Outstanding Loans and Security Agreements

The following is a summary of the Company’s debt as of September 30, 2018 (in thousands):



	Unpaid Principal Balance		Net Carrying Value						Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse
	Unpaid Principal Balance		Current		Long- Term		Total		Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse

5.22% senior secured notes	$	82,624	$	11,840	$	69,560	$	81,400	$	—	5.2%	March 2025	PPA II	No
Term loan	40,937		1,737		34,765		36,502		—		7.5%	September 2028	PPA IIIa	No
Term loan	24,934		866		23,155		24,021		—		LIBOR plus margin	October 2020	PPA IIIb	No
6.07% senior secured notes	83,993		2,308		80,529		82,837		—		6.1%	March 2030	PPA IV	No
Term loan	126,088		3,485		120,349		123,834		—		LIBOR plus margin	December 2021	PPA V	No
Letters of Credit	—		—		—		—		1,504		2.25%	December 2021	PPA V	No
Total non-recourse debt	358,576		20,236		328,358		348,594		1,504
Term loan	3,631		1,686		1,945		3,631		—		LIBOR plus margin	November 2020	Company	Yes
5% convertible promissory note	34,273		—		34,273		34,273		—		5.0%	December 2020	Company	Yes
6% convertible promissory notes	296,233		—		258,862		258,862		—		6.0%	December 2020	Company	Yes
10% notes	100,000		—		95,451		95,451		—		10.0%	July 2024	Company	Yes
Total recourse debt	434,137		1,686		390,531		392,217		—
Total debt	$	792,713	$	21,922	$	718,889	$	740,811	$	1,504

The following is a summary of the Company’s debt as of December 31, 2017 (in thousands):



	Unpaid Principal Balance		Net Carrying Value						Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse
	Unpaid Principal Balance		Current		Long- Term		Total		Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity	Recourse

5.22% senior secured notes	$	91,086	$	11,389	$	78,175	$	89,564	$	—	5.2%	March 2025	PPA II	No
Term loan	41,927		1,389		35,551		36,940		—		7.5%	September 2028	PPA IIIa	No
Term loan	25,599		876		23,488		24,364		—		LIBOR plus margin	October 2020	PPA IIIb	No
6.07% senior secured notes	85,303		1,846		82,186		84,032		—		6.1%	March 2030	PPA IV	No
Term loan	128,403		2,946		122,650		125,596		—		LIBOR plus margin	December 2021	PPA V	No
Letters of Credit	—		—		—		—		1,784		2.25%	December 2021	PPA V	No
Total non-recourse debt	372,318		18,446		342,050		360,496		1,784
Term loan	5,000		1,690		3,197		4,887		—		LIBOR plus margin	November 2020	Company	Yes
8% convertible promissory notes	244,717		—		244,717		244,717		—		8.0%	December 2019	Company	Yes
6% convertible promissory notes	286,069		—		236,724		236,724		—		6.0%	December 2020	Company	Yes
10% notes	100,000		—		94,517		94,517		—		10.0%	July 2024	Company	Yes
Total recourse debt	635,786		1,690		579,155		580,845		—
Total debt	$	1,008,104	$	20,136	$	921,205	$	941,341	$	1,784

Non-recourse debt refers to debt that is recourse to only specified assets or subsidiaries of the Company. Recourse debt refers to debt that is recourse to the Company’s general assets. The differences between the unpaid principal balances and the net carrying values are due to debt discounts and deferred financing costs. The Company was in compliance with all financial covenants as of September 30, 2018 and December 31, 2017.

Non-recourse Debt Facilities

5.22% Senior Secured Notes - In March 2013, PPA Company II refinanced its existing debt by issuing 5.22% Senior Secured Notes (PPA II Notes) due March 30, 2025. The total amount of the loan proceeds was $144.8 million, including $28.8 million to repay outstanding principal of existing debt, $21.7 million for debt service reserves and transaction costs and $94.3 million to fund the remaining system purchases. The loan is a fixed rate term loan that bears an annual interest rate of 5.22% payable quarterly. The loan has a fixed amortization schedule of the principal, payable quarterly, which began March 30, 2014 that requires repayment in full by March 30, 2025. The Note Purchase Agreement requires the Company to maintain a debt service reserve, the balance of which was $11.2 million and $11.3 million as of September 30, 2018 and December 31, 2017, respectively, and was included as part of long-term restricted cash in the consolidated balance sheets. The PPA II Notes are secured by all the assets of PPA II.

Term Loan due September 2028 - In December 2012 and later amended in August 2013, PPA IIIa entered into a $46.8 million credit agreement to help fund the purchase and installation of Energy Servers. The loan bears a fixed interest rate of 7.5% payable quarterly. The loan requires quarterly principal payments which began in March 2014. The credit agreement requires the Company to maintain a debt service reserve for all funded systems, the balance of which was $3.7 million and $3.7 million as of September 30, 2018 and December 31, 2017, respectively, and was included as part of long-term restricted cash in the consolidated balance sheets. The loan is secured by all assets of PPA IIIa.

Term Loan due October 2020 - In September 2013, PPA IIIb entered into a credit agreement to help fund the purchase and installation of Energy Servers. In accordance with that agreement, PPA IIIb issued floating rate debt based on LIBOR plus a margin of 5.2%, paid quarterly. The aggregate amount of the debt facility is $32.5 million. The credit agreement requires the Company to maintain a debt service reserve for all funded systems, the balance of which was $1.7 million and $1.7 million September 30, 2018 and December 31, 2017, respectively, and was included as part of long-term restricted cash in the consolidated balance sheets. The loan is secured by all assets of PPA IIIb and requires quarterly principal payments which began in July 2014. In September 2013, PPA IIIb entered into pay-fixed, receive-float interest rate swap agreement to convert the floating-rate loan into a fixed-rate loan.

6.07% Senior Secured Notes - In July 2014, PPA IV issued senior secured notes (PPA IV Notes) amounting to $99.0 million to third parties to help fund the purchase and installation of Energy Servers. The PPA IV Notes bear a fixed interest rate of 6.07% payable quarterly. The principal amount of the PPA IV Notes is payable quarterly which began in December 2015 and ends in March 2030. The Note Purchase Agreement requires the Company to maintain a debt service reserve, the balance of which was $7.4 million as of September 30, 2018 and $7.0 million as of December 31, 2017, and was included as part of long-term restricted cash in the consolidated balance sheets. The PPA IV Notes are secured by all the assets of the PPA IV.

Term Loan due December 2021 and Letters of Credit due December 2021 - In June 2015, PPA V entered into a $131.2 million credit agreement to fund the purchase and installation of Energy Servers. The lenders are a group of five financial institutions. In addition, the lenders further had commitments to the letter of credit (LC) facility with the aggregate principal amount of $6.4 million. The LC facility is to fund the Debt Service Reserve Account. The loan was initially advanced as a construction loan during the development of the PPA V Project and converted into a term loan on February 28, 2017 (the “Term Conversion Date”). As part of the term loan’s conversion, the LC facility commitments were adjusted down to total of $6.2 million. The amount reserved under the letter of credit as of September 30, 2018 and December 31, 2017 was $4.7 million and $4.4 million, respectively. The unused capacity as of September 30, 2018 and December 31, 2017 was and $1.5 million and $1.8 million, respectively.

In accordance with the credit agreement, PPA V was issued a floating rate debt based on LIBOR plus a margin, paid quarterly. The applicable margins used for calculating interest expense are 2.25% for years 1-3 following the Term Conversion Date and 2.5% thereafter. For the Lenders’ commitments to the loan and the commitments to the LC, PPA V also pays commitment fees at 0.50% per annum over the outstanding commitments, paid quarterly. The loan is secured by all the assets of the PPA V and requires quarterly principal payments which began in March 2017. In connection with the floating-rate credit agreement, in July 2015 the PPA V entered into pay-fixed, receive-float interest rate swap agreements to convert its floating-rate loan into a fixed-rate loan.

Recourse Debt Facilities

Term Loan due November 2020 - On May 22, 2013, the Company entered into a $12.0 million financing agreement with a financial institution. The loan has a term of 90 months, payable monthly at a variable rate equal to one-month LIBOR plus the applicable margin. The weighted average interest rate as of December 31, 2017 was 5.1%. As of September 30, 2018 and December 31, 2017, the debt outstanding was $3.6 million and $4.9 million, respectively.

8% and 5% Convertible Promissory Notes - In December 2014, the Company entered into a three year $132.2 million convertible promissory note agreements with certain investors, including $10.0 million each from three related parties. The related parties consisted of Independent Board Members of the Company from Alberta Investment Management Corporation, KPCB Holdings, Inc. and New Enterprise Associates. The notes were amended to mature in December 2018.

As part of the agreements with certain investors, the Company entered into two more promissory note agreements in January and February 2015 for an additional $34.0 million. In June 2015, the Company entered into an additional promissory note agreement for $27.0 million requiring principal and interest accrued as due upon maturity and were amended to mature in December 2018. The notes had a fixed interest rate of 8.0% compounded monthly, were due at maturity or at the election of the investor with accrued interest due in December of each year which, at the election of the investor, could be paid or accrued.

On January 18, 2018, amendments were finalized to extend the maturity dates for all the 8% Notes to December 2019. At the same time, a portion of the notes held by Constellation NewEnergy, Inc. (the Constellation Note) was extended to December 2020 and the interest rate decreased from 8% to 5%.

Investors held the right to convert the unpaid principal and accrued interest of both the 8% and 5% notes to Series G convertible preferred stock at any time at the price of $38.64. In July 2018, the $221.6 million of principal and accrued interest of outstanding 8% Notes automatically converted into equity, the conversion of which included all the related-party noteholders. Upon the Company's IPO, the 8% Notes converted to shares of Series G convertible preferred stock and, concurrently, each such share of Series G convertible preferred stock converted automatically into one share of Class B common stock. 5,734,440 shares of Class B common stock were issued from conversions and the 8% Notes were retired. The 5% Constellation Note have not elected to convert as of September 30, 2018.

The Company had the intent and ability to extend the maturity from December 2018 to December 2020 for the 5% Constellation Note and from December 2018 to December 2019 for the 8% Notes, consequently the outstanding balances of $34.3 million and $244.7 million of the debt was classified as non-current as of September 30, 2018 and December 31, 2017, respectively.

6% Convertible Promissory Notes (Originally 5% Convertible Promissory Notes) - In December 2015, January 2016 and September 2016, the Company entered into five promissory note agreements with J.P. Morgan, Canadian Pension Plan Investment Board (CPPIB), Mehetia Inc., New Enterprise Associates, and KPCB Holdings, Inc. The total value of the promissory notes is $260.0 million and originally bore a 5% fixed interest rate, compounded monthly, and are entirely due at maturity. Due to a reduction of collateral as a result of the issuance of the 10% Notes in June 2017 (see the discussion below headed 10% Notes), a 1% interest increase was negotiated between the Company and investors changing the interest rate from 5% to 6% effective July 1, 2017.

In connection with the issuance of the 6% Notes, the Company agreed to issue to J.P. Morgan and CPPIB, upon the occurrence of certain conditions, warrants to purchase the Company’s common stock up to a maximum of 146,666 shares and 166,222 shares, respectively. On August 31, 2017, J.P. Morgan transferred its rights to CPPIB and the Company issued 312,888 common stock warrants to CPPIB. Upon completion of the IPO, the warrants were net exercised for 312,575 Class B Common stock.

As of September 30, 2018 and December 31, 2017, the amount outstanding on the 6% Notes, which includes accrued interest through the IPO date, was $296.2 million and $286.1 million, respectively. At the election of the investors, the accrued interest and the unpaid principal can be converted into common stock at any time through the maturity date, with no provision for mandatory conversion upon IPO. In certain circumstances, the notes are also redeemable at the Company’s option, in whole or in part, in connection with a change of control or at a qualified initial public offering at a redemption price. In January 2018, the Company amended the terms of the 6% Notes to extend the convertible put option dates to December 2019. After the IPO date, the Company paid the interest when due and no additional interest accrues on the consolidated balance sheet on the 6% Notes.

10% Notes - In June 2017, the Company issued $100.0 million of senior secured notes. The 10% Notes mature in July 2024 and bear a 10.0% fixed rate of interest, payable semi-annually. The notes have a continuing security interest in the cash flows payable to the Company as servicing, operations and maintenance fees, as well as administrative fees, from the five active power purchase agreements in the Company’s Bloom Electrons program. Under the terms of the indenture governing the 10% Notes, the Company is required to comply with various restrictive covenants including meeting reporting requirements such as the preparation and delivery of audited consolidated financial statements, as well as maintaining certain restrictions on investments and incurring new debt.

The following table presents detail of the Company’s entire outstanding loan principal repayment schedule as of September 30, 2018 (in thousands):



Remainder of 2018	$	5,052
2019	29,523
2020	392,229
2021	153,639
2022	40,059
Thereafter	172,211
	$	792,713

Interest expense of $18.8 million and $28.9 million for the three months ended September 30, 2018 and 2017, respectively, was recorded in interest expense on the consolidated statements of operations. Interest expense of $68.0 million and $78.8 million for the nine months ended September 30, 2018 and 2017, respectively, was recorded in interest expense on the consolidated statements of operations.