What happens to the loan if financed equipment is not delivered on time, or fails its tests?
Fermi’s high voltage equipment loan treats equipment as impaired if final delivery has not happened by the acceptance deadline, or if installed equipment is faulty or fails its specification and tests. Final delivery means the equipment is at an approved location, accepted, paid for in full and owned free of the supplier’s rights. If the lenders call it, the borrower has 60 days to swap in equipment of a similar or better model, age, condition and value; for breakers, transformers and switches, from an approved manufacturer, Siemens or ABB. Otherwise it must prepay that part of the loan with the prepayment amount.
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What the filed contracts say
Contract
What the filed wording says
Fermi high voltage equipment loan
Equipment is impaired if final delivery misses the acceptance deadline, or if installed equipment is faulty or fails its specification or tests.
Fermi high voltage equipment loan
Final delivery needs delivery and acceptance at an approved location and every progress payment paid.
Fermi high voltage equipment loan
On the lenders’ demand the borrower has 60 days to exchange impaired equipment, or must prepay that advance with the prepayment amount.
Fermi high voltage equipment loan
A replacement must be a similar or better model, age, condition and value.
Fermi high voltage equipment loan
For gas circuit breakers, transformers and gas-insulated switches, a qualifying exchange comes from an approved manufacturer, Siemens or ABB.
The filed wording
“Impaired Equipment Collateral” means, as of any date of determination, Equipment Collateral subject to and constituting Applicable Collateral for an Advance, and for which (a) Final Delivery has not occurred on or before the applicable Acceptance Deadline specified in the related Advance Request, or (b) to the extent such Equipment has been installed, such Equipment Collateral is determined to be faulty, deficient for its intended use or otherwise out of compliance with the parameters set forth in the related Supply Contract, or the Borrower shall have otherwise failed to provide evidence of the inspection, testing and final acceptance thereof, in form and substance acceptable to the Agent in its sole discretion.
Fermi high voltage equipment master loan agreement (Keystone), for the campus at Texas Tech, section 1, “Impaired Equipment Collateral” · Fermi 8-K, Exhibit 10.1
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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