UNITED STATES DEPARTMENT OF TRANSPORTATION INDICATIVE TERM SHEET FOR TIFIA LOAN AGREEMENT

Transcription

1 Draft 9/9/16 UNITED STATES DEPARTMENT OF TRANSPORTATION INDICATIVE TERM SHEET FOR TIFIA LOAN AGREEMENT TRANSFORM 66 P3 PROJECT (TIFIA APPLICATION FOR CREDIT ASSISTANCE NO. ) 1 The terms set forth herein (this Term Sheet ) represent certain common terms for a TIFIA Loan Agreement that must be accepted by the Borrower in order to proceed to execution of a TIFIA Loan Agreement on an expedited basis after final approval of the Borrower s application for TIFIA credit assistance (the Application ). The terms in this document are indicative only, based on the requirements in the Transportation Infrastructure Finance and Innovation Act of 1998 ( TIFIA ), 23 U.S.C , as supplemented and amended from time to time (the Act ) and standard TIFIA practices, and are subject to modification by the Credit Council of the United States Department of Transportation ( USDOT ). TIFIA credit assistance is contingent on the credit evaluation of the selected Borrower s financial plan and the execution of a loan agreement (the TIFIA Loan Agreement ) with the selected Borrower on terms and conditions acceptable to USDOT. This Term Sheet represents an indicative statement of USDOT s general intent only and does not purport to be and does not constitute a binding agreement of USDOT. USDOT will not have any legal obligation under this Term Sheet. Any legal obligation of USDOT shall only arise if a TIFIA Loan Agreement and all other documents required by USDOT to govern, evidence and secure the TIFIA Loan are agreed to, executed and delivered by USDOT, the Borrower and required counterparties. It is expressly understood and agreed that as an accommodation to the Virginia Department of Transportation ( VDOT ) in connection with its competitive proposal process to select a concessionaire for the Project that would become the Borrower under the TIFIA Loan, USDOT is making this Term Sheet available prior to VDOT s selection of such concessionaire and such concessionaire s presentation of a senior loan financing structure to USDOT, and prior to USDOT s completion of its legal and business due diligence and underwriting with respect to, among other items, the selected Borrower and the senior obligation financing structure. As such, the terms and conditions reflected herein remain subject to change by USDOT in its sole discretion. Any change required by USDOT must be addressed by the Borrower in a revised plan of finance that will be subject to acceptance by USDOT. The reliance by any party on the terms of this Term Sheet shall be at the sole risk of such party, without any liability to USDOT. Capitalized terms used in this Term Sheet and not otherwise defined herein shall have the meanings ascribed thereto in the list of defined terms which is attached hereto as Schedule 1. Certain additional capitalized terms not otherwise defined herein or in Schedule 1 are defined in the draft Comprehensive Agreement that is being developed by VDOT. Unless the context shall otherwise require, the words hereto, herein, hereof and other words of similar import refer 1 Note: This is a preliminary draft Term Sheet. This Term Sheet remains subject to the ongoing due diligence of TIFIA and its consultants and advisors, including review of the Comprehensive Agreement. Intercreditor principles to be added to this Term Sheet as Schedule 2 once negotiated.

2 to this Term Sheet as a whole. Words importing the singular number shall include the plural number and vice versa unless the context shall otherwise require. The words include, includes and including shall be deemed to be followed by the phrase without limitation. The headings or titles of this Term Sheet and its schedules are for convenience of reference only and shall not define or limit its provisions. TIFIA LENDER PROJECT USDOT, acting by and through the Federal Highway Administrator, and its successors and assigns (the TIFIA Lender ). The Project consists of high occupancy/toll lanes ( Express Lanes ) and associated facilities and services along the I-66 corridor between U.S. Route 15 in Prince William County and Interstate 495 in Fairfax County, Virginia, in accordance with a Comprehensive Agreement to be entered into by VDOT and the Borrower (as defined below) pursuant to the Public-Private Transportation Act of 1995 (as amended). The Project will provide: Two tolled Express Lanes in each direction (the existing high occupancy vehicle (HOV) lane will be converted to an Express Lane and one new Express Lane will be constructed); Three general-purpose lanes in each direction, which will be operated and maintained by VDOT after the end of construction; Additional access points and interchanges for the Express Lanes; Direct or near direct access between the Project s Express Lanes and new or expanded park and ride facilities; and Ongoing transit funding. BORROWER EQUITY SPONSORS A special purpose entity (acceptable to the TIFIA Lender) to be formed by the successful proposer selected by VDOT for the Project via a competitive process (the Borrower ). [ ] and [ ] 2 (collectively, the Equity Sponsors and each, an Equity Sponsor ) shall make equity contributions in the Borrower in the amounts of $[ ] and $[ ] 3 respectively under 2 3 Note: Identity and number of Equity Sponsors to reflect organizational structure of preferred bidder. Note: Equity commitments to reflect the equity contributions required based on approved financial plan of preferred bidder. 2

3 an equity contribution agreement (the Equity Contribution Agreement ), in form and substance acceptable to the TIFIA Lender, to be executed on or prior to the Effective Date. INITIAL PRINCIPAL AMOUNT OF THE TIFIA LOAN The loan made pursuant to the TIFIA Loan Agreement (the TIFIA Loan ) shall have a maximum principal amount of the TIFIA Loan (excluding capitalized interest) not to exceed the lesser of (a) 33 percent of reasonably anticipated Eligible Project Costs, as defined in the Act or (b) if the TIFIA Loan does not receive an investment grade rating, the amount of the Initial Senior Obligations. Any capitalized amount to be added to the TIFIA Loan balance will be in addition to the original principal amount and not subject to the limitations described in the immediately previous sentence. The total amount of Initial Senior Obligations and the total initial principal amount of the TIFIA Loan will be adjusted lower to the extent that the debt service coverage ratio for Senior Debt Service plus TIFIA Mandatory Debt Service fails to exceed 1.00x (releases from the RURA can be included for purposes of the calculation of this debt service coverage ratio) under either the Lenders Low Case or the Rating Case 4 as of each Calculation Date in each and every year of the forecast, excluding the Capitalized Interest Period, assuming that, at a minimum, no more than [70]% of the unpaid TIFIA loan balance remains outstanding [ten (10)] years prior to the Final Maturity Date and the remaining TIFIA debt service will be fully repaid as mandatory level debt service over the final [ten (10)] years to Final Maturity Date. TERM CREDIT RATINGS The final maturity date of the TIFIA Loan (the Final Maturity Date ) shall be no later than the earliest of (a) [December 31, 2058], (b) the payment date prior to the 35 th anniversary of the Substantial Completion Date and (c) the estimated expiration of the useful life of the Project, consistent with 603(b)(5) of the Act. 5 The Senior Obligations and the TIFIA Loan must be publically rated by at least two Nationally Recognized Rating Agencies. The Initial Senior Obligations and the TIFIA Loan must 4 5 Acceptability of the Lenders Low or the Rating Case remain subject to the TIFIA Lender s continuing analysis of the plan of finance provided by the Borrower and may be adjusted further on the basis of additional sensitivity analyses in the TIFIA Lender s sole discretion. For purposes of calculating financial ratios, the Final Maturity Date is not subject to modification as a result of any prepayment of the TIFIA Loan. 3

4 receive an investment grade rating from at least two Nationally Recognized Rating Agencies. Updated public ratings on each of the TIFIA Loan and the Senior Obligations must be provided annually until the maturity of the related debt instrument. TIFIA INTEREST RATE The TIFIA Loan shall bear interest at a fixed rate (the TIFIA Interest Rate ) calculated by adding one basis point (.01%) to the rate of securities of a similar maturity as published on the execution date of the TIFIA Loan Agreement in the United States Treasury Bureau of Public Debt s daily rate table for State and Local Government Series (SLGS) securities, currently located on the internet at SLGSDate.htm. Interest shall be computed on the outstanding TIFIA Loan balance (which shall include any past due interest and any capitalized interest) on the basis of a 365-day or 366-day year, as appropriate, for the actual number of days elapsed and will be compounded semi-annually. DEFAULT RATE If the Borrower fails to pay when due interest on or principal of the TIFIA Loan, the Borrower shall pay interest on such overdue amount from its due date to the date of actual payment at an interest rate of 200 basis points (2.00%) above the TIFIA Interest Rate (the Default Rate ). Upon the occurrence of a Development Default or upon the abandonment of the Project, the interest rate on the entire outstanding balance of the TIFIA Loan, including past due payments and capitalized interest, shall be the Default Rate and the TIFIA Loan shall continue to bear interest at the Default Rate until (a) with respect to a Development Default, such Development Default has been cured or the TIFIA Loan has been paid in full or (b) with respect to an abandonment, the entire outstanding balance of the TIFIA Loan has been paid in full. If an Event of Default results in the TIFIA Loan becoming immediately due and payable, the Default Rate shall be applicable on and after the occurrence of such Event of Default until the TIFIA Loan is paid in full. ELIGIBLE PROJECT COSTS Eligible Project Costs shall be those costs defined in the Act as eligible for Federal participation. Eligible Project Costs, including certain costs incurred up to four years prior to the date of the submission of the TIFIA letter of interest, shall be verified by the TIFIA Lender and must be consistent with U.S.C. Title 23 for highways and Chapter 53 of Title 49 4

5 for public transportation, for third-party contracts, 48 C.F.R. Part relating to construction and architect-engineer contracts and the cost principles in 48 C.F.R. Part PROJECT REVENUES SECURITY AND PRIORITY The TIFIA Loan shall be repayable in whole or in part from the tolls, user fees, payments under the Comprehensive Agreement and other amounts received by the Borrower derived from or related to the operation or ownership of the Project (collectively, the Project Revenues ). Project Revenues include: (a) Toll Revenues (as defined in the Comprehensive Agreement), (b) other receipts derived from or related to the operation of the Project, (c) all payments under the Comprehensive Agreement, including any Department Termination Amount, Developer Debt Termination Amount, or Significant Force Majeure Termination Amount (each as defined in the Comprehensive Agreement) or under any other Principal Project Contract (including warranty payments and delay liquidated damages); (b) all income derived from Permitted Investments; (c) proceeds from business interruption and delay in start-up insurance policies; (d) all proceeds of the sale or other disposition of any part of the Project; (e) loss proceeds not used to rebuild the Project; (f) revenue from any lease or other contract; (g) all net cash payments received by the Borrower under or in connection with any Hedging Agreements; and (h) all other amounts arising or derived from or paid in respect of the Project. The TIFIA Loan shall be secured by a second priority security interest in Project Revenues and liens and security interests in all other project assets (including a pledge of equity interests in the Borrower), subordinate to the liens securing the Senior Obligations only for so long as a Bankruptcy Related Event with respect to the Borrower has not occurred. TIFIA Debt Service may be subordinated to Senior Debt Service in the application of the cash flow waterfall (but will automatically be on parity in all respects with the Senior Loans upon a Bankruptcy Related Event with respect to the Borrower). An illustrative flow of funds applicable prior to a Bankruptcy Related Event with respect to the Borrower is set forth below: 1. Operations and Maintenance Expenses (funds from the OMRA or the RURA may be used to the extent Project Revenues are insufficient); 2. If, and to the extent that, each of the Restricted Payment Conditions has been met as of the current Calculation Date 5

6 and as of the most recent prior Calculation Date (assuming, solely for the purpose of determining the portion of the VDOT Revenue Sharing Amount that may be paid pursuant to this paragraph, that the VDOT Revenue Sharing Amount is treated as an Operations and Maintenance Expense), Revenue Sharing Amounts payable to VDOT, as defined in (and to the extent required in accordance with the terms of) the Comprehensive Agreement (if any Restricted Payment Condition is not satisfied as of the applicable Calculation Date and as of the most recent prior Calculation Date, the amounts that would otherwise be payable to VDOT as Revenue Sharing Amounts shall be deposited into the VDOT Revenue Sharing Lock-Up Account); 3. Required Capital Expenditures and Major Maintenance Costs (funds from the MMRA may be used to the extent Project Revenues are insufficient); 4. Fees, costs and expenses due under Senior Loan Agreement, if any, and the TIFIA Loan Agreement; 5. Interest portion of Senior Debt Service and related Hedging Obligations; 6. Principal portion of Senior Debt Service and Hedging Termination Obligations arising from Permitted Hedging Terminations; 7. Interest portion of Mandatory TIFIA Debt Service; 8. Principal portion of Mandatory TIFIA Debt Service; 9. Deposits to the Senior Debt Service Reserve Account; 10. Deposits to the TIFIA Debt Service Reserve Account; 11. Interest portion of Scheduled TIFIA Debt Service, provided that any amount thereof that is not paid will be rolled to the next payment date; 12. Principal portion of Scheduled TIFIA Debt Service, provided that any amount thereof that is not paid will be rolled to the next payment date; 13. Deposits to the Major Maintenance Reserve Account; 14. Deposits to the OMRA; 6

7 15. Transit Funding Payments, if the Total Debt Service Coverage Ratio is at least 1.25:1, the Loan Life Coverage Ratio is at least 1.25:1, and the Project Life Coverage Ratio is at least 2.25:1, in each case as of the current Calculation Date and as of the most recent prior Calculation Date; provided, that (a) while the RURA is in effect there has been no draw upon the RURA during the twenty-four (24) month period ending on the current Calculation Date, and (b) there is no Event of Default outstanding under the TIFIA Loan Agreement that has occurred and is continuing or event that, with due notice or the passage of time or both, would result in an Event of Default under the TIFIA Loan Agreement; provided, that non-compliance with the Rate Coverage Test will be disregarded for purposes of clause (b) of this paragraph unless and until an Event of Default attributable to such non-compliance has occurred. 16. Deposits into the Distribution Lock-Up Account, if any of the Restricted Payment Conditions has not been satisfied; Deposits into the TIFIA Revenue Sharing Account 7 ; 18. Support for Corridor Improvement Payments, if each of the Restricted Payment Conditions has been met as of the current Calculation Date and as of the most recent prior Calculation Date; 19. Voluntary prepayments, Senior Obligations and the TIFIA Loan and related Hedging Termination Obligations, if any; 20. Discretionary Capital Expenditures; and 21. Deposits into the Distribution Account, if each of the Restricted Payment conditions has been satisfied as of the applicable determination date. Any balances in a reserve account (excluding balances held in the TIFIA Debt Service Reserve Account, the Senior Debt Service Reserve Account, any Handback Requirements Reserve Account required by the Comprehensive Agreement, 6 7 Transit Funding Payments shall be released from the Distribution Lock-Up Account as soon as the conditions to the making of Transit Funding Payments has been satisfied. All amounts remaining after level 16 will be deposited into and maintained in the TIFIA Revenue Sharing Account until the next Semi-Annual Payment Date. The TIFIA Revenue Sharing Amount, if any, will be determined as of such date and all remaining funds will be released from the TIFIA Revenue Sharing Account for application to payments described in the remainder of the waterfall. 7

8 or any other reserve account established for the sole benefit of any holders of Senior Obligations) and any balances in the Distribution Lock-Up Account may be utilized (in accordance with the terms of the Collateral Agency Agreement) for any purpose which has priority over the funding of such Project Account in the flow of funds, provided that the amounts used for such purposes shall not be included in the calculation of the Senior Debt Service Coverage Ratio, the Total Debt Service Coverage Ratio or the Loan Life Coverage Ratio. BANKRUPTCY RELATED EVENT Bankruptcy Related Event means (a) with respect to any entity, an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of such entity or any of its debts, or of a substantial part of the assets thereof, under any Insolvency Law, or (ii) the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official for such entity or for a substantial part of the assets thereof and, in any case referred to in the foregoing subclauses (i) and (ii), such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or (b) with respect to any entity, such entity shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator, custodian, sequestrator, conservator or similar official therefor or for a substantial part of the assets thereof, (ii) generally not be paying its debts as they become due unless such debts are the subject of a bona fide dispute, or become unable to pay its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition with respect to it described in clause (a) of this definition, (v) commence a voluntary proceeding under any Insolvency Law, or file a voluntary petition seeking liquidation, reorganization, an arrangement with creditors or an order for relief under any Insolvency Law, (vi) file an answer admitting the material allegations of a petition filed against it in any proceeding referred to in the foregoing subclauses (i) through (v), inclusive, of this clause (b), or (vii) take any action for the purpose of effecting any of the foregoing; or (c) solely with respect to the Borrower, fail to make two consecutive payments of TIFIA Mandatory Debt Service; or (d) solely with respect to the Borrower, (i) the Collateral Agent shall commence a process pursuant to which all or a substantial part of the collateral (other than the equity interests) may be sold or otherwise disposed of in a public or private sale or disposition pursuant to a foreclosure of the liens 8

9 thereon securing the Senior Obligations, or (ii) the Collateral Agent shall commence a process pursuant to which all or a substantial part of the collateral (other than the equity interests) may be sold or otherwise disposed of pursuant to a sale or disposition of such collateral in lieu of foreclosure; or (e) solely with respect to the Borrower, (i) the Collateral Agent shall commence a process pursuant to which all or a substantial part of the equity interests may be sold or otherwise disposed of in a public or private sale or disposition pursuant to a foreclosure of the liens thereon securing the Senior Obligations, or (ii) the Collateral Agent shall commence a process pursuant to which all or a substantial part of the equity interests may be transferred pursuant to a sale or disposition of such collateral in lieu of foreclosure, or (f) solely with respect to the Borrower, upon the occurrence and during the continuance of an event of default under the Senior Loan Documents, the Collateral Agent shall transfer, or direct the transfer of, funds on deposit in any of the Project Accounts for application to the accelerated prepayment of any Secured Obligations. SENIOR DEBT SERVICE RESERVE ACCOUNT: TIFIA DEBT SERVICE RESERVE ACCOUNT: The Senior Debt Service Reserve Account will be funded as provided in the Collateral Agency Agreement. The TIFIA Debt Service Reserve Account shall be established and maintained for the sole benefit of the TIFIA Lender and funded (with either cash or an Acceptable Letter of Credit with respect to which the Borrower has no payment or other obligations) in an amount at least equal to 100% of TIFIA Mandatory Debt Service for the subsequent year (i.e., one year look forward) (the TIFIA Debt Service Reserve Required Balance ). 8 The TIFIA Debt Service Reserve Account shall be funded initially in an amount at least equal to the TIFIA Debt Service Reserve Required Balance by no later than the date that is twelve (12) months prior to the Debt Service Payment Commencement Date and subsequently funded in accordance with the flow of funds or as otherwise permitted by the Collateral Agency Agreement. The TIFIA Debt Service Reserve Account may not be funded with the proceeds of taxexempt bonds or TIFIA Loan proceeds. 8 Note: Sizing of TIFIA Debt Service Reserve Required Balance to be determined based on review of financial plan of preferred bidder, including the applicable amortization schedule set forth in the Base Case Financial Model. 9

10 OPERATIONS & MAINTENANCE RESERVE ACCOUNT RAMP-UP RESERVE ACCOUNT An Operations & Maintenance Reserve Account ( OMRA ) will be funded with either cash or an Acceptable Letter of Credit with respect to which the Borrower has no payment or other obligations. By no later than the date on which all amounts in the RURA (as defined below) are permitted to be released and thereafter through the Final Maturity Date, the OMRA will be funded in an amount at least equal to 50% of the expected Operations and Maintenance expenses for next twelve (12) months. 9 Amounts released from the RURA (when funds therefrom may be released as described below) may be deposited into the OMRA. A Ramp-Up Reserve Account ( RURA ) will be initially funded in an amount equal to [$30] million (with either cash or an Acceptable Letter of Credit with respect to which the Borrower has no payment or other obligations) on or prior to the Substantial Completion Date. The RURA may be used to pay the Senior Debt Service, TIFIA Mandatory Debt Service, make deposits to the Senior Debt Service Reserve Account, the OMRA, the TIFIA Debt Service Reserve Account, pay Required Capital Expenditures and Major Maintenance Costs, and pay Operations and Maintenance expenses. The RURA may be released through the cash flow waterfall when the Total Debt Service Coverage Ratio is [1.35:1.00] for two (2) consecutive Calculation Dates to be calculated after the Capitalized Interest Period, but in no event shall the RURA be released prior to the [6] th anniversary of Substantial Completion. MAJOR MAINTENANCE RESERVE ACCOUNT The Major Maintenance Reserve Account will be funded (with either cash or an Acceptable Letter of Credit with respect to which the Borrower has no payment or other obligations) and maintained (in accordance with the terms of the Collateral Agency Agreement). The Borrower shall at all times maintain in the Major Maintenance Reserve Account an amount at least equal to the aggregate of (i) 100% of expected Major Maintenance Costs in the then current Fiscal Year, (ii) 80% of expected Major Maintenance Costs for the next succeeding Fiscal Year (i.e., year 2), (iii) 60% of expected Major Maintenance Costs for the 9 Note: Sizing of any O&M reserve requirement to be determined based on review of financial plan of preferred bidder, including the Base Case Financial Model, and input from the LTA. In addition, TIFIA s technical due diligence to include determination of potential need for accordion feature to O&M reserve based on analysis of applicable debt service coverage ratios. 10

11 next succeeding Fiscal Year (i.e., year 3), (iv) 40% of expected Major Maintenance Costs for the next succeeding Fiscal Year (i.e., year 4), and (v) 20% of expected Major Maintenance Costs for the next succeeding Fiscal Year (i.e., year 5). Such expected expenditures will be based on the forecast of estimated life cycle maintenance costs with respect to the Project set forth in the report of the LTA, which report shall be delivered prior to the Effective Date and updated on an annual basis to reflect the LTA s ongoing analysis of funding requirements for Major Maintenance Costs and work needed to satisfy the Performance Requirements (as defined in the Comprehensive Agreement) and condition ratings throughout the concession term and at expiration of the term and handback to VDOT. The LTA shall deliver to the TIFIA Lender an annual certificate verifying that the Major Maintenance Reserve Account is fully funded in accordance with the requirements described in this paragraph. Amounts in the Major Maintenance Reserve Account will be used to pay for Major Maintenance Costs, including work needed to satisfy the Performance Requirements (as defined in the Comprehensive Agreement) and condition ratings throughout the concession term and at expiration of the term and handback to VDOT. VDOT REVENUE SHARING LOCK-UP ACCOUNT A VDOT Revenue Sharing Lock-Up Account will be established. Amounts that would otherwise be paid to VDOT as VDOT Revenue Sharing Amounts but that are not so paid because one or more of the Restricted Payment Conditions has not been satisfied as of the current Calculation Date or as of the most recent prior Calculation Date will be deposited into the VDOT Revenue Sharing Lock-Up Account. Amounts on deposit in the VDOT Revenue Sharing Lock-Up Account shall be released and paid directly to VDOT on the first Calculation Date when each of the Restricted Payment Conditions has been satisfied as of such Calculation Date and as of the most recent prior Calculation Date. Amounts in the VDOT Revenue Sharing Lock-Up Account may be used to pay Senior Debt Service, TIFIA Mandatory Debt Service, make deposits to the Senior Debt Service Reserve Account, the OMRA, the TIFIA Debt Service Reserve Account, pay Required Capital Expenditures and Major Maintenance Costs, and pay Operations and Maintenance expenses. Any amounts in the VDOT Revenue Sharing Lock- Up Account will be used only if (i) funds available in the Distribution Lock-Up Account have been exhausted and (ii) 11

12 cash flow from operations is not sufficient to pay for the above expenses. Funds in the VDOT Revenue Sharing Lock-Up Account that have remained on deposit therein for twenty-four (24) months shall be subject to mandatory prepayment of the TIFIA Loan. SUBSTANTIAL COMPLETION DATE INDEPENDENT CONSULTANTS Substantial Completion for the Project shall occur upon the opening of the Project to vehicular traffic. The Substantial Completion Date is the date on which Substantial Completion occurs. A lenders technical advisor ( LTA ) that is not unacceptable to the TIFIA Lender shall be retained for the term of the TIFIA Loan and shall advise the TIFIA Lender (with a duty of care to the TIFIA Lender) with regard to construction, operation and maintenance, life cycle and handback related matters. Provisions related to the replacement of the LTA will be included in the TIFIA Loan Agreement. The Borrower shall pay for all costs and expenses in connection with the services performed by the LTA. The LTA required under the TIFIA Loan Agreement may be the same entity as the technical advisor engaged by the Senior Lenders. An independent insurance consultant (the Insurance Consultant ) that is not unacceptable to the TIFIA Lender shall be retained and shall advise the TIFIA Lender (with a duty of care to the TIFIA Lender) with regard to insurance related matters, including delivering a report to the TIFIA Lender, on or immediately prior to the Effective Date, regarding all insurance matters pertaining to the Project. The Insurance Consultant shall be retained until the later of (a) the first anniversary of the Substantial Completion Date and (b) the date through which the Insurance Consultant is retained by the Senior Lenders. The TIFIA Lender shall have the right to retain an insurance consultant at the Borrower s expense if there are material changes to the Project or to the Borrower s proposed insurance program or if there is a material event of loss affecting the Project. Provisions related to the replacement of the Insurance Consultant will be included in the TIFIA Loan Agreement. The Borrower shall pay for all costs and expenses in connection with the services performed by the Insurance Consultant. The Insurance Consultant required under the TIFIA Loan Agreement may be the same entity as the insurance consultant engaged by the Senior Lenders. A financial model auditor (the Model Auditor ) that is not 12

13 unacceptable to the TIFIA Lender shall be retained (with a duty of care to the TIFIA Lender) to review the Base Case Financial Model. The TIFIA Lender will require reliance on independent advisors reports provided to the Senior Lenders at and following the Effective Date, including model audit reports. TIFIA DEBT SERVICE PROFILE The TIFIA Debt Service profile has been structured as shown in Schedule 2. The TIFIA Loan Agreement will include a covenant requiring the Borrower to pay all TIFIA Debt Service exclusively with non-federal funds. CONDITIONS PRECEDENT The TIFIA Loan Agreement shall contain conditions precedent typical for a transaction of this nature. The TIFIA Loan Agreement shall not become effective, nor shall the TIFIA Lender have any obligation to make disbursements of TIFIA Loan proceeds to the Borrower, until such conditions precedent are satisfied, in form and substance satisfactory to the TIFIA Lender. 10 Conditions precedent to the effectiveness of the TIFIA Loan Agreement shall include the following, each in form and substance satisfactory to the TIFIA Lender : 1. (a) Execution and delivery of the Financing Documents and the Security Documents and delivery of copies of the same to the TIFIA Lender and (b) satisfaction of the closing conditions under the Senior Loan Documents; Evidence of equity commitments, delivery of each Equity Letter of Credit, and funding of any equity contributions required to be funded as of the Effective Date; 3. Legal opinions of counsel to Borrower and each other Borrower Related Party, counsel to each Principal Project Party and counsel to VDOT; Note: The conditions precedent to effectiveness of the TIFIA Loan Agreement and to disbursement of the TIFIA Loan set forth in this Term Sheet are not exhaustive. Please refer to the TIFIA Loan Agreement template on TIFIA s website for examples of typical conditions precedent for such events. Note: Specific required document deliverables related to Senior Obligations to be determined based on final capital structure of preferred bidder. 13

14 4. Delivery to the Collateral Agent of (a) the [membership interest] certificate(s) evidencing the 100% ownership interest in the Borrower and appropriate stock powers or other transfer documents duly executed in blank and (b) copies of UCC-1 financing statements with respect to the collateral that will be filed on the Effective Date, in each case, in form and substance satisfactory to the TIFIA Lender and the Collateral Agent; 5. Delivery of non-debarment certificate; 6. Evidence and satisfaction of 23 USC 134 & 135 requirements; 7. Evidence of two public investment grade ratings for each of the TIFIA Loan and the Initial Senior Obligations; 8. Delivery of the completed traffic and revenue study from the Traffic Advisor; 9. Delivery of the report of the lenders traffic advisor, the LTA s report, the Insurance Consultant s report and the Model Auditor s report, and written confirmation from each consultant that it has a duty of care to, and the TIFIA Lender may rely on, its report; 10. Delivery of Borrower s authorized representative certificate; 11. Demonstration that the aggregate of all sources of funds shown in the Base Case Financial Model have been fully and completely committed and allocated to the Borrower and that such funds are sufficient to complete the Project; 12. Delivery of (a) copies of executed versions of each Principal Project Contract, together with any amendments, waivers or modifications thereto and any other material contracts relating to the construction or operation and maintenance of the Project, including provisions related to liquidated damages and limit of liability acceptable to the TIFIA Lender in consultation with the LTA and (b) related performance security and credit support instruments acceptable to the TIFIA Lender in consultation with the LTA; 13. Confirmation that all material contracts relating to the construction or operation and maintenance of the Project include the following provisions (including flow down to 14

15 material subcontracts): (a) except as otherwise agreed by the TIFIA Lender, any payment or allocation of time relief provided to contractors or subcontractors will be conditioned on the Borrower s receipt of such payment or time relief, as applicable, to at least the same extent under the Comprehensive Agreement; and (b) limit of liability provisions acceptable to the TIFIA Lender; 14. Written confirmation of all required permits and approvals required to commence construction and for the then current stage of construction; 15. Payment of all invoices received from the TIFIA Lender for the fees and expenses of its consultants and advisors; 16. Evidence of compliance with NEPA, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C et seq.) and Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.); 17. Delivery by the TIFIA Lender of the TIFIA Lender s authorized representative certificate; 18. Delivery of organizational documents and evidence of authority for the Borrower and each other Borrower Related Party; 19. Submission of schedule and evidence of prior incurred Eligible Project Costs; 20. Delivery of draw schedule and funding sources for Project elements; 21. Delivery of other related documents as reasonably required by the TIFIA Lender; 22. Evidence of DUNS number, federal tax identification number, and active registration in the federal System for Award Management; 23. Delivery of certified Base Case Financial Model, satisfactory to the TIFIA Lender and showing: Note: The required ratio levels set forth in this clause are indicative only and will be finalized following review of the preferred bidder s financial plan and, in particular, ensuring that the Base Case Financial Model provides sufficient buffer for the rating scenarios. Minimum and average levels in each year as shown in the Base Case Financial Model shall not be less than the levels upon which TIFIA approvals were based. 15

16 a. Minimum Total DSCR: [1.40]:1.00 b. Minimum LLCR: [1.35]:1.00 c. Minimum PLCR: [2.35]: Delivery of the initial financial plan reflecting no amortization of Senior Obligations until all currently accruing TIFIA interest is being paid; 25. Accuracy of representations and warranties; 26. Evidence that the TIFIA Loan does not exceed 33% of reasonably anticipated Eligible Project Costs and that total federal assistance for the Project does not exceed 80% of reasonably anticipated Eligible Project Costs; and 27. Delivery of insurance policies and certificates. Conditions Precedent for each disbursement (including the initial disbursement) of the TIFIA Loan shall include the following, each in form and substance satisfactory to the TIFIA Lender: 1. (a) Funding of any equity contributions required to be funded on or prior to the disbursement date and delivery of evidence thereof to the TIFIA Lender; (b) application of such equity contributions to the payment of Project costs; (c) maintenance of Equity Letters of Credit supporting the remaining portion of the equity commitment; and (d) for any disbursement on or after the Substantial Completion Date, evidence of funding of the full equity commitment; 2. Delivery of new agreements, permits, latest financial plan and information; 3. No event of default under the Related Documents or documentation for other Borrower indebtedness (if any); 4. Confirmation of representations and warranties; 5. No Material Adverse Effect or any event or condition that could reasonably be expected to result in a Material Adverse Effect shall have occurred since the date the Borrower submitted the Application to the TIFIA Lender; 6. Borrower certification (and confirmed by the LTA) that (a) the Project will achieve Substantial Completion by [ ] 16

17 months prior to the Long Stop Date 13 and (b) in the case of any projected failure to achieve Project Completion (as defined in the Comprehensive Agreement) by the Project Completion Date (as defined in the Comprehensive Agreement) the amount of liquidated damages available from the design-build contractor will be sufficient to pay debt service and other unavoidable costs (in each case, up to the Long Stop Date) during such delay. 7. Borrower certification (and confirmed by the LTA) that the remaining Project costs to reach Substantial Completion and Project Completion (as defined in the Comprehensive Agreement) do not exceed the funding actually available to the Borrower, including committed and undrawn funding available under the debt facilities and the equity commitments (including any contingent equity commitments) and the Public Funds Amount (as defined in the Comprehensive Agreement) projected in the most recent updated version of the Base Case Financial Model remaining to be paid to the Borrower pursuant to the Comprehensive Agreement; 8. Delivery of a certificate of the LTA in which the LTA, inter alia: (i) certifies and approves for payment of the costs to be reimbursed with the requested disbursement; and (ii) certifies that construction of the Project is proceeding substantially in accordance with the design-build contract; 9. Maintenance of required permits and insurance; 10. Delivery of requisition; 11. Delivery of other agreements, documents, certificates, opinions and other items required by the TIFIA Lender; and 12. Payment of all invoices received from the TIFIA Lender for the fees and expenses of its consultants and advisors. REPRESENTATIONS AND WARRANTIES The TIFIA Loan Agreement shall contain representations and warranties from the Borrower typical for a transaction of this nature. Such representations and warranties shall address, inter 13 Note: Time period to be determined based on due diligence and following consultation with the LTA following selection of a preferred bidder. 17

18 OF THE BORROWER alia, the matters listed below. 14 The representations and warranties shall be made as of the date of execution of the TIFIA Loan Agreement and as of each date on which any disbursement of the TIFIA Loan is made. 1. Organization, valid existence and good standing; 2. Authorization of signatory; 3. Corporate authorization; due execution; enforceability; 4. No conflicts; compliance with laws; 5. Required consents; authorizations and permits; 6. No litigation; 7. Valid and perfected liens; 8. No suspension or debarment; 9. Accuracy of representations and warranties in the Related Documents and documentation for other indebtedness; 10. NEPA requirements; 11. State and metropolitan transportation improvement plans; 12. Credit ratings; 13. No default under the Related Documents; 14. Effectiveness of the Principal Project Contracts; 15. Capitalization of the Borrower; 16. Accuracy of information furnished; 17. Compliance with applicable laws; OFAC regulations; Patriot Act; 18. Environmental matters; 19. Sufficiency of rights to real property and utilities; 14 Note: The representations and warranties set forth in this Term Sheet are not exhaustive. Please refer to the TIFIA Loan Agreement template on TIFIA s website for examples of typical representations and warranties. 18

19 20. Sufficiency of funds; 21. Insurance; 22. Title to personal property; absence of liens; 23. Intellectual property rights; 24. Investment Company Act; 25. Financial statements; 26. Taxes; 27. ERISA; and 28. Transactions with affiliates. RESTRICTED PAYMENT CONDITIONS There shall be no distribution of any kind of surplus funds to the Borrower, any Equity Sponsor or to any of their respective affiliates or transfer of any funds from the Distribution Lock- Up Account to the Distribution Account, unless and until all of the following conditions, inter alia, have been met as of the Calculation Date immediately preceding the date of such distribution (collectively, the Restricted Payment Conditions ): the Debt Service Payment Commencement Date has occurred; 2. the Borrower has paid in full all TIFIA Debt Service due and payable on the two most recent Semi-Annual Payment Dates, including the applicable Calculation Date and all previously due but unpaid TIFIA Scheduled Debt Service shall have been paid; 3. as of the Substantial Completion Date, the Borrower s debt (including capitalized interest) to equity ratio is no greater than [ : ] 16 ; 4. (a) the Total Debt Service Coverage Ratio as of such Calculation Date and as of the two most recent prior Calculation Dates (i.e., during the preceding twenty-four (24) months, as the historical calculations performed on Note: Additional conditions to be added as necessary based on the financial plan of the preferred bidder. Note: This ratio will be the debt to equity ratio set forth in the Base Case Financial Model. 19

20 each Calculation Date test against the trailing 12-month Calculation Period, provided that the applicable calculation period shall be less than twenty-four (24) months for any Calculation Date occurring prior to the second anniversary of the Substantial Completion Date) is equal to at least [1.35:1.00] and (b) the Total Debt Service Coverage Ratio as of the four consecutive Calculation Dates following such Calculation Date is projected to be at least [1.35:1.00]; (a) the Senior Debt Service Coverage Ratio as of such Calculation Date and as of the two most recent prior Calculation Dates (i.e., during the preceding twenty-four (24) months, as the historical calculations performed on each Calculation Date test against the trailing 12-month Calculation Period, provided that the applicable calculation period shall be less than twenty-four (24) months for any Calculation Date occurring prior to the second anniversary of the Substantial Completion Date) is equal to at least [1.45:1.00] and (b) the Senior Debt Service Coverage Ratio as of the four consecutive Calculation Dates following such Calculation Date is projected to be at least [1.45:1.00]; the Loan Life Coverage Ratio is greater than [1.35:1.00] 19 for each Calculation Date through the Final Maturity Date; 7. the Project Life Coverage Ratio is greater than [2.30:1.00] 20 for each Calculation Date through the end of the Term (as defined in the Comprehensive Agreement); 8. no potential event of default or event of default has occurred and is continuing under the TIFIA Loan Agreement, the Senior Loan Documents or under any other indebtedness of the Borrower; 9. all reserve accounts are funded to their required levels; Note: Total Debt Service Coverage Ratio levels to be determined based on review of financial plan of preferred bidder, including the applicable projections set forth in the Base Case Financial Model. Note: Senior Debt Service Coverage Ratio levels to be determined based on review of financial plan of preferred bidder, including the applicable projections set forth in the Base Case Financial Model. Note: Loan Life Coverage Ratio level to be determined based on review of financial plan of preferred bidder, including the applicable projections set forth in the Base Case Financial Model. Note: Loan Life Coverage Ratio level to be determined based on review of financial plan of preferred bidder, including the applicable projections set forth in the Base Case Financial Model. 20

21 10. no Developer Default (as defined in the Comprehensive Agreement) or event that, with due notice or the passage of time or both, may constitute a Developer Default has occurred and is continuing and VDOT has not exercised or provided any notice of intent to exercise, any right of termination under the Comprehensive Agreement; 11. the Borrower would not be insolvent after the distribution; and 12. for transfers from the Distribution Lock-Up Account to the Distribution Account, the satisfaction of other conditions. Any calculation of Total Debt Service Coverage Ratio, Senior Debt Service Coverage Ratio, Loan Life Coverage Ratio or Project Life Coverage Ratio shall be based solely on Net Cash Flow and shall disregard amounts available under any liquidity support arrangement or in any reserve account. To the extent that each of the conditions to the making of Transit Funding Payments has been satisfied as of a given Calculation Date, the Transit Funding Payments accrued as of such Calculation Date shall be released from the Distribution Lock-Up Account. PROJECT EQUITY The Equity Sponsors shall provide binding commitments in respect of their contributions prior to or on the Effective Date. An Equity Letter of Credit shall be required for the full amount of the equity contributions to be made subsequent to the Effective Date. If at any time an issuer of an Equity Letter of Credit ceases to be a Qualified Issuer, the Borrower shall cause such Equity Letter of Credit to be replaced by a new Equity Letter of Credit issued by a Qualified Issuer within thirty (30) days of the date on which the current issuer ceased to be a Qualified Issuer, which replacement Equity Letter of Credit shall be on substantially the same terms and conditions as the Equity Letter of Credit being replaced, or such other terms and conditions as may be satisfactory to the TIFIA Lender. On the Substantial Completion Date, the ratio of (i) the sum of the aggregate principal amount of all Senior Obligations and the TIFIA Loan (taking into account any indebtedness contemplated pursuant to the then applicable financial plan of the Borrower to be drawn following the Substantial Completion Date and applied to the payment of Project costs) to (ii) the 21

22 amount of all equity contributions made by the Equity Sponsors pursuant to the terms of the Equity Contribution Agreement and which either (a) have been applied to the payment of Project costs or (b) are on deposit in a Project Account or a secured local operating account (including amounts drawn from any Equity Letter of Credit, if any, but excluding any (1) equity contributions deposited into any Project Account which cause the amount on deposit therein to exceed the applicable required balance thereof as of the date of such deposit, and (2) equity contributions that are repaid from any Public Funds Amount following Substantial Completion) shall, at a maximum, be [ : ] 21 (the Maximum Debt to Equity Ratio ). On the Substantial Completion Date, the Borrower shall provide the TIFIA Lender with reasonably detailed calculations which demonstrate compliance with this paragraph. AMORTIZATION OF SENIOR OBLIGATIONS NET CASH FLOW The financial plan required within 60 days after the Effective Date shall not reflect amortization of Senior Obligations until all currently accruing TIFIA interest is being paid. Net Cash Flow for any period, shall mean an amount equal to (a) the sum (without duplication) of (i) Toll Revenues (excluding (A) termination amounts payable under the Comprehensive Agreement, (B) liquidated damages (other than delay liquidated damages actually received by the Borrower), (C) loss proceeds (other than in respect of business interruption or delay in start-up insurance actually received by the Borrower), (D) third party revenues, (E) extraordinary, nonrecurring items and (F) any amounts consisting of proceeds of equity contributions or Public Funds Amounts), (ii) amounts withdrawn from the Major Maintenance Reserve Account or the Handback Reserve Account during such period and applied to the payment of Major Maintenance Costs and Handback Requirements (as defined in the Comprehensive Agreement), as applicable, and (iii) for any Calculation Period (each, an Applicable Calculation Period ), transfers during such period from any reserve account to the revenue account solely to the extent of amounts on deposit in such reserve account in excess of the relevant reserve requirement for the Applicable Calculation Period (provided that, for purposes of the calculation of Net Cash Flow, the released amount from any such reserve account counted for purposes of the determination of Net Cash Flow shall be no greater than the relevant reserve 21 Note: This ratio will be the debt to equity ratio set forth in the Base Case Financial Model. 22