An increasing number of retail, office, industrial and warehouse/distribution property owners are utilizing electricity generated by on-site photovoltaic (also referred to as “pv” or “solar”) systems to meet a portion of their properties’ electrical energy needs. The pv systems can be located on the roofs of buildings, in parking fields, on open areas of the property or on two or more of these locations.One of the most common methods that property owners are using to obtain such on-site solar-generated electricity is to enter into a power purchase agreement, often referred to as a “PPA,” with a solar developer, frequently referred to as a “provider.” In a PPA, the property owner, often called a “host,” provides leasehold or license rights on its property to the provider for the installation and operation of the pv system, and the provider sells the electricity that the pv system generates to the host. The provider … [Read more...] about Letters Of Intent For On-Site Solar Energy Transactions
Example letter of intent
Whether being used as a way to formally open negotiations or as a final summary of agreed upon terms, a well-drafted letter of intent ("LOI") can do wonders to help get you to a completed deal. A LOI will provide both parties with a road map of the deal's most fundamental terms and can also make it easier to gain approvals by providing an easily understood snapshot to those who may not have been involved in the negotiations themselves. A good LOI will also save both parties time and money by providing specific direction to those drafting the final leases, contracts or other binding documentation. Some of the key provisions to include in the LOI are as follows:Financial Terms/Timelines – The most fundamental terms to include in a LOI are the applicable economic terms and timelines. Whether negotiating a new deal or renewing an existing one, deals are often made or lost based on the rent and term provisions and the more speci ficity with which these terms can be outlined in … [Read more...] about It’s Time to Play “Let’s Make A Deal” – Drafting Effective Letters of Intent
I recently appeared on an episode of the Private Equity FunCast: “The Art (and Science?) of the LOI” to talk deal terms with private equity masters Devin Mathews and Jim Milbery. This well-spent hour got me thinking about how confusing some of the deal terms in a Letter of Intent (LOI) must be for first time sellers. As a result, we are launching a series of blog posts that will deconstruct the LOI into easily understandable parts. In this series, we will be covering the following topics:The purchase price and how it is calculated;The structure of the transaction;Key tax issues;Key deal terms, including working capital, representations and warranties, and indemnification/escrow arrangements; andThe legal “mumbo-jumbo.”We covered much of this during the FunCast, but will take a deeper dive here with a more intense focus.The Purchase Price and how it is Calculated For most business sellers the purchase price is the purpose of the deal – cashing … [Read more...] about Deconstructing a Letter of Intent for Business Owners, Part 1
In almost all corporate transactions, the first piece of written documentation the parties exchange and execute (after a non-disclosure agreement) is a letter of intent or term sheet (“LOI”), which is intended to summarize the main deal points. And as many corporate transactions involve entities organized in Delaware, these documents often select Delaware as the governing law. Typically, this same LOI documentation is clearly identified as “non-binding,” as it usually represents merely the initial, tentatively negotiated business points between the main players of each side of the deal. The task is then left to outside or in-house counsel to craft the definitive agreements to memorialize the business points reflected in the LOI. Unless a particular provision is clearly identified in the non-binding LOI as, in fact, “binding” (such as an exclusivity provision), most lawyers assume that there cannot be liability if the definitive agreement differs … [Read more...] about When Is a Non-Binding Term Sheet or Letter of Intent Enforced as a Binding Contract?
Prior to entering into a definitive commercial agreement, parties often enter into a letter of intent, a term sheet or a memorandum of understanding (a preliminary agreement). Some of the provisions in the preliminary agreement may be intended to be binding on the parties (e.g., no-shop clauses) while others are not. Problems arise when negotiations falter and the prospective deal breaks down. A party that feels jilted may argue that the preliminary agreement created binding obligations that the other party did not expect. Among the potentially binding obligations that may be pressed in these situations is the duty to negotiate a definitive agreement in good faith based on the terms of the preliminary agreement.In related decisions (the SIGA decisions), the Delaware Supreme Court signaled an increased risk exposure for parties that enter into preliminary agreements. The Supreme Court established that (i) an agreement between the parties to negotiate in good faith in … [Read more...] about Assessing New Risks in Letters of Intent: Delaware Supreme Court Creates Increased Exposure by Recognizing a Duty to Negotiate in Good Faith
If you’ve been in the real estate business long enough, odds are you’ve found yourself in the following situation: You’ve signed a letter of intent (LOI) to buy or sell a property, which contains some combination of the basic deal terms (property description, price, due diligence period, closing date, earnest money, etc.) and contemplates the negotiation of a detailed, definitive purchase agreement. Then, before the agreement is actually signed, you decide not to pursue the deal—because you’ve changed your mind, market conditions have shifted or the negotiations have reached an impasse. If the other party still wants to proceed, can they force you to go through with the deal?The answer depends on the language in the LOI. In almost all cases, this preliminary document is not intended to be a binding agreement for the purchase and sale of the property; its purpose is to memorialize the terms that the parties have agreed to in principle and provide a … [Read more...] about Letters of Intent: Preliminary Negotiation or Binding Agreement?
Major lending institutions are reemphasizing traditional community-branch banking. Thus, as ubiquitous as the retail bank branch might now seem, signs suggest that more are on the way, as letters of intent and leases are being signed. In this context, bank tenants will be best served by legal counsel that understand that their client, while a retail tenant, has specific, banking-driven needs.In many, perhaps most, ways, the branch bank is a retail establishment governed by conventional "retail rules." Well before the lease-negotiation phase, selecting the site of the bank follows the "location-is-everything" principle. Using New York City as an example and backdrop, retail bank locations that are close to subway stops often offer the most attractive opportunities, as do avenue corners. Of course, a branch bank is a great convenience in one's office building and often adds value as a building amenity that may translate into higher rents for the office floors. Following yet another … [Read more...] about Unique Retail Considerations of Branch Bank Leasing
On October 22, DaVita HealthCare Partners Inc., one of the nation’s largest dialysis companies, and its wholly owned subsidiary, Total Renal Care, Inc. (collectively, “DaVita”), agreed to pay $389 Million to settle allegations that DaVita violated the federal False Claims Act (FCA) 31 U.S.C. §§3729 et seq. by inducing physicians to refer business to DaVita in violation of the federal Anti-Kickback Statute (AKS) 42 U.S.C. §1320a-7b(b) and then submitting claims for reimbursement under Medicare or Medicaid despite these violations. The settlement amount does not include amounts to be paid to the whistleblower, which were still under negotiation at the time of settlement. The complaint, filed by a former DaVita senior financial analyst turned qui tam relator, alleged that DaVita induced physicians to refer business to its facilities and monetarily rewarded those who provided such referrals by (a) selling them shares in existing DaVita dialysis centers for … [Read more...] about Buy High, Sell Low, and Restrict Competition: The Allegations Underlying the Government’s Case Against DaVita and the Implications of the Settlement
ENERGY AND CLIMATE DEBATEAs the clock struck midnight October 1, the United States entered a new fiscal year, and, without a budget, the federal government shut down. Congress worked through the weekend to pass a continuing resolution, but the stalemate seems no closer to being resolved. With the October 17 “x-day” of the debt ceiling approaching, debates over the two financial issues are beginning to merge, and pressure to come to an agreement has been mounting.Energy and environment issues have taken a backseat to the continuing resolution and the impending debt ceiling limit, and some have expressed concerns about how the shutdown will impact the scheduled operations of the government, such as the release of the 2014 renewable fuel standard targets. Some agencies, like the Department of Defense, have been better able to weather the shutdown, but the energy and environment agencies—the Department of Energy, the Department of the Interior, and the … [Read more...] about Energy and Environmental Law Update – Week of October 7, 2013
A team of Dutch developers would like to bring a little bit of Atlantis to Miami. Earlier this month, Dutch Docklands submitted a letter of intent and request for zoning variance to the City of North Miami Beach in order to erect 29 multi-million dollar floating homes and an “amenity island” in Maule Lake. Connected via the Intracoastal Waterway to Biscayne Bay in the south, Maule Lake began its life as a limestone rock quarry. Now, like Cinderella’s fairy Godmother (mixed with a touch of Ursula, the sea witch), Dutch Docklands seeks to transform the once humble aquatic rock pit into an archipelago of luxury homes.The project, deemed Amillarah Private Islands, would be the first of its kind in the Western hemisphere, but floating homes have long proliferated in the Netherlands. Collectively, Dutch Docklands and its architectural partner on the project, Koen Olthius, have constructed more than 800 floating houses in Holland, in … [Read more...] about Miami’s Future Archipelago of Floating Houses