Critical Issues in Joint Development and Joint Ownership Projects: Avoiding Acquisition Pitfalls Lori B. Green Nixon Peabody LLP 1100 Clinton Square Rochester, NY

Recipe for Effective Transaction Clear goals – aligned (check regularly)? Clear strategy – group dynamics/coordination –Sub-groups (benefit? detriment?) –Divide and Conquer?

Recipe for Effective Transaction Successful execution –Coordinated negotiation –Ongoing due diligence –Financing coordination –Closing coordination

Due Diligence – What Is It and Why Do It Physical investigation of project assets/liabilities/status Understand and evaluate project/assets Identify legal and operational issues Draft/negotiate transaction documents Allocate risks Understand approval process/timing

Due Diligence – How to Conduct Site visits Real or virtual data room Independent experts – engineers, attorneys Operations personnel

Purpose of Asset Purchase Agreement Roadmap to get to financial closing Identify assets and liabilities Economic arrangements Reps and warranties Covenants between signing and closing Conditions precedent to closing Termination/Withdrawal rights and remedies Indemnification and survival

Assets and Liabilities Permits Real property interests Coal or other fuel Contracts Personal Property Assumed liabilities – known, unknown, contingent?

Economic Arrangements Purchase price Development fee/success/completion fee? Reimbursement/sharing of development costs Timing of payments

Reps and Warranties Disclosure of and about what selling/buying Disclosure about seller/buyer – authority/consents/litigation Knowledge and materiality qualifiers Risk allocation Relationship to due diligence

Covenants Exclusivity Most favored party Disclosure of changes Consents, proceedings, cooperation

Conditions Precedent to Closing Financing Authorization to construct –Full NTP under EPC Contract No MAC – project or project documents Consents/approvals No litigation Equity

Termination/Withdrawal Rights Mutual agreement Law or order Breach (notice and cure rights) MAC No financing Drop dead date Sponsor abandonment Participant convenience

Remedies Upon Termination Refund of development fees (or loss) Liquidated damages –different depending on breach Out of pocket costs Actual damages Equitable remedies ROFR Limitation of liability Exclusive remedy

Indemnification and Survival Post-closing remedy for breaches Reps, warranties and covenants Basket and cap Who pays and controls defense? Exclusive remedy Survival – how long? –General – 1-3 years (from when?) –Statute of limitations –No limit (title, authorization, etc.)

Guaranty If Sponsor/Participant is SPE APA and development obligations between signing and closing –Including termination damages Indemnification obligations Alternative: credit-worthy entity as a party

Lori B. Green Nixon Peabody LLP 1100 Clinton Square Rochester NY,