EAM Solar

Legal Proceedings Report • Sep 23, 2016

EAM Solar ASA : P31 Acquisition legal status update

EAM Solar ASA : P31 Acquisition legal status update

23(rd) of September 2016

Following the fraudulent sale of 31 Solar PV power plants to EAM Solar ASA in

July 2014 by Enovos Luxembourg SA and Avelar Energy Ltd through their jointly

owned special purpose vehicle Aveleos SA of Luxembourg, the so-called "P31

Acquisition", EAM group has been forced to pursue EAM's legal and economic

rights in several legal venues due to the unwillingness of the sellers to

respect their contractual obligations in accordance with the Share Purchase

Agreement entered into the 31(st) of December 2013.

At current, EAM has 6 separate legal proceedings in progress or recently

finalized, and in addition, between 2 and 4 further civil and criminal legal

processes underway to be formally initiated. The following is an update on the

status of these legal proceedings.

The financial reporting through annual and quarterly reports issued since July

2014 contains further details relevant for the interpretation of this stock

exchange notice and can be found on the company web site (www.eamsolar.no).

1) Proceedings in the Criminal Court of Milan

Following the Criminal Court of Milan's decision to start tribunal proceedings

in March 2016 in the case of criminal fraud against the State of Italy and EAM

Solar ASA, the tribunal conducting the proceedings commenced on the 7(th) of

June 2016.

In the initial three hearings of the Tribunal, the formal decisions of March

2016 and appeals filed by the indicted and civilly liable companies to be

excluded from the criminal proceedings have been reviewed by the Court. EAM has

summoned Enovos Luxembourg SA and Avelar Energy Ltd as financially liable

parties for the damages suffered by EAM. In the court ruling issued the 13(th)

of September 2016 the Court judged that Aveleos SA is merely an alter ego of the

two companies and as such Enovos and Avelar are financially liable parties. The

Courts ruling is public information and can be seen EAMs web site

(www.eamsolar.no/investors/p31-acquisition-legal-information/).

The next session in the criminal court of Milan is on the 2(nd) of November

2016, and in total 8 trial sessions has been scheduled between November 2016 and

March 2017.

2) Administrative legal proceedings against GSE in the Administrative Court of

Rome

Following the suspension of payments of the FIT contracts initiated by GSE in

August 2014, and the permanent termination of the FIT contracts in Q4'2016, EAM

appealed GSE's termination decision to the appropriate legal venue, the

Administrative Court of Lazio in Rome. The appeal was based on the necessity to

achieve a decision in the matter sanctioned by the appropriate Court.

EAM also summoned Aveleos and the financing banks to participate in the appeal

of the termination decision. However, both Aveleos and the financing banks

abstained from participating in court or to provide any factual information that

would result in an annulment of GSE's termination decision, thereby waiving

their rights of remedy on accordance with the rights and obligations in the

Share Purchase Agreements.

On the 9(th) of June the Administrative Court of Lazio issued their ruling that

gave unreserved support and legal verification of the termination decision by

GSE, thus making the termination a lawful fact.

The court concluded that the power plants does not have the right to the FIT

contracts due to the fact that the have not been built in accordance with

technical rules and regulations, and that the FIT contracts was obtained based

on falsified documentation.

An important consequence of the ruling is that most of the PV modules on the

power plants no longer have valid CE certification, consequently the power

plants have lost the right to operate and be connected to the grid and any

insurance is no longer valid. Based on this the power plants permanently closed

operation on mid June 2015, and are now considered electronic scrap with a

recycling obligation in accordance with the EU WEEE Directive.

3) Criminal complaint with civil action in Luxembourg against Enovos Group and

managing directors in Enovos

In February 2016, based on the evidence at hand, EAM Solar ASA and associated

companies and individuals filed two criminal complaints with civil damages

actions to the Court of Luxembourg. One criminal complaint was filed against

Aveleos SA, and one criminal complaint action against Enovos Luxembourg SA,

Enovos International SA, Jean Lucius, Michel Schaus, Peter Hamacher and Martin

Technau (all employees in the Enovos Group), and the Aveleos board directors,

Igor Akhmerov and Marco Giorgi (employees of Avelar Energy Ltd).

EAM has been under obligatory investigation confidentiality in this matter until

Tuesday the 20(th) of September 2016 and has therefore not reported this fact

earlier. The Prosecutors office in Luxembourg currently handles the criminal

complaint.

The civil action contains damages claims in excess of EUR 215 million stemming

from the contractual fraud against EAM solar ASA in conjunction with the P31

Acquisition.

4) Breach of standstill agreement proceedings against Aveleos SA in the Court of

Luxembourg

In October 2014, EAM entered into a so-called standstill agreement with Aveleos

SA that also encompassed Enovos, Avelar and its employees. The purpose of the

standstill agreement was to give the sellers time to resolve the payment

suspension measures of GSE and to document the necessary facts confirming the

validity of the FIT contracts and the technical feasibility of the power plants

within a limited time frame of 6 months. In exchange for this the sellers

pledged to finance the running costs of the criminally affected power plants

with a minimum of EUR 5 million in liquidity until the above matters was

resolved.

In exchange for this pledge and the promises given by the sellers, EAM lifted

the injunction achieved on the bank accounts of Aveleos SA in Luxembourg in

September 2014 in order to avoid the immediate bankruptcy Aveleos SA in October

2014 as threatened by the Enovos and Avelar directors.

Aveleos and its Directors breached the standstill agreement already in November

2014, as confirmed in the ruling by the Civil Court of Milan (Enterprise Matters

Specialized Section) in September 2015 and by the Criminal Court of Milan in the

ruling the 13(th) of September 2016.

In the Autumn 2015 Aveleos summoned EAM again in Luxembourg court in order to

misuse the standstill agreement to achieve exclusion from the criminal

proceedings in Milan in order for Enovos and Avelar to escape legal proceedings.

On the 20(th) of September 2016 Aveleos asked the court of Luxembourg for a

postponement of these proceeding, which was granted until January 2017.

5) Financial restructuring and voluntary liquidation plan for the criminally

indicted SPVs in the Bankruptcy Court of Milan

Following the FIT termination decision by GSE, the criminal affected SPVs filed

for a financial restructuring procedure ("Concordato Preventivo") with creditor

protection. This was granted by the bankruptcy Court of Milan until the 8(th) of

July, and then further extended to the 6(th) of September 2016.

EAM has been forced to act as a custodian for the SPVs affected by the criminal

proceedings since July 2014. EAM has performed this task in order to protect the

values of the SPVs and minimize any financial damage arising from the criminal

proceedings and its legal and operational consequences.

Following legal and technical clarifications achieved during July and August

2016, the Sole Managing Director and the shareholder of the SPVs, in an

understanding with the Bankruptcy Court of Milan, determined that a financial

restructuring would be unachievable under the laws governing such procedures,

mainly due to the fact that the SPVs are criminally indicted, but also due to

technical administrative reasons. Therefore the companies filed for a voluntary

liquidation and bankruptcy procedure with the Bankruptcy Court of Milan on the

22(nd) of September 2016.

As the custodian, EAM will ask the Bankruptcy court of Milan to review the

bankruptcy in light of the Italian civil code article 1227 concerning gross

negligence of creditors.

6) Initiation of Arbitration proceedings in the Chamber of Arbitration in Milan

On the 12(th) of September 2016, EAM Solar ASA and EAM Solar Italy holding Srl

filed a summons to the Chamber of Arbitration of Milan against Aveleos SA. The

objective of the filing is to have the entire Share Purchase Agreement and

associated agreements annulled based on fundamental breach of contract. The

annulment is merited by the various court rulings obtained in Rome and Milan

that substantiate the validity of EAM's legal and financial claims.

In addition to the reversal of all transactions, EAM is also seeking damages for

the economic losses imposed on EAM through the fraudulent sale of the P31

companies.

Aveleos SA has 30 days to respond to the arbitration summons.

7) Future legal proceedings to be initiated in Italy and Switzerland

Based on the legal rulings achieved, and clarification and validation of facts

evidencing the fraud, EAM is in the process of initiating further criminal and

civil legal proceedings.

Future legal actions will be formally initiated going forward in Italy and

Switzerland against companies and individuals with a documented responsibility

for participating in the fraud against EAM. The timing of legal actions is based

on the finalization of various forensic investigations and third party

validation of the forensic investigation results.

For information, please contact:

Viktor E Jakobsen, CEO, phone +47 9161 1009, viktor@eam.no

About EAM Solar: EAM Solar is a utility company that acquires and operates solar

power plants. The Company currently owns solar PV power plants in Italy. The

plants are operating under long-term sales contracts.

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.