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Offset Purchase Agreements:Key Issues

RON EZEKIELFasken Martineau604 631 4708rezekiel@van.fasken.com

Outline

Transaction StructurePurchase and SaleRepresentationsAudit / Further AssurancesSecurity / CreditDefault / Remedies

Transaction Structure

Who is the Vendor?Project ProponentAggregatorOther?

Who is the Purchaser?Financial Position

Transaction Structure

What is Being Bought / Sold?Offsets (risk on vendor)Rights capable of becoming offsets (risk on purchaser)

When Will the Transaction Occur?One-time tradeLong term supplyStatus of the Offset Project

Purchase and Sale

DeliveryDelivery schedule that sets out quantity and delivery dateDelivery by deposit to Purchaser’s account

PaymentTimingMeans

Representations

Can provide comfort on project statusProject milestonesOption to “refresh” representations

Representations

Confirmation that obvious issues have been addressed, like:

project start dateproject approvalsreductions or removals during registration periodno climate change incentivestitle

Audit / Further Assurances

Important until system is operational and we all understand exactly what is required

Security / Credit

Critical to mitigate long term supplySome parties may not have credit ratings, or options for a credit support providerProviding security is a cost (GSA / Letter of Credit)

Default / Remedies

Force MajeureChange in Law

Surplus risk

Limitations of LiabilityNo consequential lossReplacement offsetsCaps

Dispute Resolution

Questions?

Ron Ezekiel