13. Subsequent Events

Wind Project Investment and Nonrecourse Debt

In October 2014, we acquired a $144 million investment (“Wind Project Investment”), in a portfolio of ten operating wind projects owned by an affiliate of JP Morgan Chase & Co. (“JP Morgan”). The transaction enables us to participate in the priority cash flows associated with these wind projects. As part of the transaction, we borrowed $115 million of fixed-rate, amortizing non-recourse debt using the investment as collateral, pursuant to a loan agreement.

The transaction was structured as an investment by HA Wind I LLC, our newly formed subsidiary (“HA Wind”), in a 50% ownership interest in newly formed Strong Upwind Holdings LLC (“NewCo”). NewCo, using the cash contributions from HA Wind and an affiliate of JP Morgan, the other 50% owner, has purchased minority ownership interests in four wind limited liability companies from JP Morgan. These four limited liability companies collectively own ten operating wind projects across five states. The expected cash flow from these wind projects is the primary source of repayments of the loan. The limited liability companies are majority owned and operated by large wind energy companies.

The minority ownership interests in the holding companies are structured in a typical wind partnership flip structure where NewCo, along with a number of other large institutional investors receive a pre-negotiated preferred return consisting of a priority distribution of the project cash flows along with tax attributes. Once this preferred return is achieved, the partnership “flips” and the project owner receives the majority of the cash flow and the institutional investors will have an ongoing residual interest. HA Wind and JP Morgan will share in the cash flow and tax attributes of NewCo according to a negotiated schedule. After factoring in the various ownership interests, HA Wind will own between 4% and 17.5% of the holding companies based on voting percentage.

As part of the Wind Project Investment, we borrowed $115 million of fixed-rate, amortizing non-recourse debt using the investment as collateral, pursuant to a loan agreement (the “Wind Loan Agreement”), dated as of October 15, 2014, among HA Wind, Bank of America, N.A., and each lender from time to time party thereto. The loan bore interest from the closing date through October 22, 2014, at a rate per annum equal to the sum of (x) the LIBOR daily floating rate plus (y) 4.25% per annum and converted on October 22, 2014, to a fixed rate of 5.74%. Principal and interest are paid quarterly starting in March 2015 with a minimum principal payment amount equal to one-half percent (0.5%) of the principal amount of the loans plus additional principal payments based on available cash flow and a target debt balance. The scheduled maturity date of the loan is September 30, 2021 and the expected remaining debt balance to be repaid at the maturity date is $20.2 million.

HAT Holdings II LLC, our subsidiary, has pledged its 100% ownership of the equity in HA Wind and HA Wind has pledged all of its assets, which consists primarily of its 50% ownership interest in NewCo, as security for the loan. The loan is otherwise non-recourse to our company.

The Wind Loan Agreement contains terms, conditions, covenants, and representations and warranties from HA Wind that are customary and typical for a transaction of this nature, including limitations on the incurrence of liens and indebtedness, investments, fundamental organizational changes, dispositions, changes in the nature of business, transactions with affiliates, use of proceeds and stock repurchases. The Wind Loan Agreement also includes customary events of default, the occurrence of which may result in termination of the Wind Loan Agreement, acceleration of amounts due, and accrual of default interest at a rate of 7.74%.

Sale of Common Stock

In October 2014, we completed a follow-on public offering in which we sold 4,600,000 shares of common stock (including 600,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares) at $13.60 per share, less the underwriting discount and estimated expenses, for net proceeds of $58.9 million.