inspection. All access pursuant to this Section 6.04
shall be during normal business hours and shall not unreasonably interfere with
the business and affairs of the Jointly Owned Company or PEGI.

 

(b)             If any inspection or audit referred to in Section 6.04(a) or any
report delivered to PSP or a PSP Project Entity in accordance with this
Agreement discloses that any error has occurred and that, as a result thereof,
any overpayment or any underpayment of any Fixed Fees or Reimbursable Expenses
has occurred, the amount thereof shall promptly be paid to the Party to whom it
is owed by the other Party; provided, that a Party shall only be liable for any
amounts hereunder that relate to errors discovered and disclosed within the
authorized inspection and audit period.

 

(c)             Notwithstanding Section 6.04(a), each of PSP and any PSP Project
Entity shall be entitled to conduct an audit with respect to any period (and
not, for the avoidance of doubt, only a period that is within the last eighteen
(18) months) upon the final, non-appealable determination that PEGI or any of
its Affiliates have committed actual fraud in connection with the performance of
the Services or PEGI’s obligations pursuant to this Agreement. The provisions of
Section 6.04(a) and Section 6.04(b) shall apply to any such audit that is
conducted by PSP or any PSP Project Entity pursuant to this Section 6.04(c),
mutatis mutandis, without limitation to any other rights that PSP or such PSP
Project Entity may have under applicable Laws.

 

Section 6.05.      Set-Off. The PSP Project Entity to whom an amount is owed
pursuant to this Agreement may exercise a right of set-off in respect of such
amount so that any amounts payable by the PSP Project Entity to PEGI shall be
reduced to the extent of amounts outstanding to the PSP Project Entity and
payable by PEGI.

 

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Article 7
PEGI Property

 

Section 7.01.      PEGI Property. As between the Parties, PEGI shall own all
right, title and interest in and to any and all Intellectual Property developed
by or on behalf of PEGI or any of its Affiliates, employees, contractors,
consultants or other agents in connection with its performance of the Services
(“PEGI IP”). Subject to the terms and conditions of this Agreement, PEGI hereby
grants to PSP and the PSP Project Entities, a non-exclusive, non-transferable,
non-sublicensable, royalty-free license on an “as is” warranty-free basis, in,
to and under the PEGI IP, but solely to the extent necessary for the
administration of each applicable Jointly Owned Company during the applicable
Jointly Owned Company Service Period; provided that following the termination or
expiration of the applicable Jointly Owned Company Service Period, PSP and the
PSP Project Entities may continue to use such PEGI IP but solely to the extent
required by PSP or the PSP Project Entities for routine internal compliance,
audit or record keeping purposes, in each case related to the Services performed
under this Agreement prior to the termination or expiration of the applicable
Jointly Owned Company Service Period. The PEGI IP shall be deemed to be
Confidential Information of PEGI and subject to the terms and conditions of
Article 13.

 

Section 7.02.      Further Assurances. Upon the request of PEGI, during and
after the Term, PSP and the PSP Project Entities shall take any and all actions
and execute any and all documents reasonably necessary to perfect, confirm and
record PEGI’s ownership of the PEGI IP, provided that PEGI shall be solely
responsible for any and all out of pocket costs and expenses of PSP and the PSP
Project Entities in connection therewith.

 

Article 8
Indemnification

 

Section 8.01.      Indemnification by PEGI. PEGI shall defend, indemnify and
hold harmless each PSP Indemnified Party from and against any and all Claims
incurred by or asserted against any PSP Indemnified Party in connection with
this Agreement arising out of or relating to (i) any violation of Law by PEGI or
its Affiliates in connection with the Services or the performance of its duties
hereunder, (ii) any taxes imposed on or attributable to the income or property
of PEGI; (iii) demands or liens by subcontractors for nonpayment of amounts due
as a result of furnishing work or materials to PEGI for the Services (unless
such nonpayment is due to a PSP Project Entity’s failure to make payments to
PEGI as specified in this Agreement), (iv) injury to or death of any Person,
including employees of PEGI, (v) loss of or damage to property, (vi) the failure
of PEGI to comply with the terms of this Agreement, including a breach of the
standard of performance set forth in Section 10.01 or (vii) actual or alleged
infringement or misappropriation by PEGI of any intellectual property of a third
party in connection with PEGI’s performance of the Services; provided, however,
in each of cases (iv), (v) and (vii) only to the extent that the Claim results
from the negligent actions or negligent inactions of or breach of the terms of
this Agreement by, or the actual fraud, willful misconduct, recklessness or bad
faith of, any PEGI Indemnified Party; provided, further,

 

9

 

that PEGI shall not be required to defend, indemnify or hold harmless any PSP
Indemnified Party from and against, and no PSP Indemnified Party shall be
exculpated from, any Claims to the extent caused by any PSP Indemnified Party or
arising from a breach of this Agreement by a PSP Indemnified Party or the
negligent actions or inactions by, or the actual fraud, willful misconduct,
recklessness or bad faith of, any PSP Indemnified Party or otherwise not
attributable to any PEGI Indemnified Party.

 

Section 8.02.      Indemnification by PSP. The PSP Project Entities (and, solely
to the extent that a PSP Project Entity has not executed an Accession Agreement
in respect of a Jointly Owned Company in accordance with Section 2.03, PSP)
shall severally, and not jointly or jointly and severally, indemnify, defend and
hold harmless each PEGI Indemnified Party from and against any and all Claims
incurred by or asserted against such PEGI Indemnified Party in connection with
this Agreement arising out of or relating to (i) any a violation of Law to be
complied with by such PSP Project Entity hereunder, (ii) any taxes imposed on or
attributable to the income or property of such PSP Project Entity or of PSP,
(iii) injury to or death of any Person, including employees of such PSP Project
Entity, (iv) loss of or damage to property or (v) the failure of such PSP
Project Entity to comply with the terms of this Agreement; provided, however, in
each of cases (iii) and (iv) only to the extent that the Claim results from the
negligent actions or negligent inactions of or breach of the terms of this
Agreement by, or actual fraud, willful misconduct, recklessness or bad faith of,
any PSP Indemnified Party; provided, further, however, that a PSP Project Entity
shall not be required to defend, indemnify or hold harmless any PEGI Indemnified
Party from and against, and no PEGI Indemnified Party shall be exculpated from,
any Claims to the extent caused by any PEGI Indemnified Party or arising from a
breach of this Agreement by PEGI or any PEGI Indemnified Party or the negligent
actions or inactions by, or the actual fraud, willful misconduct, recklessness
or bad faith of, any PEGI Indemnified Party, and provided, further, that no PSP
Project Entity shall be liable for any Claim relating to a Jointly Owned Company
in which such PSP Project Entity does not hold an interest.

 

Section 8.03.      Indemnification Procedure. When required to indemnify an
Indemnified Party in accordance with this Article 8, PEGI or the relevant PSP
Project Entity, as applicable (in such capacity, the “Indemnifying Party”) shall
assume on behalf of such Indemnified Party and conduct with due diligence and in
good faith the defense of any Claim against such Indemnified Party and shall
bear the expense thereof, whether or not the Indemnifying Party shall be joined
therein, and the Indemnified Party shall cooperate with the Indemnifying Party
in such defense. The Indemnifying Party shall have charge and direction of the
defense and settlement of such Claim, provided, however, that without relieving
the Indemnifying Party of its obligations hereunder or impairing the
Indemnifying Party’s right to control the defense or settlement thereof, the
Indemnified Party shall be consulted on the defense and settlement of such Claim
and may elect to participate through separate counsel in the defense of any such
Claim, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (a) the employment of counsel by such Indemnified Party
has been authorized in writing by the Indemnifying Party, (b) the Indemnified
Party shall have reasonably concluded that there exists a material conflict of
interest between the Indemnifying Party and such Indemnified Party in the
conduct of the defense of such Claim (in which case

 

10

 

the Indemnifying Party shall not have the right to control the defense or
settlement of such Claim on behalf of such Indemnified Party) or (c) the
Indemnifying Party shall not have employed counsel reasonably acceptable to the
Indemnified Party to assume the defense of such Claim within a reasonable time
after notice of the commencement thereof. In each of such cases set forth in the
second sentence of this paragraph, the reasonable fees and expenses of counsel
shall be at the expense of the Indemnifying Party except where the Indemnifying
Party is ultimately deemed not to have been required to provide the indemnity
sought by the Indemnified Party. The Indemnifying Party shall not settle any
Claim if the terms of such settlement (x) require the payment of any amount by
the Indemnified Party for which the Indemnified Party is not indemnified
hereunder or (y) provide for non-monetary damages, in each case without the
written consent of the Indemnified Party, which consent shall not be
unreasonably conditioned, withheld or delayed.

 

Section 8.04.      Trustee and Agent. Each Party acknowledges that the other
Party is acting as trustee and agent for the remaining PSP Indemnified Parties
or PEGI Indemnified Parties, as the case may be, on whose behalf and for whose
benefit the indemnity in Section 8.01 or Section 8.02, as the case may be, is
provided and that such remaining Indemnified Parties shall have the full right
and entitlement to take the benefit of and enforce such indemnity
notwithstanding that they may not individually be Parties to this Agreement.
Each Party agrees that the other Party may enforce the indemnity for and on
behalf of such remaining PSP Indemnified Parties or PEGI Indemnified Parties, as
the case may be, and, in such event, the Party from whom indemnification is
sought will not in any proceeding to enforce the indemnity by or on behalf of
such remaining PSP Indemnified Parties or PEGI Indemnified Parties, as the case
may be, assert any defense thereto based on the absence of authority or
consideration or privity of contract and irrevocably waives the benefit of any
such defense.

 

Section 8.05.      Survival.

 

(a)             Notwithstanding any other provision of this Agreement, the
provisions of this Article 8 are intended to and shall survive termination of
this Agreement for a period of eighteen (18) months after its expiration or
termination.

 

(b)             Any rights or obligations that have accrued prior to the
termination shall survive notwithstanding the termination of this Agreement.

 

Article 9
Termination

 

Section 9.01.      Termination by Either Party. Either PEGI or PSP (“Terminating
Party”) may terminate this Agreement without limiting any other rights or
remedies it may have):

 

(a)             in the case of a termination by PSP, if PEGI fails to make any
payment required to be made hereunder when such payment is due and owing under
this Agreement and in the case of a termination by PEGI, if a PSP Project Entity
fails to make

 

11

 

any payment requirement hereunder when such payment is due and owing under this
Agreement (in each case, other than, for certainty, payments in respect of which
a dispute notice has been delivered pursuant to Section 6.03(c)), and such
failure shall continue for fifteen (15) days after written notice thereof has
been given to the non-paying Party; provided, however, that such right of
termination under Section 9.01(a) may not be exercised if PEGI’s or a PSP
Project Entity’s failure to make a payment required to be made hereunder arises
out of or relates to the Terminating Party’s (or, in the case of a termination
by PSP, a PSP Project Entity’s) actual fraud, willful misconduct, recklessness
or bad faith; or

 

(b)             (i) in the case of a termination by PSP, if PEGI under
applicable debtor relief Laws, (A) has filed against it a petition under any
bankruptcy, insolvency or similar Law of any jurisdiction which are not
dismissed within sixty (60) Business Days of the date filed, (B) proposes any
dissolution, liquidation, composition, financial reorganization or
recapitalization with creditors, (C) makes an assignment for the benefit of
creditors, or (D) files a voluntary petition in bankruptcy or under any
insolvency or similar Law or consents to the filing of any bankruptcy or
reorganization petition against it under any similar Law, or if receivers,
trustees, custodians or similar agents are appointed or take possession with
respect to any property or business of PEGI, and (ii) in the case of a
termination by PEGI, if PSP or a PSP Project Entity under applicable debtor
relief Laws, (w) has filed against it a petition under any bankruptcy,
insolvency or similar Law of any jurisdiction which are not dismissed within
sixty (60) Business Days of the date filed, (x) proposes any dissolution,
liquidation, composition, financial reorganization or recapitalization with
creditors, (y) makes an assignment for the benefit of creditors, or (z) files a
voluntary petition in bankruptcy or under any insolvency or similar Law or
consents to the filing of any bankruptcy or reorganization petition against it
under any similar Law, or if receivers, trustees, custodians or similar agents
are appointed or take possession with respect to any property or business of PSP
or such PSP Project Entity.

 

Section 9.02.      Termination by PSP.

 

(a)             PSP shall be entitled to terminate this Agreement by delivery of
written notice of termination to PEGI (i) if PEGI fails to comply in any
material respect with any term, provision or covenant of this Agreement, other
than the payment of sums to be paid hereunder but including a breach of the
standard of performance set forth in Article 10, and such failure shall continue
for thirty (30) days after written notice thereof has been given to PEGI, unless
such failure cannot reasonably be cured within said thirty (30) days and PEGI
shall have commenced to cure such failure within said period and shall
thereafter proceed with reasonable diligence and good faith to cure such
failure, in accordance with a schedule reasonably acceptable to PSP, (ii) in the
event of actual fraud, willful misconduct, recklessness or bad faith of PEGI or
its Affiliates, in each case in connection with this Agreement or (iii) in the
event of the termination or resignation of a majority of the individuals that
comprise PEGI’s management team as of immediately prior to a Change of Control
that occurs in connection with and substantially concurrently with such Change
of Control. For the purpose of this Section 9.02(a), “Change of Control” means
that any person or group of persons acting jointly or in concert acquires
Control of PEGI, where “Control” means (i) holding, whether directly or
indirectly, as

 

12

 

owner or other beneficiary (other than solely as the beneficiary of an
unrealized security interest) securities or ownership interests of PEGI carrying
votes or ownership interests sufficient to elect or appoint more than 50% of the
individuals who are responsible for the supervision or management of PEGI, or
(ii) the exercise of de facto control of PEGI, whether direct or indirect and
whether through the ownership of securities or ownership interests or by
contract, trust or otherwise. Any amounts payable by a PSP Project Entity
hereunder through the effective date of termination shall be payable pursuant to
a final Invoice to be paid in accordance with Section 6.03.

 

(b)             Each Jointly Owned Company Service Period for a Jointly Owned
Company shall terminate automatically, as of the date that such Jointly Owned
Company permanently ceases operations (including, for the avoidance of doubt,
any wind-up operations).

 

Section 9.03.      Termination by PEGI. PEGI shall be entitled to terminate this
Agreement by delivery of written notice of termination to PSP if PSP or any PSP
Project Entity fails to comply in any material respect with any term, provision
or covenant of this Agreement, other than the payment of sums to be paid
hereunder, and such failure shall continue for thirty (30) days after written
notice thereof has been given to PSP and such PSP Project Entity, unless such
failure cannot reasonably be cured within said thirty (30) days and PSP or the
relevant PSP Project Entity, as the case may be, shall have commenced to cure
such failure within said period and shall thereafter proceed with reasonable
diligence and good faith to cure such failure in accordance with a schedule
reasonably acceptable to PEGI. In connection with a termination pursuant to this
Section 9.03, any amounts payable by a PSP Project Entity hereunder through the
effective date of termination shall be payable pursuant to a final Invoice to be
paid in accordance with Section 6.03.

 

Section 9.04.      Termination for Convenience. PEGI may terminate a Jointly
Owned Company Service Period for a Jointly Owned Company for convenience at any
time upon twelve (12) months’ prior written notice to PSP. In the event of such
termination, all amounts payable hereunder by the relevant PSP Project Entity
will continue to be payable pursuant to a final Invoice to be paid in accordance
with Section 6.03. Following delivery of the twelve (12) months’ written notice
to PSP:

 

(i)            PEGI shall use commercially reasonable efforts to assist PSP and
the relevant PSP Project Entity in the appointment and commencement of duties of
any Person to be appointed by PSP or the relevant PSP Project Entity to provide
the services (substantially similar to Services) to PSP or the relevant PSP
Project Entity with respect to the applicable Jointly Owned Company (with
respect to such Jointly Owned Company, the “Successor Service Provider”) so as
not to disrupt the normal provision of the Services to the relevant PSP Project
Entity with respect to such Jointly Owned Company and shall provide the
Successor Service Provider with full access to all relevant information, data
and records in PEGI’s possession relating thereto and comply with all reasonable
requests made by the Successor Service Provider in connection with preparing for
taking over the provision of such services to the relevant PSP Project Entity.

 

13

 

(ii)            PEGI, to the extent allowed by such agreements and as may be
required by PSP, shall transfer to the Successor Service Provider, as from the
date of termination, its rights as PEGI under all agreements entered into by it
in the performance of its obligations under this Agreement that are specific to
the provision of the Services to the relevant PSP Project Entity with respect to
the applicable Jointly Owned Company. Pending such transfer, PEGI shall hold its
rights and interests thereunder for the account and to the order of the relevant
PSP Project Entity or (if so required by PSP by written notice) the Successor
Service Provider, provided that the relevant PSP Project Entity shall indemnify
PEGI for all liabilities incurred by PEGI under these agreements as a result of
their continuation and performance by such PSP Project Entity or, as the case
may be, the Successor Service Provider.

 

(iii)            For a period of up to ninety (90) days following termination,
but prior to the appointment of a Successor Service Provider, PEGI shall
cooperate with PSP and the relevant PSP Project Entity to arrange for its
personnel, to the extent available, to continue to provide support to the
relevant PSP Project Entity in connection with the provision of the Services
with respect to the applicable Jointly Owned Company for a mutually agreed fee.

 

Section 9.05.      Completion of Services at End of Term. Upon termination or
expiration of a Jointly Owned Company Service Period, all Services with respect
to applicable Jointly Owned Company as required under this Agreement shall have
been performed through the date of termination.

 

Article 10
Standard of Performance

 

Section 10.01.  Prudent Service Provider Standard. PEGI shall perform its duties
hereunder in accordance with the Prudent Service Provider Standard. From time to
time, to the extent PEGI believes that a modification of the Services is
necessary or desirable to comply with the Prudent Service Provider Standard,
PEGI shall have the right to develop and propose such modifications, which shall
be subject to the approval by PSP, in its sole and absolute discretion.

 

Article 11
Limitations of Liability

 

Section 11.01.  Total Limitation of Liability. Each Party’s total liability
under this Agreement to the PSP Indemnified Parties or PEGI Indemnified Parties,
as applicable, with respect to each Jointly Owned Company for all Claims or
series of related Claims of any kind, whether based on contract, indemnity,
warranty, tort (including negligence), strict liability or otherwise, for all
losses or damages arising out of, connected with, or resulting from this
Agreement or from the performance or breach thereof, or from any Services
relating to such Jointly Owned Company covered by or furnished, in each case,
during the eighteen (18) month period after the date hereof or any sequential
(without overlap) eighteen month period thereafter, shall in no case exceed the
aggregate Fixed

 

14

 

Fees actually payable in the applicable eighteen (18) month period in respect of
such Jointly Owned Company (a “Cap”); provided that in no event shall PEGI be
required to make any payment with respect to a Jointly Owned Company in excess
of the Fixed Fees actually paid to PEGI or its designee in the applicable
eighteen (18) month period in respect of such Jointly Owned Company (a “Actual
Paid Amount”); provided further that any amount in excess of the applicable
Actual Paid Amount but less than the applicable Cap that is not paid as a result
of the foregoing proviso (an “Accrued Indemnity Amount”) shall accrue and be
payable at such time as an amount equal to the applicable Accrued Indemnity
Amount is paid to PEGI or its designee pursuant to Section 6.03 in respect of
the applicable eighteen (18) month period. The foregoing limitation on liability
shall not apply to (a) damage to a Party arising out of the actual fraud, gross
negligence, willful misconduct, recklessness or bad faith of the other Party
with respect to the subject matter of this Agreement, (b) any amounts
recoverable by a Party as an insurance payment; or (c) amounts owed by a PSP
Project Entity to PEGI pursuant to Article 6 in respect of Services performed
with respect to such Jointly Owned Company, Reimbursable Expenses, or other
costs and expenses expressly owing to PEGI under this Agreement, as provided
hereunder. Except as previously asserted by a Party and as provided in Section
9.04, all of the other Party’s liability under this Agreement shall cease
eighteen (18) months after expiration, or earlier termination, of this
Agreement.

 

Section 11.02.  Waiver of Consequential Damages. In no event, whether based on
contract, indemnity, warranty, tort (including negligence), strict liability or
otherwise, shall either Party be liable for special, incidental, exemplary,
indirect or consequential damages including, but not limited to, loss of profits
or revenue, loss of use of the equipment or any associated equipment, cost of
capital, costs in excess of estimates, cost of purchased power, cost of
substitute equipment, facilities or services, downtime costs or Claims of
customers and/or lenders of PSP or any PSP Project Entity for such damages. In
no event shall PEGI be liable under this Agreement for any loss or damage
whatsoever arising from the failure to discover latent defects or defects
inherent in the design of the operating assets of the Jointly Owned Company. If
PEGI furnishes PSP or a PSP Project Entity with advice or assistance not
required by this Agreement, without separate compensation therefor, PEGI shall
not be subject to any liability whatsoever resulting from such advice or
assistance.

 

Section 11.03.  General. The liability disclaimers and liability limits set
forth in this Agreement shall not preclude or limit any Party in claiming under
any available insurance coverage.

 

Article 12
Notices

 

All notices and other communications required or permitted by this Agreement or
by Law to be served upon or given to a Party by any other Party shall be in
writing and deemed duly served, given and received (i) on the date of service,
if served personally or sent by facsimile transmission (with appropriate
confirmation of receipt) to the Party to whom notice is to be given, or (ii) on
the fourth day after mailing, if mailed by first class

 

15

 

registered or certified mail, postage prepaid or (iii) on the next day if sent
by a nationally recognized courier for next day service and so addressed and if
there is evidence of acceptance by receipt addressed as follows:

 

To PEGI:

 

Pattern Energy Group Inc.
Pier 1, Bay 3
San Francisco, CA, USA, 94111

 

Attention:       General Counsel
Facsimile:         415-362-7900

 

To PSP or a PSP Project Entity:

 

c/o Public Sector Pension Investment Board
1250 René-Lévesque Blvd. West
Suite 1400
Montreal, Québec H3B 5E9

 

Attention:     Managing Director, Infrastructure Investments
Email:             vertuousenergy@investpsp.ca and legalnotices@investpsp.ca

 

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

 

Davies Ward Phillips & Vineberg LLP

 

1501, avenue McGill College
26th Floor
Montréal, Québec H3A 3N9

 

Attention:         Franziska Ruf
Email:                 fruf@dwpv.com

 

The Parties, by like notice in writing, may designate, from time to time,
another address or office to which notices shall be given pursuant to this
Agreement.

 

Article 13
Confidentiality

 

Section 13.01.  General Confidential Information. Each Party hereby undertakes
to keep confidential, except as may be explicitly approved in writing by the
other Party, the other Party’s information including all documents and
information concerning the other Party, or the information furnished to each
Party in connection with the duties contemplated by this Agreement and not
otherwise lawfully available to each receiving Party (“Confidential
Information”); provided that, “Confidential Information” shall not include: (a)
public information or information in the public domain at the time of its

 

16

 

receipt by the other Party; (b) information which becomes public through no
fault or act of the other Party or its representatives; or (c) information
received by the other Party in good faith from a third party lawfully in
possession of the information and not in breach of any confidentiality
obligations. Each Party agrees to use the other Party’s Confidential Information
only in connection with its respective duties and obligations hereunder except
to the extent such information can be shown by the disclosing Party to have been
previously known by it, in the public domain through no fault of the disclosing
Party, or if such disclosure is required by Law.

 

Section 13.02.  Limited Disclosure of Confidential Information. Notwithstanding
the provisions of Section 13.01, each Party shall be entitled to the extent
necessary for the performance of its duties hereunder to allow access to the
Confidential Information described in Section 13.01 exclusively to any third
party as required for the performance of its duties hereunder, and to such of
its employees, contractors, consultants, financing parties, and Affiliates who
need to know such Confidential Information in order for PEGI, PSP or a PSP
Project Entity, as the case may be, to carry out its duties under this
Agreement, as well as each Party’s legal and accounting advisors, provided that
the Party receiving Confidential Information from the other Party shall inform
each of such Persons of the confidential nature of such information and of its
obligation of confidentiality in respect of it, and provided that such
employees, contractors, consultants, financing parties, and Affiliates are
subject to similar confidentiality restrictions against disclosure and that any
confidential material is returned to the disclosing party or destroyed, at the
option of the receiving Party at the termination of this Agreement, provided
that the receiving Party may nevertheless maintain a single confidential copy of
the Confidential Information as a record of the material provided hereunder, and
the receiving Party shall not be deemed to have retained or failed to destroy
any Confidential Information which is in electronic form if such information is
deleted from local hard drives so long as no attempt is made to recover such
information from servers or back-up sources. Each of PEGI, PSP and each PSP
Project Entity acknowledges that it is aware that (a) the Confidential
Information being furnished to it may contain material, non-public information
regarding PEGI and (b) the United States and Canadian securities Laws prohibit
any Persons who have material, nonpublic information concerning a company from
purchasing or selling securities of a company using such information or from
communicating such information to any Person (including its Affiliates) under
circumstances in which it is reasonably foreseeable that such Person is likely
to purchase or sell such securities in reliance upon such information. Each of
PEGI, PSP and each PSP Project Entity further confirms that it has in place
internal information protection mechanisms to prevent unauthorized use of the
Confidential Information. This Article 13 shall survive the termination of this
Agreement for a period of three (3) years.

 

Article 14
Dispute Resolution

 

Section 14.01.  Procedure.

 

17

 

(a)             The Parties shall attempt, in good faith, to resolve or cure all
disputes (including disputes with respect to a claimed breach hereof) by mutual
agreement in accordance with this Article 14 before initiating any legal action
or attempting to enforce any rights or remedies hereunder (including
termination, except for a termination pursuant to Section 9.04), at Law or in
equity (regardless of whether this Article 14 is referenced in the provision of
this Agreement which is the basis for any such dispute). If there is a dispute
as to whether a breach has occurred or if any other dispute under this Agreement
has arisen, any Party may give notice thereof to the other Parties which notice
shall describe in reasonable detail the basis and specifics of the alleged
breach or dispute. Within five (5) days after delivery of such notice, the
designated representatives of all Parties shall meet to discuss and attempt to
resolve or cure such dispute or claimed breach. If such representatives are
unable to resolve the dispute or claimed breach within fifteen (15) days after
delivery of such notice, the matter shall be referred to a “Senior Officer” of
(i) PSP, on behalf of itself and each of the PSP Project Entities, which Senior
Officer is unaffiliated with PEGI, and (ii) PEGI, which Senior Officer is
unaffiliated with PSP, for resolution or cure. If such Senior Officers are
unable to agree on an appropriate cure or resolution within ten (10) days after
the matter has been referred to them, the Parties may have recourse to
mediation, arbitration or other alternative dispute resolution device of their
mutual selection. If the Parties cannot agree on an alternative dispute
resolution device, each Party may pursue its legal remedies.

 

(b)             Pending final resolution of any dispute, the Parties shall
continue to fulfill their respective obligations under this Agreement.

 

Article 15
Miscellaneous

 

Section 15.01.  Execution. This Agreement may be executed in any number of
counterparts and by the different Parties on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute but one and the same instrument.

 

Section 15.02.  Governing Law. This Agreement, the legal relations among the
Parties hereunder and the adjudication and the enforcement thereof, shall in all
respects be governed by, and interpreted and construed in accordance with, the
Laws (excluding conflict of Laws rules and principles) of the State of New York
applicable to agreements made and to be performed entirely within such State,
including all matters of construction, validity and performance.

 

Each Party irrevocably submits to the exclusive jurisdiction of the Supreme
Court of the State of New York, New York County, for any proceeding arising out
of this Agreement or any transaction contemplated hereby. To the extent that
service of process by mail is permitted by Law, each Party irrevocably consents
to the service of process in any proceeding in such courts by the mailing of
such process by registered or certified mail, postage prepaid, at its address
for notices provided for herein. Nothing herein shall affect the right of any
Person to serve process in any other manner permitted by Law. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of

 

18

 

venue of any proceeding arising out of this Agreement or the transactions
contemplated hereby in the Supreme Court of the State of New York, New York
County, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any proceeding brought in any such
court has been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION
THEREWITH AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.

 

Section 15.03.  Amendments, Supplements, Etc. Neither this Agreement nor any of
the terms hereof may be amended, supplemented, or modified orally, but only by
an instrument in writing signed by PEGI and by PSP.

 

Section 15.04.  Headings. The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only and shall not
modify, define or limit any of the terms or provisions hereof.

 

Section 15.05.  Assignment. Except as set forth in this Section 15.05, no Party
may assign this Agreement without the prior written consent of the other
Parties, which may be withheld in the non-assigning Party’s sole and absolute
discretion. PEGI may freely assign this Agreement to an Affiliate of PEGI, so
long as such Affiliate of PEGI retains the institutional knowledge and personnel
to perform this Agreement and PEGI will not be released from its obligations
under this Agreement unless the assignee has a similar or better financial
ability to perform the obligations of PEGI under this Agreement, as reasonably
determined by PSP. PSP and each PSP Project Entity may, without the consent of
PEGI, pledge, collaterally assign, or encumber its rights under this Agreement
to any lender of PSP or such PSP Project Entity, as the case may be. In such
event, PEGI agrees to execute a consent to such assignment in form and substance
reasonably acceptable to PSP and consistent with then-current financing
practices. PEGI also agrees that it shall, at any time and from time to time
during the Term, after receipt of a written request by PSP or a PSP Project
Entity, execute and deliver to PSP, a PSP Project Entity and/or their respective
lenders, such estoppel statements as may reasonably be requested. PEGI may,
without the consent of PSP or any PSP Project Entity, collaterally assign its
rights to receive and collect payments due and payable under this Agreement (but
no other rights or obligations hereunder) to any lender to PEGI or its
Affiliates. If PSP or a PSP Project Entity sells, assigns, disposes of,
exchanges, pledges, encumbers, hypothecates or otherwise transfers all or part
of its ownership interest in a Jointly Owned Company or any participation or
interest therein, whether directly or indirectly (including pursuant to a
derivative transaction), or agrees or commits to do any of the foregoing (a
“Transfer”), it shall require, as a condition to such Transfer, that the
transferee assume all of PSP’s or such PSP Project Entity’s, as the case may be,
obligations hereunder with respect to the ownership interest to be so
Transferred. Any assignment or Transfer in violation of this Section 15.05 shall
be null and void.

 

19

 

Section 15.06.  Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties, and their respective successors and
assigns, to the extent that assignment is permitted hereunder.

 

Section 15.07.  Waiver. No provision of this Agreement may be waived except in
writing by the waiving Party. The waiver of any breach of any term or condition
hereof shall not be deemed a waiver of any other or subsequent breach, whether
of like or different nature.

 

Section 15.08.  Severability. If any provision of this Agreement is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, that
provision shall be modified so as to be enforceable and as nearly as possible
reflect the original intention of the Parties, it being agreed and understood by
the Parties that (a) this Agreement and all the provisions hereof shall be
enforceable in accordance with their respective terms to the fullest extent
permitted by Law, and (b) the remainder of this Agreement shall remain in full
force and effect.

 

Section 15.09.  Construction. Every term and provision of this Agreement shall
be construed simply according to its fair meaning and not strictly for or
against any Party.

 

Section 15.10.  Entire Agreement. This Agreement constitutes the entire contract
between the Parties with respect to the subject matter hereof.

 

Section 15.11.  No Third-Party Beneficiaries. Except as otherwise expressly set
forth in this Agreement, the Parties do not intend to, and this Agreement shall
not, confer any benefit hereunder on any Person other than the Parties hereto
and their permitted assigns.

 

Section 15.12.  Currency. Except as otherwise expressly indicated, all dollar
amounts in this Agreement are expressed in U.S. dollars.

 

Section 15.13.  Survival. The terms and conditions of this Agreement which
expressly or implicitly by their nature are intended to survive the termination
or expiration of this Agreement shall survive such termination or expiration.

 

Section 15.14.  Change in Law or Agreement. If, after the Commencement Date,
there is a change in Laws, the terms of this Agreement or any delay caused by
any Person other than PEGI, which requires or makes advisable any changes in the
scope or magnitude, or increases the cost, of the Services or other
responsibility of PEGI under this Agreement, then the Parties shall negotiate in
good faith and enter into a Statement of Work in connection with such change.
The Statement of Work, to the extent applicable and agreed by the Parties, may
provide for an increase in the fees and expenses payable to PEGI under this
Agreement.

 

[Signature Page Follows]

 

 

 

 

20

 

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have
executed this Agreement on behalf of the Parties, all as of the date first
stated above.

 

 

  Pattern Energy Group Inc.           By: /s/ Esben Pedersen     Name: Esben
Pedersen     Title: Chief Investment Officer

 

  PUBLIC SECTOR PENSION INVESTMENT BOARD           By: /s/ Guthrie Stewart    
Name: Guthrie Stewart     Title: Senior Vice President, Global Head of Private
Investments         By: /s/ Patrick Samson     Name: Patrick Samson     Title:
Managing Director, Infrastructure Investments

 

 

 

 

Exhibit A
SCHEDULE OF DEFINITIONS

 

When used in the Agreement (as defined below), unless otherwise defined therein,
the following terms shall have the respective meanings set forth below:

 

“Affiliate” shall mean shall mean with respect to a Person, any company or legal
Entity that (a) controls, either directly or indirectly, such Person; or (b) is
controlled, directly or indirectly by such Person; or (c) is directly or
indirectly controlled by a company or Entity which directly or indirectly
controls such Person; provided that (x) no Jointly Owned Company shall be deemed
an Affiliate of either PEGI or PSP and (y) neither PEGI nor PSP shall be deemed
an Affiliate of the other for any purpose hereunder. The phrases “control” or
“controlled” means the power or authority through ownership of voting
securities, by contract, or otherwise to exercise a controlling influence over
the management of the Entity;

 

“Agreement” shall have the meaning given thereto in the introductory paragraph
of this agreement and shall include all exhibits and schedules hereto and all
amendments and supplements hereto made in accordance with this agreement;

 

“Business Day” shall mean any day other than Saturday, Sunday or other day on
which banks are authorized or required by Law to remain closed in New York, NY
or Montreal, Quebec and, if the relevant action is required to be taken in
respect of a Jointly Owned Company, the jurisdiction in which the applicable
Jointly Owned Company operates;

 

“Claims” shall mean claims, actions, damages, expenses (including, without
limitation, legal fees and disbursements), fines, penalties, losses and
liabilities;

 

“Commencement Date” shall have the meaning given thereto in Article 3;

 

“Confidential Information” shall have the meaning given thereto in Section
13.01;

 

“CPI” shall mean the Consumer Price Index, “All Urban Consumers; U.S. City
Average,” as published by the Bureau of Labor Statistics, or if such index shall
cease to be published, such other index as shall be reasonably selected by PEGI
and PSP;

 

“CPI Adjustment” shall have the meaning given thereto in Section 6.01(d);

 

“CPI Percentage” shall have the meaning given thereto in Section 6.01(d);

 

“Entity” means any Person other than a natural Person;

 

“Financial Model” shall, with respect to any Project or Jointly Owned Company,
have the meaning set forth in the purchase and sale agreement between, among
others, the relevant PSP Project Entity, PEGI and Pattern Energy Group LP or
Pattern Energy

 

A-1

 

Group 2 LP, as the case may be, for the direct or indirect acquisition of
interests in such Jointly Owned Company or Project)

 

“Fixed Fee” shall have the meaning given thereto in Section 6.01(a);

 

“Governmental Authority” shall mean any federal, provincial, state or local
government authority, agency, court or other body, officer or public Entity,
including any zoning authority, building inspector, or health or safety
inspector;

 

“Indemnified Party” shall mean a PEGI Indemnified Party or a PSP Indemnified
Party;

 

“Indemnifying Party” shall have the meaning given thereto in Section 8.03;

 

“Initial Jointly Owned Company Service Period” shall have the meaning given
thereto in Section 3.01;

 

“Invoice” shall have the meaning given thereto in Section 6.03(a);

 

“Joint Acquisition Framework” shall have the meaning given thereto in the
recitals to this Agreement;

 

“Joint Venture Agreement” shall have the meaning given thereto in the recitals
to this Agreement;

 

“Jointly Owned Company” shall have the meaning given thereto in the preamble to
this Agreement;

 

“Jointly Owned Company Service Period” shall have the meaning given thereto in
Section 3.02;

 

“JV Contractor Agreements” shall have the meaning given thereto in Section 4.02;

 

“Intellectual Property” shall mean any and all intellectual property or similar
proprietary rights throughout the world, including any and all: (i) patents,
patent applications, patent disclosures and all related provisionals,
continuations, continuations-in-part, divisionals, reexaminations, renewals and
extensions; (ii) trademarks, service marks, logos, trade dress, corporate names
and Internet domain names, together with all goodwill associated with each of
the foregoing; (iii) copyrights and copyrightable works including all derivative
works, moral rights, renewals, extensions, reversions and restorations
associated therewith; (iv) rights in computer software, data and databases, and
documentation relating to any of the foregoing; (v) trade secrets, know-how,
inventions and invention disclosures (whether patentable or not) and proprietary
or confidential information (including pricing and cost information, business
and marketing plans and customer and supplier lists); (vi) drawings, schematics
and other technical plans; (vii) registrations and applications for any of the
foregoing; (viii) rights to sue or recover and retain damages and costs and
attorneys’ fees for the past, present or future

 

A-2

 

infringement, dilution, misappropriation or other violation of any of the
foregoing; and (ix) all other intellectual property rights.

 

“Laws” shall mean all laws, statutes, orders, decrees, injunctions, licenses,
permits, approvals, agreements and regulations of any Governmental Authority
having jurisdiction over the matter in question;

 

“MOMA” means, with respect to a Jointly Owned Company, the management, operation
and maintenance agreement entered into by such Jointly Owned Company with PEGI
or its Affiliate;

 

“PAA” means, with respect to a Jointly Owned Company, the project administration
agreement entered into by such Jointly Owned Company with PEGI or its Affiliate;

 

“Party” or “Parties” shall have the meaning given thereto in the introductory
paragraph of this Agreement;

 

“PEGI” shall have the meaning given thereto in the introductory paragraph of the
Agreement, and shall include its successors and permitted assigns, if any, under
this Agreement;

 

“PEGI Indemnified Party” shall mean PEGI and its Affiliates, and all of their
respective officers, directors, employees and representatives. In no case shall
PSP or any of its Subsidiaries, including any PSP Project Entity, be a PEGI
Indemnified Party;

 

“PEGI IP” shall have the meaning given to such term in Section 7.01.

 

“Person” shall mean any individual, partnership, joint stock company,
corporation, trust, unincorporated association or joint venture, a government or
any department or agency thereof, or any other Entity;

 

“Prime Rate” means the prime rate as published in the Wall Street Journal;

 

“Project” means any power generation, storage or transmission facility or
project now or hereafter owned, directly or indirectly, in whole or in part by
any Jointly Owned Company.

 

“Project Distribution” means any distribution made by a Jointly Owned Company to
a PSP Project Entity other than a distribution made on account of the tax
liability of such PSP Project Entity;

 

“Project Distribution Payment Direction” shall have the meaning given thereto in
Section 6.03(b).

 

“Project Rate of Return” means, for any Jointly Owned Company or Project held by
a Jointly Owned Company, the 25 year after tax (assuming internal use of any tax
benefits and inclusion of the Fixed Fee in taxable income) rate of return of the
Parties

 

A-3

 

(and not, for the avoidance of doubt, to any tax equity) that is reflected in
the Financial Model for such Jointly Owned Company or Project.

 

“Prudent Service Provider Standard” shall mean, at a particular time, those
practices, standards, methods, means, techniques, equipment and acts that would
require a Person to: (a) perform its duties in good faith and as a reasonably
prudent service provider would provide similar services, (b) exercise such care,
skill, integrity and diligence as a reasonably prudent business company of
established reputation engaged in similar services in the wind energy business
would exercise in the conduct of its business and for the advancement or
protection of its own interests and (c) use sufficient and properly trained and
skilled personnel.

 

“PSP” shall have the meaning given thereto in the introductory paragraph of the
Agreement, and shall include its successors and permitted assigns, if any, under
this Agreement;

 

“PSP Indemnified Party” shall mean PSP and its Affiliates, including any PSP
Project Entity, and all of their respective officers, directors, employees and
representatives. In no case shall PEGI or any of its Subsidiaries be a PSP
Indemnified Party;

 

“PSP Project Entity” means, with respect to a Jointly Owned Company, the
Affiliate of PSP that holds an interest in such Jointly Owned Company, and shall
include its successors and permitted assigns, if any, under this Agreement;

 

“Reimbursable Expenses” shall have the meaning given thereto in Section 6.02;

 

“Sales Taxes” shall have the meaning given thereto in Section 6.01(b);

 

“Schedule of Definitions” shall mean this Schedule of Definitions;

 

“Services” shall have the meaning given thereto in Section 4.01;

 

“Statement of Work” shall have the meaning given thereto in Section 4.03;

 

“Subsidiary” means, with respect to any Entity, any other Entity of which such
Entity (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such legal Entity;

 

“Successor Service Provider” shall have the meaning given thereto in Section
9.04(i);

 

“Term” shall have the meaning given thereto in Article 3; and

 

“Terminating Party” shall have the meaning given thereto in Section 9.01.

 

A-4

 

Exhibit B
SERVICES

 

With respect to each Jointly Owned Company, PEGI shall provide expertise,
coordination and/or assistance with the following:

 

·Major Project operational and contracting direction including turbine O&M
service, warranty enforcement, contract amendments, and general problem-solving.

 

·Senior management oversight, direction, and ability to leverage relationships.

 

·Project financing optimization including with respect to potential
refinancings, plus commercial interfacing with financing parties regarding
material amendments and consents.

 

·Maintenance of long-term cash-flow projections and understanding of relevant
capital markets, and strategic direction informed by such.

 

·Construction team management for ongoing repair and capex activities.

 

·Procurement team relationships with major equipment suppliers (e.g., turbine
OEMs) and ability to leverage PEGI’s operational scale in managing spare parts
and supply chains.

 

·Legal support from in-house transaction counsel and specialists, plus dedicated
real estate legal team.

 

·Environmental and biologist specialists managing ongoing permit compliance and
active involvement in industry-wide regulatory efforts.

 

·Power markets and transmission system specialists managing ongoing market
participation and interconnection activities and involvement in lobbying
regulators with respect to market function.

 

·Meteorological team of in-house scientists providing ongoing forecasting and
analysis of weather patterns on both a near-term and long-term basis, to inform
O&M activities and strategic direction.

 

·Insurance team ongoing optimization of Project policies and ability to leverage
the scale of PEGI’s global insurance program.

 

·IT team maintenance of Project SCADA and server systems and ongoing
optimization of technology, plus ability to leverage operational scale.

 

·Media relations, public relations, and public policy teams providing ongoing
management of Project stakeholders and information flow, and strong involvement
in local and national policy lobbying efforts.

 

B-1

 

·AP and treasury teams providing payment support and cash management including
ongoing cash-flow risk management and hedging.

 

·Accounting support from technical accounting team, consolidations team, and
internal audit team, plus ability to leverage PEGI’s overall audit scale in
performing efficient Project audits.

 

·HR support for site personnel and others providing MOMA and PAA services.

 

·Corporate governance of Jointly Owned Companies including preparation of board
minutes and resolutions, Entity maintenance, etc.

 

·Tax returns for equity partners and tax filings for Jointly Owned Companies.

 

·Bank account management and distributions.

 

·Operational and financial reporting to equity partners in each Jointly Owned
Company, as required per the governance documents of the relevant Jointly Owned
Company and including details on Fees and Reimbursable Expenses paid or payable
by the relevant PSP Project Entity during the relevant period.

 

B-2

 

Exhibit C
JOINTLY OWNED COMPANIES

 

Project Name Jointly Owned Company Name Fixed Fee Meikle Project

Meikle Wind Energy Limited Partnership

 

Meikle Wind Energy Corp.

 

CAD$171,500 Mont Sainte-Marguerite Project

[New JV MSM Holdings LP]

 

Pattern MSM GP Holdings Inc.

 

Mont Sainte-Marguerite Wind Farm L.P.

 

Mont Sainte-Marguerite Wind Farm Inc.

 

Pattern Development MSM Management ULC

 

CAD$228,830 Panhandle 2 Project

[New Class B Member LLC]

 

Panhandle Wind Holdings 2 LLC

USD$122,500

 

 

 

C-1

 

Exhibit D
FORM OF ACCESSION AGREEMENT

 

To:Pattern Energy Group Inc. (“PEGI”), [Name of PSP Entity that is party to the
SSA] (“PSP”) and each of the other parties to the Sponsor Services Agreement
referred to below

 

 

 

Reference is made to the sponsor services agreement dated June n, 2017 between
PEGI, PSP and the PSP Project Entities party thereto from time to time (the
“Sponsor Services Agreement”);

 

AND WHEREAS the undersigned (the “PSP Project Entity”) has acquired an interest
in [Name of Jointly Owned Company] (the “Jointly Owned Company”) and wishes to
become a party to the Sponsor Services Agreement as a PSP Project Entity with
respect to the Jointly Owned Company;

 

NOW THEREFORE for good and valuable consideration, the receipt and sufficiency
of which are hereby irrevocably acknowledged, the undersigned, intending to be
legally bound by this Accession Agreement, covenants and agrees as follows:

 

1.The PSP Project Entity acknowledges and agrees, subject to the terms of the
Sponsor Services Agreement, that it shall be bound by, and entitled to the
benefits of, the provisions of the Sponsor Services Agreement applicable to PSP
with respect to the Jointly Owned Company to the same extent as if the PSP
Project Entity was an original party thereto.

 

2.The PSP Project Entity assumes all of the obligations and liabilities of PSP
relating to the Jointly Owned Company under the Sponsor Services Agreement,
including any obligations and liabilities that arose prior to the date of this
Accession Agreement, and shall be entitled to all of the rights and benefits of
PSP relating to the Jointly Owned Company under the Sponsor Services Agreement,
including any rights and benefits that arose prior to the date of this Accession
Agreement.

 

3.The PSP Project Entity represents and warrants to the other Parties to the
Accession Agreement on the date hereof that:

 

a.it is duly formed and existing under the Laws of the jurisdiction of its
formation and is duly qualified to do business in each jurisdiction where the
nature of its business or its operations requires such qualification;

 

b.the execution, delivery and performance of this Accession Agreement is within
its company, corporate or partnership, as the case may be, powers, have been
duly authorized by all necessary company, corporate or partnership, as the case
may be, action and does not require any approval or consent of any Person that
has not been obtained and does not

 

D-1

 

contravene, conflict with or constitute a default under any of the terms or
conditions in its governing documents, any contracts to which it is a party or
any Law, judgment, injunction, decree, rule, regulation, order or the like
binding upon such Party or its property;

 

c.each of this Accession Agreement and the Sponsor Services Agreement
constitutes its legally valid and binding obligation enforceable against it in
accordance with its terms; subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws effecting creditors’
rights and remedies generally and to the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity);

 

d.it is not bankrupt and there are no proceedings pending or being contemplated
by it or, to its knowledge, threatened against it which would result in it being
or becoming bankrupt; and

 

e.no legal proceeding is pending or threatened against it or, to its knowledge,
any of its Affiliates that could materially adversely affect its ability to
perform its obligations under this Accession Agreement or the Sponsor Services
Agreement.

 

4.Capitalized terms used but not otherwise defined in this Accession Agreement
shall have the respective meanings given to them in the Sponsor Services
Agreement.

 

5.This Accession Agreement, the legal relations among the Parties hereunder and
the adjudication and the enforcement thereof, shall in all respects be governed
by, and interpreted and construed in accordance with, the Laws (excluding
conflict of Laws rules and principles) of the State of New York applicable to
agreements made and to be performed entirely within such State, including all
matters of construction, validity and performance.

 

DATED this ___ day of __________, __________.

 

  [NAME OF PSP PROJECT ENTITY]           By:       Name:     Title:            
    Name:     Title:

 

 

D-2