EX-10.3 7 d15263dex103.htm EX-10.3 RIGHT OF FIRST OFFER AGREEMENT
Exhibit 10.3
RIGHT OF FIRST OFFER AGREEMENT
THIS RIGHT OF FIRST OFFER AGREEMENT (this “Agreement”) is made and entered into as of the 24th day of June, 2015 (the “Effective Date”), by and between 8point3 Operating Company, LLC, a Delaware limited liability company (the “Operating Company”) and First Solar, Inc., a Delaware corporation (the “Sponsor”), each a “Party” and, collectively, the “Parties.”
ARTICLE I
“8point3 Entity” means each of Holdings, the YieldCo General Partner, the Partnership and the Operating Company.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. Notwithstanding anything in the foregoing to the contrary, for purposes of this Agreement, (a) neither the Sponsor
nor the Other Sponsor will be deemed to constitute an Affiliate of any 8point3 Entity, and (b) the Sponsor and its Affiliates (other than any 8point3 Entity), on the one hand, and the Other Sponsor and its Affiliates (other than any 8point3 Entity), on the other hand, will not be deemed to be Affiliates of one another hereunder unless there is a basis for such Affiliation independent of their respective Affiliation with any 8point3 Entity or any Affiliate of any 8point3 Entity.
“Agreement” has the meaning set forth in the preamble.
“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.
“C&I Project” means any ground-mounted or roof-top distributed solar generation system or systems designed and installed for commercial or industrial applications, which is either leased by, or subject to one or more power purchase agreements with, one or more commercial businesses, industrial companies, academic institutions, government entities, hospitals, non-profits, public entities or other entities that are neither electric utilities nor residential customers who purchase solar power directly from a generation company or a solar power plant.
“Confidential Information” means all documents, materials, data or other information with respect to the Parties and their Affiliates (including any Joint Venture) which are not generally known to the public; provided that Confidential Information shall not include information that becomes available to a Receiving Party on a non-confidential basis.
“Delaware Courts” has the meaning set forth in Section 6.9.
“Disclosing Party” has the meaning set forth in Section 5.1.
“Distributed Cash” means, with respect to any Project Company whose interests are owned directly or indirectly by the Operating Company, the aggregate amount of cash distributed to the Operating Company from such Project Company during a given period; provided that in calculating such Project Company’s Distributed Cash, any expenses incurred by the Operating Company, the YieldCo General Partner, the Partnership or any of their Affiliates directly on behalf of such Project Company during such period, and not reimbursed by the Project Company during such period, shall be deducted from the amount of cash actually distributed by such Project Company.
“Effective Date” has the meaning set forth in the preamble.
“Electricity” means electric energy, measured in kWh.
“Financing Party” means any and all Persons, or the agents or trustees representing them, providing senior or subordinated debt or tax equity financing or refinancing (including letters of credit, bank guaranties or other credit support).
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“Forecasted Distributed Cash” means, with respect to any Project, the average Distributed Cash projected to be generated by such Project per year for the ensuing ten (10) year period.
“Forecasted Distributed Cash Calculation” has the meaning set forth in Section 3.2(a).
“GAAP” means United States generally accepted accounting principles, as amended from time to time.
“Governing Body” means (a) with respect to a corporation, the board of directors of such corporation, (b) with respect to a limited liability company, the manager(s) or managing member(s) of such limited liability company, (c) with respect to a limited partnership, the board, committee or other body of the general partner of such partnership that serves a similar function or the general partner itself (or if any such general partner is itself a limited partnership, the board, committee or other body of such general partner’s general partner that serves a similar function or such general partner’s general partner itself) and (d) with respect to any other Person, the body of such Person that serves a similar function, and in the case of each of clauses (a) through (d) includes any committee or other subdivision of such body and any Person to whom such body has delegated any power or authority, including any officer or managing director.
“Governmental Entity” means any (a) multinational, federal, national, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, administrative agency, board, bureau, agency or other statutory body, domestic or foreign, (b) subdivision, agent, commission, board, or authority of any of the foregoing, or (c) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under, or for the account of, any of the foregoing (including the New York Stock Exchange and NASDAQ Stock Market), in each case, that has jurisdiction or authority with respect to the applicable party or the Projects.
“Holdings” means 8point3 Holding Company, LLC, a Delaware limited liability company.
“Holdings Limited Liability Company Agreement” means the Amended and Restated Limited Liability Company Agreement of 8point3 Holding Company, LLC, as it may be further amended, modified, supplemented or restated from time to time.
“Independent Valuation Expert” means Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated or another nationally recognized investment banking firm of similar quality.
“Joint Venture” means a joint venture that is not a Subsidiary and through which the applicable Party conducts its business and operations and in which such applicable Party, owns an equity interest.
“Laws” means any and all applicable (a) laws, constitutions, treaties, statutes, codes, ordinances, principles of common law and equity, rules, regulations and municipal bylaws whether domestic, foreign or international, (b) judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, writs, injunctions, decisions, and awards of any Governmental Entity, and (c) policies, practices and guidelines of any Governmental Entity
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which, although not actually having the force of law, are considered by such Governmental Entity as requiring compliance as if having the force of law, and the term “applicable,” with respect to such Laws and in the context that refers to one or more Persons, means such Laws that apply to such Person or Persons or its or their business, undertaking, property or securities at the relevant time and that emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities.
“Lien” means any lien (including environmental and tax liens), security interest, pledge, encumbrance, claim, restriction on voting, hypothecation, option, profits or participation interests, preferential purchase right, restrictive covenant, right of first refusal, preemptive right, community property interest, mortgage, charge, title retention agreement or other encumbrance of any nature whatsoever.
“Negotiation Period” has the meaning set forth in Section 2.1.
“Non-ROFO Asset” means any Project that is (a) owned, directly or indirectly, by the Sponsor, (b) not a ROFO Asset and (c) not otherwise owned, directly or indirectly, by the Operating Company.
“Operating Company” has the meaning set forth in the preamble.
“Other Sponsor” has the meaning set forth in the recitals.
“Partnership” has the meaning set forth in the recitals.
“Partnership Agreement” means the Amended and Restated Limited Partnership Agreement of 8point3 Energy Partners LP, as it may be further amended, modified, supplemented or restated from time to time.
“Party” or “Parties” has the meaning set forth in the preamble.
“Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association, government agency or political subdivision thereof or other entity.
“Project” means a Utility Scale Project, C&I Project, Residential Project, Utility Project Site or any other asset or project that is designated as a “Project” pursuant to the Holdings Limited Liability Company Agreement.
“Project Company” means a corporation, limited liability company, partnership, joint venture, trust or other entity which is a Subsidiary or Joint Venture of the Operating Company and the direct or indirect owner of a Project.
“Receiving Party” has the meaning set forth in Section 5.1.
“Removal Notice” has the meaning set forth in Section 3.2(a).
“Removal Request” has the meaning set forth in Section 3.2(a).
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“Representatives” has the meaning set forth in Section 5.1.
“Residential Project” means any ground-mounted or roof-top distributed solar generation system designed and installed for residential applications, which is leased by, or subject to a power purchase agreement with, the owner of a residence for the purpose of generating Electricity for that residence.
“Resolution Period” has the meaning set forth in Section 3.2(b).
“ROFO Asset” means, subject to the removal or replacement rights set forth in Section 3.1, the assets set forth on Annex A, as further described therein.
“Sale” means, other than in connection with any granting of Liens permitted under any indebtedness (including any tax equity financing) in respect of any ROFO Asset that is incurred from time to time and any disposition of assets resulting from the enforcement of such Liens, any direct or indirect sale by the Sponsor or any Affiliate thereof of all or any portion of the equity interest in, or all or substantially all of the assets of, any ROFO Asset; provided, that a “Sale” shall not include any (i) merger or consolidation of the Sponsor with or into, or sale of all or substantially all of the Sponsor’s assets to, a Third Party, (ii) direct or indirect sale of a ROFO Asset that is a Utility Scale Project (or any of its assets), resulting in, among other things, (A) the monetization of tax incentives associated with such ROFO Asset or (B) with respect to such Projects located outside of the United States, the participation by development partners, in each case, so long as, following the consummation of such sale, the Sponsor directly or indirectly holds interests that entitle it to at least forty-five percent (45%) of the cash distributions of such ROFO Asset, or (iii) direct or indirect sale of a partial economic interest in a ROFO Asset or any of its assets as part of a tax equity investment in such ROFO Asset, including any partnership flip transaction, sale leaseback transaction or pass-through lease transaction; provided, that the terms of any such sale referred to in clauses (ii) or (iii) above will not impair or delay the ability of the Operating Company to acquire such ROFO Asset from the Sponsor or its Affiliate in accordance with the terms of this Agreement if and when the Sponsor elects to sell, transfer or otherwise dispose of such ROFO Asset to a Third Party. The term “Sold” has the corresponding meaning.
“Sponsor” has the meaning set forth in the preamble.
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than fifty percent (50%) of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other Governing Body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if such Person, one or more Subsidiaries of such Person, or a combination thereof, controls such partnership on the date hereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, directly or by one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has the power to elect or direct the election of a majority of the directors or other Governing Body of such Person.
“Term” has the meaning set forth in Section 4.1.
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“Termination Event” means the occurrence of any of the following:
(a) the withdrawal of the YieldCo General Partner as general partner of the Partnership in accordance with Section 11.1 of the Partnership Agreement;
(b) the removal of the YieldCo General Partner as general partner of the Partnership in accordance with Section 11.2 of the Partnership Agreement, if no Shares (as defined in the Partnership Agreement) held by the Sponsor, the Other Sponsor or their Affiliates voted in favor of such removal; and
(c) the failure of the Sponsor to own, directly or indirectly, at least fifty percent (50%) of the Management Units (as defined in the Holdings Limited Liability Company Agreement).
“Third Party” means any Person other than a Party or an Affiliate of a Party.
“Third Party Sale Period” has the meaning set forth in Section 2.1.
“Transaction Notice” has the meaning set forth in Section 2.1.
“Utility Project Site” means the real property on which a Utility Scale Project is situated, provided that such real property and the Utility Scale Project are separately owned.
“Utility Scale Project” means any wholesale solar energy production facility that is neither a C&I Project nor a Residential Project, including the rights to the site on which the facility is located, the other assets, tangible and intangible, that compose such facility and the transmission and interconnection facilities connecting the Project to an electric utility or other wholesale power offtaker.
“YieldCo General Partner” means 8point3 General Partner, LLC, a Delaware limited liability company.
Section 1.2 Construction; Interpretation.
Except where expressly provided or unless the contract otherwise necessarily requires, in this Agreement:
(a) Reference to a given Article, Section, clause or Annex is a reference to an Article, Section, clause or Annex of this Agreement, unless otherwise specified. The Annexes attached to this Agreement are hereby incorporated by reference into this Agreement and form part hereof. The terms “hereof”, “herein”, “hereunder” and “herewith” refer to this Agreement as a whole (including Annex A).
(b) Unless otherwise specifically indicated or the context otherwise requires, (i) all references to “dollars” or “$” mean United States dollars, (ii) words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders, (iii) all references to “days” means calendar days, (iv) “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and (v) all words used as accounting terms shall have the meanings assigned to them under GAAP applied on a consistent basis and as amended from time to time.
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(c) If any date on which any action is required to be taken hereunder by any of the Parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day.
(d) Reference to a given agreement, instrument, document or Law is a reference to that agreement, instrument, document or Law as modified, amended, supplemented and restated through the date as of which such reference is made, and, as to any Law, any successor Law.
(e) Reference to a Person includes its predecessors, successors and permitted assigns. Any reference to any federal, state, local, or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.
(f) The word “will” shall be construed to have the same meaning and effect as the word “shall.” The word “or” shall not be exclusive.
(g) Amounts calculated or determined under this Agreement shall be without double-counting.
(h) No provision of this Agreement will be interpreted in favor of, or against, any of the Parties to this Agreement by reason of the extent to which any such Party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft of this Agreement, and no rule of strict construction will be applied against any Party hereto.
(i) No Person will be required to take any action, or fail to take any action, if to do so would violate any Law.
ARTICLE II
RIGHT OF FIRST OFFER ON ROFO ASSETS
Section 2.1 Notice of Transaction Related to ROFO Assets and Negotiation of Definitive Terms for Transaction. Prior to engaging in any negotiation with a Third Party regarding any proposed Sale of a ROFO Asset (or any portion thereof), the Sponsor shall deliver a written notice to the Operating Company setting forth in reasonable detail the material terms and conditions of the proposed Sale transaction (such notice, a “Transaction Notice”). In the event the Operating Company elects to engage in negotiations to purchase such ROFO Asset, for the next forty-five (45) days (the “Negotiation Period”) the Operating Company and the Sponsor shall engage in non-binding discussions and negotiations in good faith to attempt to agree on definitive terms acceptable to both Parties, in their sole and absolute discretion, for the Sale of the applicable ROFO Asset to the Operating Company or any of its Subsidiaries. If, by the end of the Negotiation Period, the Parties have not agreed to definitive terms for the Sale of such ROFO Asset to the Operating Company or one of its Subsidiaries, the Sponsor will have the right, within the one hundred eighty (180) days following such Negotiation Period (the “Third Party Sale Period”), to consummate a Sale of such ROFO Asset to a Third Party (or agree in writing to undertake such Sale to a Third Party) in accordance with the terms of Section 2.2.
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ARTICLE III
(a) Within ten (10) Business Days of the closing of a sale or contribution of a Non-ROFO Asset to the Operating Company, the Sponsor shall deliver to the Operating Company a notice (the “Removal Notice”) setting forth its formal request to remove a ROFO Asset from Annex A (the “Removal Request”), including the name of the ROFO Asset to be removed and a calculation of the Forecasted Distributed Cash of such ROFO Asset and of the Non-ROFO Asset previously contributed or sold to the Operating Company (together, the “Forecasted Distributed Cash Calculation”).
(b) If, based upon the Forecasted Distributed Cash Calculation, the Forecasted Distributed Cash of the Non-ROFO Asset is less than the Forecasted Distributed Cash of the ROFO Asset, the Removal Request shall be deemed to be immediately rejected. If, based upon the Forecasted Distributed Cash Calculation, the Forecasted Distributed Cash of the Non-ROFO
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Asset is greater than or equal to the Forecasted Distributed Cash of the ROFO Asset, the Operating Company will be afforded a period of thirty (30) days following the delivery of the Removal Notice to review the Forecasted Distributed Cash Calculation, during which period the Operating Company and its advisors shall have the right to inspect the work papers generated by the Sponsor in preparation of the Forecasted Distributed Cash Calculation and shall have reasonable access, during normal business hours, to the relevant personnel of the Sponsor and to information, books and records of the Sponsor, in each case, related to such Forecasted Distributed Cash Calculation. At or before the end of such thirty (30) day review period, the Operating Company will either (i) accept the Removal Request and execute an amendment to this Agreement removing the applicable ROFO Asset from Annex A, or (ii) deliver to the Sponsor a written explanation of those items in the Forecasted Distributed Cash Calculation that the Operating Company disputes. If the Operating Company fails to accept or dispute the Removal Request before the end of the thirty (30) day review period set forth above, the Removal Request shall be deemed to be accepted and the Operating Company shall be obligated to execute an amendment to this Agreement removing the applicable ROFO Asset from Annex A. Within a further period of ten (10) days from the end of the aforementioned review period, the Sponsor and the Operating Company will attempt to resolve in good faith any disputed items (the “Resolution Period”).
(c) Failing a resolution during the Resolution Period, the Sponsor may, for a period of ten (10) Business Days after the end of the Resolution Period, engage an Independent Valuation Expert to resolve the dispute. The Independent Valuation Expert shall promptly review the Forecasted Distributed Cash Calculation and any disputed items thereto and each Party shall provide the Independent Valuation Expert with additional information, including access to all relevant books and records, as the Independent Valuation Expert may reasonably request in order to analyze the Forecasted Distributed Cash Calculation. As promptly as practicable, but in no event later than ten (10) Business Days after its engagement, the Independent Valuation Expert shall deliver to the Parties a written notification, which shall set forth its decision regarding the Forecasted Distributed Cash Calculation. The decision of the Independent Valuation Expert with respect to the Forecasted Distributed Cash Calculation shall be final and binding on the Parties.
(d) Any costs and expenses of the Independent Valuation Expert shall be paid by the non-prevailing Party or as otherwise reasonably determined by the Independent Valuation Expert.
ARTICLE IV
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ARTICLE V
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ARTICLE VI
If to the Operating Company:
8point3 Operating Company, LLC
c/o 8point3 General Partner, LLC
00 Xxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Email: xxxxx.xxxxxxx@xxxxxxxx.xxx
Attention: Xxxxxxx Xxxxxxx, Chief Executive Officer
with copies, which shall not constitute notice, to:
8point3 Operating Company, LLC
c/o 8point3 General Partner, LLC
000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxx.xxx
Attention: Xxxxx Xxxxxxx, General Counsel
8point3 Operating Company, LLC
c/o 8point3 General Partner, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Email: xxxx.xxxxxx@xxxxxxxxxx.xxx
Attention: Xxxx Xxxxxx, Chief Financial Officer
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with copies to:
First Solar, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Email: xxxxxxxxxxxxxx@xxxxxxxxxx.xxx
Attention: General Counsel
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxx.xxxxxxx@xxxxxxx.xxx
Attention: Xxxxx Xxxxxxx
If to First Solar:
First Solar, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Email: xxxx.xxxxxx@xxxxxxxxxx.xxx
Attention: Xxxx Xxxxxx, Chief Financial Officer
with copies to:
First Solar, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Email: xxxxxxxxxxxxxx@xxxxxxxxxx.xxx
Attention: Xxxx Xxxxxx, General Counsel
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Tel: (000) 000-0000
Email: xxxxx.xxxxxxx@xxxxxxx.xxx
xxxxxx.xxxxxxx@xxxxxxx.xxx
Attention: Xxxxx Xxxxxxx; Xxxxxx Xxxxxxx
Each Party shall have the right to change the place to which notices shall be sent or delivered or to specify one additional address to which copies of notices may be sent, in either case by similar notice sent or delivered in like manner to the other Party. Without limiting any other means by which a Party may be able to prove that a notice has been received by another Party, all notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand,
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if personally delivered; (ii) five (5) Business Days after being deposited in the mail, postage prepaid, if mailed by first class certified mail, receipt requested; (iii) when received, if sent by facsimile or email, if received prior to 5 p.m., recipient’s time, on a Business Day, or on the next Business Day, if received later than 5 p.m., recipient’s time; and (iv) on the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. In any case hereunder in which a Party is required or permitted to respond to a notice from another Party within a specified period, such period shall run from the date on which the notice was deemed duly given as above provided, and the response shall be considered to be timely given if given as above provided by the last day of the period provided for such response.
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EXCEPT IN SUCH COURTS), (B) WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH LITIGATION IN THE DELAWARE COURTS AND AGREES NOT TO PLEAD OR CLAIM IN ANY DELAWARE COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM AND (C) ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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First Solar, Inc. | ||||
By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Chief Financial Officer | |||
8point3 Operating Company, LLC | ||||
By: | 8point3 Energy Partners LP, its managing member | |||
By: | 8point3 General Partner, LLC, its general partner | |||
By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Chief Financial Officer |
[Signature Page to First Solar ROFO Agreement]
ANNEX A
ROFO ASSETS
Project | Location | Capacity (MWAC) | ||
Kingbird | California | 40 | ||
Moapa | Nevada | 000 | ||
Xxxxxx | Xxxxxxxxxx | 00 | ||
Xxxxxxxxx | Xxxxxxxxxx | 300 |