Solar Contracts: What Vermont Attorneys Need to Know in … · 2012. 9. 16. · Solar Contracts:...

Vermont Bar Association

Seminar Materials

Solar Contracts: What Vermont Attorneys

Need to Know in Advising Clients

December 9, 2016

DoubleTree, So. Burlington

Speakers:

Eric Derry, Esq.

Lucas Fykes

Paul Giuliani, Esq.

Professor Kevin Jones

Justin Kolber, Esq.

John Langhus, Esq.

Ethan McLaughlin, Esq.

Jeannie Oliver, Esq.

Amanda Quinlan

Mark Smith

Template for Group Net Metering Agreements for Vermont Municipal and School District Solar Projects

I. Introduction Solar power can offer many benefits such as reducing energy costs, stabilizing and predicting energy expenses and reducing greenhouse gas emissions. This Template for Group Net Metering Agreements has been drafted to help municipalities and school districts take advantage of these benefits. The Template was a collaborative effort by the Vermont School Boards Association, Vermont Superintendents Association - School Energy Management Program, Vermont Public Service Department, Vermont Natural Resources Council, and several Vermont attorneys1, and coordinated by the Vermont League of Cities and Towns. The goal of the collaboration was to create a template of potential contract provisions to help guide municipalities and school districts through the process of "going solar," and to help them identify, modify and craft provisions that best suit their goals and financial needs. This Template is offered to school districts and municipalities to provide a general framework for a potential group net metering contract with a solar developer (or other third-party system owner). It is intended to help municipal and school district officials better understand standard contract provisions as well as highlight issues that should be considered. It is meant to serve as a starting point for consideration and negotiation and is not meant to supplant the need to retain legal counsel when negotiating a long-term solar contract (or other legal agreement). Municipal and school district officials, therefore, are strongly recommended to work with an attorney with expertise in these types of agreements. II. Important Considerations Here are some of the important issues to consider as your municipality or school district explores the idea of going solar:

What are the current and future electrical needs of your municipality or school district? Have you assessed those needs? If not, do you know how to do so? Is solar power a viable option for your school district or municipality? Would the array of solar panels be placed on municipal or school district property or

elsewhere? What issues need to be addressed if the facility is on municipal or school district

property? How can you evaluate whether a Solar Power Purchase Agreement2 is the preferred

option for meeting the school district's or municipality's electricity needs? What are the benefits? What are the risks?

1 Ethan McLaughlin, Esq. of Gravel & Shea PC drafted the agreement template, and it was also reviewed by the following attorneys who assisted VLCT and the Vermont School Boards Association: Paul Giuliani, Esq. and Joslyn Wilschek, Esq. of Primmer, Piper, Eggleston & Cramer PC, and Brian Monaghan, Esq. and Ed Adrian, Esq. of Monaghan, Safar, Ducham PLLC. 2 A Solar Power Purchase Agreement is defined below in Section III A. Transaction Structure.

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Template for Group Net Metering Agreements for Vermont Municipal & School District Solar Projects

How can municipalities and school districts protect themselves against unnecessary risks? What are the legal purchasing requirements for school districts and municipals? Does it make sense to partner with a third-party developer to finance, install and operate

the system? Third-party developers are able to take advantage of significant federal tax credits that help reduce the cost of solar projects. These tax credits are not available to municipalities and school districts which do not pay federal taxes. Municipalities and school districts can still benefit from these tax credits if the third-party developer takes advantage of the credits and passes on those financial benefits to the municipality or school district in the form of a lower Service Price. This Group Net Metering Agreement Template allows school districts and municipalities to partner with third-party developers to finance, install and operate and manage the solar arrays. Please note: the current federal tax incentives will be significantly reduced in 2017 unless Congress takes action to extend these benefits. III. Group Net Metering Agreement Template It is not expected that this Template and all of its provisions will be suitable for all net metering arrangements. Every provision in this Template may be subject to negotiation and change, depending on the facts and circumstances of your particular transaction. The Group Net Metering Agreement Template and accompanying commentary address many potential issues but not all of these issues will be present in any single transaction. Likewise, not every issue that may potentially arise in the course of a transaction will, or can be, covered by or addressed in this Template. Given the potential variations in the facts and circumstances involved in any solar project, the Group Net Metering Agreement Template should not be considered as establishing any standards of general practice nor shall it constitute legal advice. This Template and accompanying commentary are not a substitute for a lawyer’s careful exercise of judgment in a specific transaction and do not purport to measure the reasonableness of a lawyer’s judgment in any situation. While the notes/commentary included in the Template may include discussion of Vermont laws, rules and regulations and some U.S. federal and state tax considerations in structuring and negotiating a solar project transaction, the discussion does not constitute, and is not intended to constitute, legal advice or tax advice. The laws, rules, regulations, orders and tariffs governing solar projects and tax statutes and regulations are subject to change, amendment and/or repeal at any time, and their application is fact-sensitive. The Group Net Metering Agreement Template and the discussion in the commentary are no substitute for legal and tax advice from qualified legal and tax advisors who are familiar with the current law and the facts at hand. The authors and publishers of this Template assume no obligation to update the Template to reflect any changes in applicable laws, rules, regulations, orders, tariffs, tax statues or regulations or other changes in facts and/or circumstances that may occur. The authors and publishers of the Group Net Metering Agreement Template make no representations or warranties regarding the legality or enforceability of any provision in the Template or otherwise, and disclaim any implied warranties whatsoever.

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A. Transaction Structure The Group Net Metering Agreement Template is structured for use in connection with a “third-party” ownership model also known as a Solar Power Purchase Agreement. Under this kind of model a separate private party (the “System Owner”) constructs, pays for and operates a qualifying solar electricity generating system (the “System”) and instructs the electric utility to allocate all or a portion of the electricity generated by the System to electricity meters of the municipality or school district (the “Customer”). The Customer receives savings or monetary credits on its electric utility bills for each kilowatt hour of electricity produced by the system and allocated to its meters, which reduces the amount that the Customer is required to pay to the electric utility (such savings and credits are “Net Metering Credits”). The Customer, in turn, agrees to pay the System Owner for the Net Metering Credits allocated to its meters during the term of the Agreement. An advantage of the third-party ownership structure is that the System Owner bears the risk and responsibility for permitting, constructing, financing and operating the System. The Customer pays no money up front and is only required to pay for Net Metering Credits that are allocated to its meters. If the System cannot be permitted or constructed, or fails to produce output, the Customer simply pays its electric utility what it otherwise would in the absence of the Agreement. As described above, because the System Owner is a private party, it can take advantage of the tax credits and other tax benefits and incentives (which are unavailable to municipalities and school districts that do not pay federal income tax) that help make construction and operation of the solar facility economically viable. The System may be located on land that is owned by the Customer or on separate land that is owned or leased by the System Owner. The Group Net Metering Agreement Template can be used for both scenarios. However, where the System will be located on land that is owned by the Customer, the Customer and the System Owner will need to enter into a separate lease agreement for that land. The publishers of the Group Net Metering Agreement Template intend to publish a Lease Agreement Template for these transactions at a later date. In the meantime, Customers that wish to enter into a group net metering arrangement can retain legal counsel to prepare a lease agreement or to review a lease agreement provided by a potential System Owner. B. System Size and Estimated Output The standard provisions of the Group Net Metering Agreement Template require the Customer to pay for all of the Net Metering Credits that are allocated to its meters. The Customer is responsible for using the credits. This is the way that net metering arrangements are typically structured throughout the country. Customers should be careful to ensure that the system size and the estimated output of the System are appropriate for the Customer's current and future electricity usage. For any school district or municipality that is considering going solar – and entering into one of these contracts – consider approaching it the same way you would if you were going to put a system on your own home or business. What are your energy needs and realities today? What are your future goals? How important is renewable energy to your school district or municipality?

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Look at your current energy realities right now. What are you spending? How much are you relying on fossil fuels? What are your goals? Have you made efficiency investments? Do you want to? Did you know that the most energy efficient school buildings use about half of the electricity of inefficient school buildings? Who can help answer these questions? School district officials can work with the School Energy Management Program, and Efficiency Vermont is a resource for municipal officials. Exhibit "D" of The Group Net Metering Agreement Template provides alternative language that the parties may agree to include in order to cap the amount the Customer pays at the amount of its avoided costs (costs that would otherwise be payable to the electric utility). If this option is selected, the Customer would never be required to pay more to the System Owner during any contract year than it would pay to its electric utility. If the Customer does not pay for all of the Net Metering Credits that are allocated to its meters, then the System owner has the right to change the allocations, add additional customers, or terminate the agreement with the Customer. Selecting this option is generally favorable to the Customer, but may not be acceptable to all System Owners and financing sources, as the revenue to the System Owner will now depend upon both the production of the System and the usage by the Customer. C. Purchasing Requirements Vermont municipalities and school districts have different legal requirements for purchasing. In general, Vermont law does not require municipalities to solicit bids for purchases, but some municipalities have imposed their own procurement procedures through the adoption of a purchasing policy or governance charter, which procedures must be adhered to. Even if not required to do so, municipalities considering entering a contract should solicit proposals from more than one solar developer. School districts, on the other hand, are required by statute to solicit three or more bids for the acquisition of "items or services" costing in excess of $15,000 for the “construction, purchase, lease, or improvement of any school building.” D. Voter Approval The answer to the question of whether these agreements must be subject to public vote depends on the location of the solar array. If a solar array will not be located on municipal or school district property, then voter approval is not generally a prerequisite for entering into a solar contract. However, if an array will be maintained on school district or municipal property that is leased to the solar developer, the answer is not as straightforward. As previously recommended, municipal and school district officials should engage an attorney as early as possible to help with this and other issues. Paul Giuliani, Esq. of Primmer, Piper, Eggleston and Cramer recommends that school districts should gain an understanding of the interplay between 16 V.S.A. § 562(7) and 16 V.S.A. § 3741 which address leases of certain school property. When it comes to municipal property, the VLCT Municipal Assistance Center has advised municipal officials for many years that the legal requirements for the sale or "conveyance" of municipal property under 24 V.S.A. § 1061 would also apply to a long-term lease. Although the law does not define the word "conveyance," VLCT's conservative interpretation of its meaning

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includes the transfer of interest - such as a long-term lease or easement - in municipal property and therefore necessitates compliance with that statute. According to 24 V.S.A. § 1061, notice of the terms of a proposed sale of municipal property must be posted in at least three public places in the municipality and published in a local newspaper. If no voter-backed petition regarding the sale is received by the selectboard, the sale may go through as proposed. On the other hand, if a voter-backed petition is received, the selectboard must ask the voters at the next special or annual meeting whether or not the municipality should convey the property. As an alternative to this procedure, the selectboard may go directly to the voters and present the question for approval of the conveyance at an annual or special meeting. Taking these steps early in the process of considering a solar contract should allow ample time to complete the project. As with this and other relevant issues, since Vermont law regarding long-term leasing of school district or municipally-owned property is not clear, attorneys may have different opinions about how the law applies to the unique circumstances of a specific solar project. The question of whether a public vote is necessary should be explored with an attorney as soon as the decision is made to explore a solar group net meeting project. E. Service Price There are many different ways to structure the pricing provisions of a group net metering arrangement. The Group Net Metering Agreement Template employs a so-called "floating rate," where the Service Price is calculated based on a percentage of the monetary value of the Net Metering Credits that are allocated to the Customer’s meters. This is the most common pricing structure employed in Vermont for group net metering arrangements with municipalities and schools. Alternative pricing structures, such as fixed-rate pricing, are discussed in the commentary, but use of alternative structures may require substantial modifications to the Group Net Metering Agreement Template, and the Template should not be used for a fixed-price arrangement without the assistance of legal counsel. F. Payment The Group Net Metering Agreement Template allows the parties to select at the time of signing whether the Customer will pay for Net Metering Credits as such credits are generated, or pay for credits as they are used/consumed by the Customer. This is significant because solar systems produce significantly more power in the summer than they do in the winter, and excess credits may build up on a Customer’s utility bill during the summer only to be consumed in the winter when the System’s production is lower. Net Metering Credits that are not used within twelve (12) months will expire. All of this is discussed in more detail in the comments section of the Template. G. Renewable Energy Credits The Group Net Metering Agreement Template allows the parties to specify whether the renewable energy credits attributable to the output of the system will be owned by the System Owner or the Customer. The significance of this choice is discussed in additional detail in the commentary that accompanies the agreement template.

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IV. Resources Several resources that could be helpful to Vermont municipalities and school districts are included in this section, but this is by no means a comprehensive list. Many Vermont municipalities and school districts have already entered third-party solar agreements. Learning from them about their experiences may be very helpful. The people and organizations listed below can information about specific group net metering solar projects and the entities involved as well as additional information:

Vermont Public Service Department: Anne Margolis, Renewable Energy Development Manager at 802-828-3058 or [email protected]. Website: www.publicservice.vermont.gov/topics/renewable_energy

School Energy Management Program: Norm Etkind, Director, VSA - SEMP at [email protected] or 802-229-1017. Website: www.vtvsa.org/school-energy-management-program.php

Vermont Natural Resources Council and the Vermont Energy & Climate Action Network could potentially offer guidance on potential best options and strategies. Website: www.vecan.net or contact Johanna Miller, VNRC at [email protected] or 802-223-2328 ext. 112.

Renewable Energy Vermont is the trade association of renewable energy businesses. Find potential solar installers/contractors at www.revermont.org.

Vermont Law School Energy Clinic, Institute for Energy and the Environment. Email: [email protected] or website: www.vermontlaw.edu/academics/clinics-and-externships/energy-clinic

Efficiency Vermont website: www.efficiencyvermont.com/index

Municipal and school district officials are strongly recommended to work with an attorney with expertise in group net metering agreements for solar projects as well as municipal or school district law as applicable. Attorneys at the following Vermont law firms have expertise in these areas: Dinse Knapp McAndrew 209 Battery St, #2, Burlington, VT 05402 Tel: 802-864-575 Website: http://www.dinse.com/ Gravel & Shea PC 76 St. Paul Street, 7th Floor P. O. Box 369 Burlington, VT 05402 Tel: 802-658-0220 Website: www.gravelshea.com Monaghan Safar Ducham PLLC 156 Battery Street Burlington, VT 05401 Website: www.msdvt.com

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Primmer Piper Eggleston & Cramer PC 100 East State Street P.O. Box 1309 Montpelier, VT 05601 Tel: 802 223 2102 Website: www.primmer.com Tarrant, Gillies and Richardson 44 E State St., Montpelier, VT 05602 Tel: 802-223-1112 Website: www.tgrvt.com

* Please refer to the Cover Memo for additional information.

TEMPLATE FOR GROUP NET METERING AGREEMENTS

FOR VERMONT MUNICIPAL AND SCHOOL DISTRICT SOLAR PROJECTS*

This Group Net Metering Agreement (this “Agreement”) is made as of the ___ day of ________, 20__ (the “Effective Date”)

BY AND BETWEEN

“System Owner”

Name: , a

Address:

Attn:

E-Mail:

Telephone:

Facsimile:

AND

“Customer”

Name: , a

Address:

Attn:

E-Mail:

Telephone:

Facsimile: .

COMMENT

The Parties must insert the name, state of organization and entity type for each Party. For example, “ABC Solar Development Company, LLC, a Vermont limited liability Company.” The addresses and contact information specified above will be used for all notices under the Agreement.

Background

1. System Owner intends to construct a ___________ kW (DC) ___________ kW (AC) net metered photovoltaic electricity generating facility (the “System”) at ________________ (the “System Site”). The System and the System Site are described in further detail on Exhibit “A” hereto.

Check one: ___ The System Site is owned by Customer and leased to System Owner.

___ The System Site is not owned by Customer.

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COMMENT

This Agreement can be used both for Projects that are located on the Customer’s property and for Projects that are not. If the System will be located on property owned by the Customer, the Parties will need to enter into a separate Lease Agreement.

2. System Owner intends to petition the Vermont Public Service Board for a Certificate of Public Good to construct, install and operate the System as a group net-metering system pursuant to 30 V.S.A. § 219a and § 248.

COMMENT

This Agreement contemplates a fact pattern in which the Parties sign this Agreement before the System Owner has obtained a Certificate of Public Good and before the System is constructed and placed in service. If the actual fact pattern is different, the Parties should modify this Agreement accordingly.

3. System Owner estimates that the System will be installed on or before ___________________________, 20_____ (the “Estimated Commissioning Date”).

4. The Customer is a customer of ___________________ (the “Utility”) and desires to combine electric meters with System Owner to join the net metering group associated with the System to offset and reduce Customer’s Utility billing and charges (the “Group”).

COMMENT

List the name of the Customer’s electric utility here. The System must be constructed and interconnected to the Utility in the same service territory as the Customer. For example, if the Customer’s electric utility is Washington Electric Cooperative, Inc., then the System must be interconnected with the distribution system of Washington Electric Cooperative, Inc. and be located within that utility’s service territory.

5. Following the installation of the System, the Utility will allocate credits for the kilowatt hours of electricity output generated by the System to the designated electric meters of the members of the Group (each, a “Group Member”) pursuant to allocation instructions provided to the Utility. The Customer Meters and Utility accounts and instructions for allocating Output from the System to such Customer Meters and accounts are set forth on Exhibit “C” hereto. Each kilowatt hour of electricity allocated to a designated electric meter of a Group Member will result in corresponding bill credits being allocated or applied to the Utility bills or against the usage or charges for such meter and/or result in other economic benefits or savings being realized, credited, allocated, offset or otherwise applied by the Utility to the electricity usage, Utility bills, accounts, charges or fees for such meter on account of such kilowatt hour of Output, including any credits allocated to such meter in excess of the charges or usage for meter during any applicable Utility billing period (such credits, offsets, benefits and savings attributable to the Output of the System, collectively, “Net Metering Credits”).

6. The Customer desires to engage the services of the System Owner, become a Group Member, and receive the benefits of Net Metering Credits attributable to the Output of the System pursuant to the terms and conditions set forth in this Agreement.

N O W, T H E R E F O R E ,

In consideration of the premises and the mutual covenants and agreements herein set forth, the Parties hereby agree as follows:

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Section 1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have the following meanings:

“Administrator” means the administrator and designated person (as defined in 30 V.S.A. § 219a(g)(1)) of the Group.

“Agreement” has the meaning given to such term in the introductory paragraph of this Agreement.

“Avoided Utility Costs” means, for any Meter during any period, the net amount by which the charges, fees and costs that would otherwise be payable to the Utility with respect to such Meter, including any electricity usage thereunder, are reduced or otherwise avoided on account of membership in the Group Net Metering Arrangement contemplated by this Agreement, the allocation of Output to such Meter, or the application of Net Metering Credit Value to the Utility bills for such Meter with respect to such period.

“Conditional Early Termination Date” means , 20____.

COMMENT

The Customer and the System Owner each have the right to terminate this Agreement if certain milestones are not completed by the Conditional Early Termination Date.

“Contract Year” means a twelve (12) month period during the Term of this Agreement that begins on the Service Commencement Date or on the annual anniversary of the Service Commencement Date, as applicable.

“Certificate of Public Good” means a Certificate of Public Good to construct and install the System and operate the System as a group net-metering system pursuant to 30 V.S.A. § 219a and § 248.

“Customer” means the Person listed as the “Customer” in the introductory paragraph of this Agreement.

“Customer Meters” means all of the Customer’s electricity Meters with the Utility listed in Exhibit “C”, as amended from time to time. Any Meters included at Customer’s request or direction in the Group Net Metering Arrangement contemplated by this Agreement shall be deemed to be Customer Meters, even if a third party is the Utility account holder for such Meter.

“Construction Preconditions” has the meaning set forth in Section 4(b).

“Effective Date” has the meaning set forth in the introductory paragraph of this Agreement.

“Estimated Commissioning Date” has the meaning set forth in paragraph 3 of the Background Section of this Agreement.

“Estimated Year One Output” means the System Owner’s estimate set forth on Exhibit “A” to this Agreement of the future Output of the System for the twelve (12) month period beginning on the Service Commencement Date.

COMMENT

The Estimated Year One Output is an estimate of the Customer’s anticipated allocation of the electricity generated by the System.

“Excess Output” has the meaning set forth in Section 6(c).

“Excess Output Credit” has the meaning set forth in Section 6(c).

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“Expiration Date” means the year anniversary of the Service Commencement Date.

“Financing Source” or “Financing Sources” means, either in the singular or collectively, as applicable, the persons or entities lending money, extending credit or providing debt, equity or lease financing for or secured by the System and any trustee or agent acting on any such person or entity’s behalf.

“Force Majeure Event” has the meaning set forth in Section 12(b).

“Group Member” has the meaning set forth in paragraph 5 of the Background section of this Agreement.

“Group Net Metering Arrangement” means an agreement between one or more electric utility customers, located within the same service territory, to combine multiple electricity meters in order to share and allocate electricity generated by a qualified renewable-generation facility.

“kWh” means a kilowatt hour of electricity.

“Lease Agreement” has the meaning set forth in Section 12(a)(iii)(D).

“Meters” shall mean each of the electric meters of the members of the Group to which credit for electricity generated by the System may be allocated from time to time, including each of the electricity meters listed in Exhibit “C” hereto.

“Net Metering Credits” has the meaning set forth in paragraph 5 of the Background section of this Agreement.

“Net Metering Credit Value” means, for each kWh of Output allocated to a Customer Meter: (a) the monetary value of any bill credits applied to the Utility bills for such Meter or against the charges in such Utility bill on account of such kWh of Output, plus (b) the monetary value of any other economic benefits realized, credited, allocated, offset or otherwise applied by the Utility to the electricity usage, Utility bills, accounts, charges or fees for such Customer Meter on account of such kWh of Output, including any credits allocated to such Customer Meter in excess of the charges or usage for such Customer Meter during any applicable billing period.

COMMENT

The manner in which net metering benefits are calculated and applied to the Customer’s bill by the Utility depends on the rate class of the specific Customer Meter, the manner in which the System is interconnected to the Utility, the “solar adder” incentive in effect for the Utility on the date the System is commissioned, and the tariff and practices of the Utility. This Agreement uses a broad definition of “Net Metering Credit Value” to capture all of the potential ways that net metering benefits may be allocated or applied to a Customer Meter and the Customer’s Utility bills.

For most solar net metering arrangements with school districts and municipalities, the System will be interconnected directly to the Utility and serve Customer Meters on “demand” and “time of use” rate schedules. In this scenario, the Utility will apply a monetary credit to the bill for such Meter, calculated by multiplying the kWhs allocated to such Meter by the Utility’s residential rate. During the first ten years after a solar System is commissioned, the Customers will receive an additional bill credit equal to the number of kWhs allocated to the Meter multiplied by the Utility’s solar adder incentive in effect at the time the System is commissioned.

“Output” means electricity produced by the System, measured in kWh, that is delivered to the Utility and for which corresponding Net Metering Credit Value is allocated or otherwise credited or applied by the Utility to the electricity usage or charges for one or more Customer Meters.

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“Party” means System Owner or Customer, as applicable, and “Parties” means System Owner and Customer.

“Payment Date” has the meaning set forth in Section 7(b).

“Permits” has the meaning set forth in Section 4(a).

“Person” means any natural person, partnership, trust, estate, association, corporation, limited liability company, nonprofit corporation, governmental authority or agency or any other individual or entity.

“Regulatory Event” has the meaning set forth in Section 21.

“Renewable Energy Credits” means all “tradable renewable energy credits” as defined in 30 V.S.A. § 8002(8) associated with a single unit of energy generated by the System. For the avoidance of doubt, Renewable Energy Credits shall not be deemed to include electric energy or any mandatory or voluntary federal, state or local renewable energy rebates, subsidies, incentive payments, tax credits, grants or other monetary benefits or incentives related to the System.

“School Closure” has the meaning given to such term in Section 12(c).

“Services” means any and all of the services provided by the System Owner to the Customer pursuant to this Agreement, including admitting the Customer as a Group Member, administration of the Group Net Metering Arrangement contemplated hereby, and the allocation of Net Metering Credits to the Customer Meters.

“Service Commencement Date” means the first date on which the System actually delivers Output to the Utility, which subsequently results in Net Metering Credits for such Output being allocated by the Utility to Customer’s electricity bills.

“Service Price” is defined in Exhibit “B” to this Agreement.

“System” has the meaning given to such term in paragraph 1 of the Background of this Agreement, as further described on Exhibit “A”.

“System Site” has the meaning given to such term in paragraph 1 of the Background of this Agreement, as further described on Exhibit “A”.

“System Owner” the Person listed as the “System Owner” in the introductory paragraph of this Agreement.

“12-Month Period” has the meaning given to such term in Section 6(c).

“Unused Credits” has the meaning given to such term in Section 6(c).

In this Agreement, unless the context requires otherwise, the singular includes the plural and the plural the singular, words importing any gender include the other gender; references to statutes, sections or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending, replacing, succeeding or supplementing the statute, section or regulation referred to; the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation” or “but not limited to” or words of similar import; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to those of this Agreement unless otherwise indicated; references to agreements and other contractual instruments shall be deemed to include all exhibits and appendices attached thereto and all subsequent amendments and other modifications to such instruments, and references to Persons include their respective successors and permitted assigns.

Section 2. Group Net Metering Agreement. This Agreement creates an obligation by the Customer to pay System Owner for the Services, including the benefits of Net Metering Credits

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attributable to electricity generated by the System and allocated to the Customer Meters in accordance with the Allocation Instructions.

Section 3. Administrator and Designated Person. System Owner shall have the right to designate, from time to time, the Administrator for the Group.

Section 4. Permits and Approvals; Conditions.

(a) Permits and Approvals. System Owner shall endeavor to obtain all permits and approvals required for the construction, installation, start-up and operation of the System, including the Certificate of Public Good (collectively, “Permits”), and to complete the commissioning of the System on or before the Estimated Commissioning Date. All costs and expenses of obtaining any Permits, including all costs, fees and expenses for professional services, shall be the sole responsibility of System Owner.

COMMENT

The System Owner is responsible for permitting and building the System, including securing a group-net-metering Certificate of Public Good for the System from the Vermont Public Service Board.

(b) Construction Preconditions. Notwithstanding the foregoing, System Owner shall have no obligation to proceed with construction and installation of the System, unless the following conditions precedent (collectively, the “Construction Preconditions”) have been satisfied or waived by System Owner on or prior to the Conditional Early Termination Date:

(i) System Owner shall have obtained all Permits that the System Owner deems necessary or desirable, each in form and substance satisfactory to the System Owner: (A) for the construction and installation of the System, (B) for the provision of Services to the Customer under this Agreement, and (C) for the Net Metering Arrangement contemplated hereby, and all such approvals, permits, licenses and authorizations shall be in force and effect.

COMMENT

This Agreement allocates the risk and expense of permitting the System to the System Owner. Obtaining all of the permits for a System generally requires a substantial investment of time and money by the System Owner, with no guaranty that the necessary Permits can be obtained on acceptable terms or at all. A System Site may contain “fatal flaws,” which result in Permits being denied or delayed or make the development of the System prohibitively expensive (for example, if the System Site contains a protected species habitat or environmental contamination, or if interconnection with the Utility will require especially costly upgrades to Utility infrastructure, or if the permitting of the project is litigated or opposed in a material respect by a governmental agency or authority). Fatal flaws may not be apparent or foreseeable until after this Agreement is signed.

(ii) System Owner shall have obtained any necessary easements, leases, licenses, consents and approvals and real property and other rights necessary or desirable for the construction, installation, operation and maintenance of the System.

(iii) System Owner shall have obtained all funding and financing commitments for the System from one or more Financing Sources on terms acceptable to System Owner, in its sole discretion.

(c) Service Commencement Date. System Owner shall notify Customer of the Service Commencement Date within 5 days of its occurrence.

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Section 5. Allocation Instructions. On or before the Service Commencement Date, System Owner shall instruct the Utility to allocate credit for the Output of the System to the Customer Meters in accordance with the allocation instructions attached hereto as Exhibit “C” (the “Allocation Instructions”). System Owner and Customer acknowledge that adjustments to the Allocation Instructions may become necessary or desirable from time to time on account of changes in rate schedules and electricity usage as between the Customer Meters. System Owner and Customer shall cooperate in good faith to identify the optimum allocation of the Output of the System, which maximizes the net savings and benefits realized by Customer and the amount of the Service Price payable to System Owner hereunder.

Section 6. System Output.

(a) System Owner’s estimate of the Estimated Year One Output was prepared by or on behalf of System Owner using the National Renewable Energy Laboratory’s PVWatts program or otherwise using practices and methods generally accepted within the solar power industry with respect to solar systems similar to the System.

(b) Customer acknowledges and agrees that: (i) the Output from the System will vary from time to time; (ii) System Owner provides no warranty or guarantee of any particular level of Output of the System; (iii) during any Utility billing period during the term of this Agreement, Customer’s Utility charges for the Customer Meters may exceed the Net Metering Credits attributable to Output of the System for such billing period (for example, if Customer’s electricity usage exceeds the Output of the System); (iv) Customer is solely responsible for paying any and all Utility charges in excess of the Net Metering Credits allocated to Customer; and (v) System Owner is not a utility or an electricity provider and does not assume any regulatory or statutory obligations of a utility or electricity provider.

(c) In the event that the Output of the System during any period of twelve (12) consecutive monthly Utility billing periods (each, a “12-Month Period”) beginning after the Service Commencement Date exceeds the Estimated Year One Output (the “Excess Output”) and as a result of such Excess Output, the Net Metering Credit Value attributable to Output from the System that is allocated to Customer Meters for Utility billing periods during such 12-Month Period exceeds the Avoided Utility Costs for such Customer Meters for such period, such that Net Metering Credits attributable to such Excess Output expire for non-use (“Unused Credits”), then, to the extent such Unused Credits are attributable to Excess Output, the amount of the Service Price paid by Customer with respect to such Unused Credits, if any, shall be credited against the Service Price payable to the System Owner for future payment periods (“Excess Output Credit”) until such Excess Output Credit is exhausted. Upon the termination of this Agreement, the System Owner shall pay Customer the amount of any accrued but unused Excess Output Credit, if any, for 12-Month Periods ending prior to such termination, which payment shall be made within 45 days of the end of the Utility billing period during which such termination occurs. With respect to any 12-Month Period ending after the termination of this Agreement, any Excess Output Credit for such year shall be refunded by System Owner to Customer within 45 days of the end of the Utility billing period during which such 12-Month Period ends.

COMMENT

The System Owner is required to provide an estimate of the Output that will be allocated to the Customer during the first year of the System’s operation. The actual Output of the System, however, will depend on the weather and vary from day-to-day, month-to-month and year-to-year. The System Owner does not guarantee a particular level of Output, but has a strong incentive to ensure that the System Output is maximized, because the System Owner will only receive payments to the extent the System produces.

The standard Service Price provisions of this Agreement require the Customer to pay for all Output allocated to the Customer Meters, however in the event that the actual Output of the System exceeds the Estimated Year One Output for any 12-Month Period, and the Customer pays for Net Metering

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Credits generated during such period that expire for non-use, the Customer will be entitled to a credit against future payments to the System Owner.

Section 7. Service Price; Billing and Payment.

(a) Service Price. Customer agrees to pay System Owner the Service Price for Services set forth on Exhibit “B” hereto.

(b) Billing and Payment. System Owner shall bill the Customer monthly for the Service Price. All payments under this Section 7 shall be due and payable within thirty (30) days of the Customer’s receipt of an invoice from the System Owner (the “Payment Date”).

COMMENT

The standard language of this Agreement provides for monthly billing based on the actual Net Metering Credit Value credited or otherwise applied within the corresponding Utility billing period. Calculating this amount each month may requires monthly forwarding of Utility statements by the Customer and preparation and review of invoices, which some Customers and System Owners find administratively burdensome. Some System Owners and Customers prefer an alternative billing method, where the Customer pays a flat monthly fee based on an estimated monthly service price, subject to an annual adjustment.

(c) Late Payment Charge. If the System Owner does not receive payment in full within ten (10) business days after the Payment Date, then the System Owner shall have the right to impose a late payment charge of one percent (1%) upon the unpaid balance, including any prior unpaid late payment charges. The late payment charge shall be assessed on such unpaid balance once each month after it is initially imposed on an unpaid balance, until such balance is paid.

Section 8. Ownership of the System. Nothing in this Agreement shall have the effect of passing to the Customer or any other Person any right, title or interest in or to the System or any electric energy, mandatory or voluntary federal, state or local renewable energy rebates, subsidies, incentive payments, tax credits, grants or other monetary benefits or incentives related to the System, all of which shall be the sole property of the System Owner and its affiliates and assigns, as applicable.

Section 9. Ownership of Renewable Energy Credits. All Renewable Energy Credits generated or otherwise attributable to the Output allocated to the Customer Meters shall be the property of the Party selected below as the owner of the Renewable Energy Credits (the “REC Owner”): (check one only)

____ Customer

____ System Owner

If the Parties do not select a REC Owner above, then the System Owner shall be deemed to be the REC Owner. The REC Owner shall have the right to sell, transfer, grant, convey or assign such Renewable Energy Credits to any other person in the REC Owner’s sole discretion. The other Party agrees to provide any acknowledgements, consents or approvals reasonably requested by the REC Owner to validate the System Owner’s rights to and ownership of the Renewable Energy Credits. No Party shall make any environmental claims regarding the System or the Output allocated to the Customer Meters without the permission of the REC Owner.

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COMMENT

The electricity and corresponding net metering credits generated by solar power facilities, on the one hand, and the environmental attributes of solar power, on the other hand, are distinct commodities that may be sold separately. The tradable units representing the environmental attributes associated with solar power are referred to in this Agreement as Renewable Energy Credits. Renewable Energy Credits are generated over time, based on the System’s electricity output. Only the owner of the Renewable Energy Credits may claim to be using “green energy,” “renewable energy,” “solar power” or similar terms, or claim any other environmental benefits from the solar facility, such as reduced carbon generation.

Typically, all Renewable Energy Credits associated with the electricity produced by the System will be the property of the System Owner. There is an active market for sales of Renewable Energy Credits, and the proceeds from such sales are part of the System Owner’s revenue stream. The buyer of the Renewable Energy Credits is typically a utility that is required to buy renewable power pursuant to a renewable portfolio standard or other regulatory requirement. The buyer of the Renewable Energy Credits is deemed to have purchased solar power if it pairs the Renewable Energy Credits with a corresponding amount of electricity.

Customers that need or desire to make environmental claims about using renewable power from the System (for instance, to satisfy carbon neutrality standards) can do so if the parties agree that the Customer will retain ownership of the Renewable Energy Credits. This will typically result in a higher Service Price. Customers can also make environmental claims if they buy Renewable Energy Credits on the open market, which may be less expensive.

Section 10. Covenants.

(a) Reports. If requested by System Owner, Customer shall provide System Owner with copies of all Utility bills and invoices received by the Customer from the Utility with respect to the Customer Meters and the allocation of any net Metering Credits thereto. To the extent such bills and invoices are available from the Utility via an electronic platform, Customer may satisfy its obligations under this Section 10 by giving the System Owner access to such online information.

COMMENT

The System Owner may need to review the monthly invoices and statements of the Customer from time to time to verify the amount of the Net Metering Credits allocated to the Customer Meters. The Group Net Metering Agreement Template requires the Customer to provide the System Owner with copies of such invoices and statements to the extent requested by the System Owner. If the System is located in the service territory of a Utility that automatically provides the Administrator with a monthly summary of the generation of the System and the calculation and application of Net Metering Credits among the meters in the group, the System Owner may not need to make such a request.

(b) Exclusivity. Without the prior written consent of the System Owner, the Customer shall not enter into a Group Net Metering Arrangement with any person or entity, other than System Owner, during the Term with respect to any Customer Meter or connect any individual net metering system to a Customer Meter, to the extent doing so would prevent such Customer Meters from being part of the Group Net Metering Arrangement contemplated by this Agreement or restrict or prevent the System Owner from allocating Output to such Customer Meters or otherwise adversely affect the Group Net Metering Arrangement contemplated hereby, the Net Metering Credit Value attributable to Output allocated to the Customer Meters, or the Parties’ rights and the performance of their obligations under this Agreement.

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COMMENT

Under current net metering rules, a customer utility account may only be part of one net metering Group at a time. This means that a Customer Meter cannot be part of two net metering Groups at any given time.

(c) Utility. Customer shall remain a customer of the Utility in good standing at all times during the Term hereof. Customer shall not take any action to cause any Customer Meter to be disconnected or removed from the Utility’s service without obtaining System Owner’s prior written consent, which shall not be unreasonably withheld if Customer designates one or more replacement meters on the same rate schedule and with substantially similar usage within the same Utility service territory to be added to Exhibit “C” hereto as a Customer Meter.

(d) Further Assurances. Customer, from time to time, on written request of System Owner, shall perform such further acts, including execution of documents, as may be reasonably required in order to fully perform and to more effectively implement and carry out the terms of this Agreement, provided that such acts shall not be inconsistent with this Agreement or any law or regulatory approvals pertaining to the subject matter hereof.

(e) Authorization. System Owner and the Administrator are hereby authorized to making any filings and submissions to the Utility and any applicable regulatory bodies, individually or on behalf of the Group or any Group Member, as may be necessary from time to time to carry out the terms of this Agreement.

(f) Insurance. The System Owner shall procure and maintain, at its sole cost and expense, a general policy of liability insurance against property damage, personal injury or death, in an aggregate amount of at least One Million Dollars ($1,000,000.00). Customer shall be named as additional insured under such policy.

Section 11. Representations and Warranties.

(a) The Customer hereby represents and warrants to System Owner as follows:

(i) Binding Obligation. This Agreement has been duly authorized by all necessary action of Customer, and constitutes a legal, valid and binding obligation of the Customer, enforceable against Customer in accordance with the terms hereof.

(ii) Customer further represents and warrants to System Owner that Customer is a customer of the Utility in good standing and each of the Customer Meters is subject to the Utility rate class indicated opposite such Customer Meter on Exhibit “C” hereto.

(b) System Owner hereby represents and warrants to the Customer as follows:

(i) Binding Obligation. This Agreement has been duly authorized by all necessary action of System Owner, and constitutes a legal, valid and binding obligation of System Owner, enforceable against System Owner in accordance with the terms hereof.

(ii) The System Site is located within the service territory of the Utility.

Section 12. Events of Default.

(a) The occurrence of any of the following events shall be an “Event of Default” with respect to the applicable Party under this Agreement:

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(i) With respect to the System Owner, if the System fails to provide any Output during any continuous one hundred twenty (120) day period starting after the Service Commencement Date or for one hundred and eighty (180) days during any twelve (12) month period starting after the Service Commencement Date (“Non-Delivery Period”); provided, however, that non-operation of the System for the duration of a Force Majeure Event (as defined in Section 12(b) below) or for any period during which Customer is in default hereunder shall not be used in calculating the Non-Delivery Period; and provided, further, that the System Owner’s failure to deliver Output following the Non-Delivery Period shall not be a default so long as the System Owner, at its option, pays to the Customer an amount equal to ____________ percent (__%)3 of the monetary value of the Net Metering Credits that would have been credited, allocated or otherwise applied to the Customer Meters in the ordinary operation of the System based on the average Output of the System during the same billing period in the two most recent years of operation (or in the absence of prior periods, based on the estimated monthly output of the System), on a monthly basis until such time as the System Owner restores delivery of Output for the System.

COMMENT

The Customer needs a remedy in the event that the System is out of operation for a substantial period of time. However, there may be legitimate reasons why a System Owner may need more than the 120 days to restore the operation of the System in the event of a catastrophic system failure or casualty event. For example, it may take time to collect insurance proceeds, pursue warranty claims, secure financing for repairs, or it may not be practical to commence a significant repair during the winter months. As a compromise, the model Group Net Metering Agreement allows the System Owner to avoid a termination after the Non Delivery Period by making payments that allow Customer to realize the same financial benefits they would receive if the System were operational.

(ii) With respect to the Customer, Customer fails to make any payment on the due date therefore, and such failure continues for a period of ten (10) business days after the applicable due date.

(iii) With respect to either Party:

(A) The other Party voluntarily or involuntarily files or has filed against it a bankruptcy or other similar petition (and in the event of an involuntary filing only, such involuntary bankruptcy petition continues un-dismissed for a period of sixty (60) days after the filing thereof).

(B) The other Party breaches or fails to perform any material covenant, agreement or obligation set forth in this Agreement or any other Agreement of the Parties appended hereto or the other Party makes any misrepresentation or breaches any material representation or warranty contained herein, and such breach, failure or misrepresentation remains uncured ninety (90) days or more after the Party claiming default provides written notice to the other Party, specifying the provision pursuant to which the alleged default has occurred. The Party accused of default shall have ninety (90) days from the date of the notice to cure the default. In the event that the defaulting Party shall fail to cure the default within ninety (90) days, the non-defaulting Party shall be entitled to send a notice of

3 The percentage specified here should mirror the discount applied in calculating the Service Price in Exhibit “B”.

For example, if the Customer pays a Service Price equal to 90% of the value of the Net Metering Credits, the percentage specified in Section 12(a)(i) would be 10%.

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termination of this Agreement to the defaulting Party and shall be entitled to pursue any and all remedies available at law or in equity.

(C) System Owner ceases to hold any Permit required for the Group Net Metering Arrangement contemplated hereby or for the lawful construction or operation of the System that results in a lack of legal rights on the part of the System Owner or the System to continue to operate; provided, however, that the foregoing shall not result in an Event of Default if, (1) such Permit is no longer required at such time, or (2) System Owner, within 30 days after becoming aware of such suspension, revocation or cancellation, commences and diligently pursues efforts to obtain a replacement of such Permit.

(D) If System Owner and the Customer are parties to a Lease Agreement whereby the Customer leases the System Site to the System Owner (the “Lease Agreement”), the termination of the Lease Agreement or the occurrence of an Event of Default (as defined in the Lease Agreement) with respect to the other Party.

(b) Force Majeure. Neither System Owner nor Customer shall be considered to be in default in the performance of its obligations under this Agreement to the extent that performance of any such obligation is prevented or delayed by a Force Majeure Event (as defined below). Notwithstanding any provision herein to the contrary, Customer shall only be obligated to make payments for the Output and Net Metering Credits actually allocated to the Customer under this Agreement for any period during which the System Owner or Customer experiences a Force Majeure Event. A “Force Majeure Event” means any circumstance not within the reasonable control, directly or indirectly, of the Party affected, but only if and to the extent that (i) such circumstance, despite the exercise of due diligence, cannot be prevented, avoided or removed by such Party, (ii) such event is not due to such Party’s negligence or intentional misconduct, (iii) such event is not the result of any failure of such Party to perform any of its obligations under this Agreement, (iv) such Party has taken reasonable steps to mitigate the consequences and effects of such event, and (v) such Party has given the other Party prompt notice describing such event, the effect thereof and the actions being taken to comply with this Agreement. Subject to the foregoing conditions, Force Majeure Events may include: strikes or other labor disputes, other than strikes or labor disputes solely by employees of the Party declaring the Force Majeure Event or as a result of such Party’s failure to comply with a collective bargaining agreement; adverse weather conditions and other acts of nature; earthquakes; war, acts of terrorism, riots or civil unrest; provided, that Force Majeure Events shall not include any inability to make any payments that are due hereunder or to any third party or to procure insurance required to be procured hereunder.

(c) School Closure. If Customer is a Vermont public school or public school district, and if as a result of any change in any Vermont or federal law, rule, regulation, or general vote of the electorate of such district, one or more facilities of Customer serviced by Customer Meters are closed or Customer is merged or consolidated with another school district, and as a result of which Customer will no longer be a customer of the Utility in good standing or any Customer Meter will be disconnected or removed from the Utility’s service and such School Closure will otherwise have a material adverse effect upon the System Owner’s rights and financial returns under this Agreement (a “School Closure”), then Customer shall provide System Owner with the maximum advance notice reasonably possible of the date on which such School Closure is to become effective. Customer shall designate one or more replacement meters of Customer (or its successor, as applicable) on the same rate schedule and with substantially similar usage (and in any event, sufficient usage to use the Net Metering Credits generated by the System) within the same Utility service territory to be added to Exhibit “C” hereto as a Customer Meter. If no such meters of Customer (or its successor, as applicable) exist or are available for such purpose, Customer and System Owner shall diligently endeavor and cooperate in good faith to mitigate the System Owner’s damages by locating a replacement customer to purchase the Services and Net Metering Credits that would otherwise

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be allocated to the Customer hereunder, on terms substantially similar to the terms hereof. System Owner shall have the right to terminate this Agreement or modify the allocation instructions attached hereto at any time from and after receipt of notice of any pending School Closure, so as to accommodate any replacement customers and otherwise mitigate System Owner’s damages. Subject to compliance with the forgoing terms and conditions, Customer shall have the right to terminate this Agreement without further obligation upon one hundred eighty days (180) days notice to System Owner delivered on or after any such School Closure if such School Closure, could reasonably be expected to result in the Avoided Utility Costs for the Customer Meters for the remainder of the Term becoming _____ percent (___%)4 or less than the amount of the Service Price that would otherwise be payable to System Owner hereunder.

COMMENT

The Group Net Metering Agreement Template includes generous cure periods and Force Majeure provisions. Although these terms are favorable to the Developer, the author believes these terms are reasonable in light of the disproportionate consequences and effects of periods of non-performance on the System Owner and the severe effects of termination on the System Owner and financing source.

Section 13. Financing Source Cure Rights Upon System Owner Event of Default.

Notwithstanding anything in this Agreement to the contrary, upon the occurrence of an Event of Default as to System Owner, or any event that with notice the passage of time or both would constitute or be reasonably likely to result in an Event of Default:

(a) A Financing Source, as collateral assignee, shall be entitled to exercise, in the place and stead of System Owner, any and all rights and remedies of System Owner under this Agreement in accordance with the terms of this Agreement. A Financing Source shall also be entitled to exercise all rights and remedies of secured parties generally with respect to this Agreement and the System.

(b) A Financing Source shall have the right, but not the obligation, to pay all sums due by System Owner under this Agreement and to perform any other act, duty or obligation required of System Owner thereunder or cause to be cured any Event of Default of System Owner thereunder in the time and manner provided by the terms of this Agreement. Financing Source will not be required, but will have the option, to cure any default or Event of Default of System Owner under this Agreement or to perform any act, duty or obligation of System Owner under this Agreement.

(c) Upon a Financing Source’s exercise of remedies pursuant to any security interest in the System, including any sale of the System by such Financing Source, or any conveyance from System Owner to a Financing Source (or any assignee of such Financing Source) in lieu of such Financing Source’s exercise of its remedies, the Financing Source will give notice to Customer of the transferee or assignee of this Agreement. Any such exercise of remedies or conveyance shall not constitute an Event of Default under this Agreement.

(d) In the event of any rejection or other termination of this Agreement under the United States Bankruptcy Code, at the request of the Financing Source made within one hundred twenty (120) days of such termination or rejection, Customer will enter into a new agreement with the Financing Source or its assignee having substantially the same terms and conditions as this Agreement.

(e) If the Financing Source or its assignee, pursuant to an exercise of remedies by the Financing Source, shall acquire title to or control of System Owner’s assets related to the System and shall, within the later of the time periods described in Section 12(a)(iii) or thirty (30) days after such exercise of remedies (so long as notice of termination pursuant to Section 14(b)(iii) has not been given 4 The percentage specified here should mirror the discount applied in calculating the Service Price in Exhibit “B”.

For example, if the Customer pays a Service Price equal to 90% of the value of the Net Metering Credits, the percentage specified in Section 12(c) would be 10%.

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prior to such exercise of remedies and in no event longer than one hundred eighty (180) days after notice of any uncured default if Customer elects to terminate after such one hundred eighty (180) day period), cure all defaults under this Agreement existing as of the date of such change in title or control in the manner required by this Agreement and which are capable of cure by a third person, then System Owner, the Financing Source or its assignee shall no longer be in default under this Agreement, and this Agreement shall continue in full force and effect.

(f) To the extent a Financing Source or any assignee or transferee of a Financing Source succeeds to the interests of the System Owner under this Agreement (such that such Person is deemed to be the System Owner for purposes of this Agreement), pursuant to this Section 13 or otherwise, such Financing Source shall be bound by all of the undertakings and responsibilities of the System Owner hereunder.

(g) The rights of any Financing Party to acquire or transfer the System shall be subject to such Financing Party and transferee filing all necessary notices to and obtaining all necessary approvals of any governmental entities as may be required in connection any applicable laws, rules, regulations or Permits in connection with any such acquisition or transfer.

COMMENT

Payments under this Agreement will be a critical source of repayment for any Financing Source, and the termination of this Agreement would adversely affect the collateral value of the System as a whole. Allowing a Financing Source to step into the shoes of the System Owner and cure Events of Default is beneficial for the Customer and attractive to potential Financing Sources.

Section 14. Term and Termination.

(a) Term. This Agreement will have a term beginning on the Effective Date and ending on the Expiration Date, or until the earlier termination of this Agreement pursuant to this Section 14 (the “Term”).

(b) Early Termination.

(i) System Owner Termination Rights. System Owner shall have the right, but not the obligation, to terminate this Agreement upon thirty (30) prior written notice to Customer:

(A) if, despite System Owner’s commercially reasonable efforts, on or prior to the Conditional Early Termination Date of the System:

(1) The Construction Preconditions are not satisfied or waived by System Owner;

(2) Owner has not obtained an executable interconnection agreement from the Utility for the System on terms and conditions reasonably satisfactory to System Owner or the costs of interconnecting the System to the Utility’s distribution system would make construction or operation of the System infeasible or not economically viable, as determined in System Owner’s sole discretion;

(3) The System Owner is unable to reach Financial Closing for the financing of the construction or operation of the System. For purposes of this Agreement, “Financial Closing” shall mean the execution of financing documents with a lender providing for the construction financing or permanent financing of the System, on terms and conditions satisfactory to System Owner, in System

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Owner’s sole discretion, and the fulfillment of all conditions precedent to the initial availability of funds thereunder; or

(4) If System Owner reasonably determines that the requirements of the Permits required to construct or operate the System would make construction or operation of the System infeasible or uneconomic.

(B) If, prior to the Service Commencement Date, System Owner reasonably determines that: (i) there exist System Site conditions (including environmental conditions) or construction requirements that were not known by System Owner as of the Effective Date and that could materially increase the cost of the development or construction of the System or materially and adversely affect the electricity production from the System as designed, (ii) there has been a material adverse change in the rights of System Owner to construct or operate the System; or (iii) there are easements, covenants, conditions or restrictions or other liens or encumbrances that would materially impair or prevent the installation, operation, maintenance or removal of the System.

(ii) Customer Termination Rights. From and after the Conditional Early Termination Date, Customer shall have the right to terminate this Agreement upon thirty (30) days notice to System Owner:

(A) If any of the following conditions are not satisfied at or prior to the Conditional Early Termination Date:

(1) System Owner shall have obtained any necessary and material easements, leases, licenses, consents and approvals and real property and other rights necessary for the construction, installation, operation and maintenance of the System; and

(2) System Owner shall have obtained all Permits necessary: (1) for the construction and installation of the System, including the Certificate of Public Good, (2) for the provision of Services to the Customer under this Agreement, and (3) for the Net Metering Arrangement contemplated hereby, and all such approvals, permits, licenses and authorizations shall be in force and effect.

Then from and after the Conditional Early Termination Date, Customer shall have the right to terminate this Agreement upon thirty (30) days prior written notice to System Owner, so long as construction of the System has not commenced prior to the date such notice was given to the System Owner and such conditions are not satisfied, waived or cured prior to the expiration of such thirty (30) day notice period.

(B) Prior to the Service Commencement Date, Customer shall have the right to terminate this Agreement upon thirty (30) days prior written notice to System Owner if the planned or anticipated size, nameplate capacity or estimated annual electricity generation of the System changes as compared to the size, capacity and estimate specified in the description of the Solar Project attached hereto as Exhibit “A” such that the Estimated Year One Output to be allocated to Customer changes by more than ten percent (10%), unless Customer has agreed to such changes in writing. System Owner shall promptly notify Customer of any such changes and provide Customer with an updated calculation of the Estimated Year One Output prepared in accordance with Section 6(a).

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(C) Customer shall have the right to terminate this Agreement upon thirty (30) days prior written notice to System Owner if the Service Commencement Date does not occur within One Hundred Eighty (180) days after the Estimated Commissioning Date and the Service Commencement Date has not occurred at or prior to the time of such termination.

(iii) Subject to the Financing Source rights set forth in Section 13 hereof, upon the occurrence and during the continuation of any Event of Default hereunder, the non-defaulting Party shall have the option, but not the obligation, to terminate this Agreement upon providing written notice of termination to the defaulting Party.

(c) All payment obligations of Customer, and all rights and remedies of the Parties hereto, arising prior to the termination of this Agreement shall survive the termination thereof.

Section 15. Assignment. Except as set forth in Section 16, neither Party may assign or transfer this Agreement to any other Person without the other Party’s prior written consent, and any attempted assignment or transfer without such consent shall be void.

Section 16. Cooperation in Financing. Customer shall reasonably cooperate with System Owner’s efforts to obtain financing for the System, and hereby consents to the collateral assignment of this Agreement to any Financing Source of System Owner. Customer agrees to provide such other ordinary and reasonable acknowledgments and certifications in respect of this Agreement as may be reasonably requested from it by any actual or potential Financing Source, provided, however, that System Owner shall pay or reimburse Customer for all reasonable costs incurred by Customer in connection with such cooperation, including reasonable attorney’s fees; and further, provided, that in no event shall Customer be required to sign or otherwise deliver any consent or agreement that modifies or alters the terms of this Agreement or the rights and obligations of the Parties hereunder. System Owner may assign or transfer its interest, rights and obligations and collaterally assign to Financing Sources all or any part of System Owner’s rights, interests or obligations under this Agreement. Customer agrees and acknowledges that any such Financing Sources shall have the right to enforce all provisions herein as an intended third-party beneficiary.

COMMENT

Payments from the Customer will be the primary source of income from the System. As a result, evaluating the creditworthiness of the Customer will be a significant underwriting consideration for any Financing Source. Customer’s cooperation with the reasonable requests of the System Owner’s Financing Sources, including delivery of estoppel certificates confirming that this Agreement remains in full force and effect and the absence of Events of Defaults, may be necessary to secure financing for the construction of the System.

Section 17. Limitation of Liability. Each Party agrees to waive any claim or right against the other for indirect, incidental, consequential or punitive damages, other than as a result of, or to the extent arising out of, personal injury, death, intentional misconduct or third party claims (to the extent such damages are awarded to any such third party). Neither Party shall be liable to the other for or, as a result of, any proceeding in which rates are reviewed or established for either Party by the Vermont Public Service Board or similarly authorized entity.

Section 18. Notices. All notices, requests, demands, claims and other communications (each, a “Notice”) hereunder shall be in writing, addressed to the intended recipient as set forth on the first page of this Agreement, or to such other person or address as the Party entitled to such Notice shall have specified by written notice to the other Party given in accordance with the provisions of this Section. Any such Notice shall be deemed duly given on the earliest of: (i) when delivered personally to the recipient; (ii)

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one (1) business day after being sent to the recipient by reputable overnight courier services (charges prepaid); (iii) one (1) business day after being sent to the recipient by facsimile transmission or electronic mail with confirmation of receipt; or (iv) four (4) business days after being mailed to the recipient by certified or registered mail, postage prepaid.

Section 19. Entire Agreement. This Agreement, including the exhibits, schedules and attachments hereto, supersedes all prior agreements, whether written or oral, between the Parties with respect to its subject matter, and there are no covenants, promises, agreements, conditions or understandings, written or oral, except as set forth herein.

Section 20. Amendment. This Agreement may not be amended, waived or modified except by an instrument in writing executed by the Party against whom such amendment, waiver or modification is to be enforced.

Section 21. Severability. Any provision of this Agreement that is not essential to the purpose of this Agreement, or that is capable of being modified or replaced in a manner that gives effect to the original underlying intent of the Parties and to the intended economic benefits to the Parties in all material respect, that is declared or rendered unlawful, invalid or unenforceable by any applicable court of law or regulatory agency or deemed or rendered unlawful, invalid or unenforceable because of a statutory or regulatory change, including any order of the Vermont Public Service Board or any change in the Utility’s tariff (individually or collectively, such events are referred to as a "Regulatory Event") will not otherwise affect the remaining lawful obligations that arise under this Agreement, and, if appropriate, such invalid or unenforceable provision shall be modified or replaced to give effect to the original underlying intent of the Parties and to the intended economic benefits to the Parties. If a Regulatory Event occurs, the Parties shall cooperate in good faith and use their best efforts to reform the Agreement in order to give effect to the original underlying intent of the Parties and to the intended economic benefits to the Parties, to the greatest extent reasonably practical.

Section 22. Waiver of Rule of Construction. The Parties waive the benefit of any rule that this Agreement is to be construed against one Party or the other.

Section 23. Fees and Expenses. Each Party will bear its own fees and expenses incurred in connection with the preparation, negotiation and execution of this Agreement.

Section 24. Effect of Agreement. This Agreement shall not be construed as a contract of agency, partnership, joint venture, surety or guaranty. The Parties agree that this Agreement is, and shall be construed as, a service contract under Section 7701(e) of the Internal Revenue Code of 1986, as amended, and not a lease.

COMMENT

The first sentence of this Section clarifies that the Parties do not intend to create a contract of agency, partnership or joint venture. These are special legal relationships that give rise to duties, obligations and rights beyond those specified in this Agreement, which could have unintended consequences for the Parties.

In order for the System Owner to receive the tax benefits and incentives attributable to the System, rather than Customer, this Agreement must not be regarded as a “lease” of the System to the Customer. Section 7701(e) of the U.S. Internal Revenue Code of 1986, as amended, provides a safe harbor for treating solar agreements like this one as services contracts rather than as leases, so long as certain criteria are satisfied.

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Section 25. Choice of Law. This Agreement shall be governed and construed in accordance with the internal laws of the State of Vermont, without giving effect to principles of conflict of laws that would require the application of any other law.

Section 26. Jurisdiction. Any action or proceeding arising out of or related to this Agreement shall be brought in the State of Vermont, or, if it has or can acquire jurisdiction, in the United States District Court of the District of Vermont. Customer and System Owner each hereby irrevocably consents to and submits to the exclusive jurisdiction of each such court and waives any objection it may ever have to venue or convenience of forum. Customer and System Owner acknowledge and agree that this Section constitutes a voluntary and bargained-for agreement between the Parties.

COMMENT

Some parties may prefer to provide for mediation, arbitration or other alternative dispute resolution procedures as an alternative to or condition to commencing litigation.

Section 27. Additional Terms and Conditions. (check only one)

___ The additional terms and conditions specified on Exhibit “D” hereto apply to this Agreement.

___ No additional terms and conditions apply to this Agreement.

If the Parties have checked above to indicate that additional terms and conditions specified on Exhibit “D” apply to this Agreement, then Exhibit “D” shall be incorporated into this Agreement by reference. In the event of any conflict between the terms of this Agreement and the terms set forth on Exhibit “D”, the terms set forth in Exhibit “D” shall control. Notwithstanding the foregoing, if the Parties have indicated that no additional terms and conditions apply or if no selection is indicated above, then Exhibit “D” shall have no force or effect.

COMMENT

The Parties may specify additional terms and conditions or amend or modify the body of this Agreement using Exhibit “D”. The comment to Exhibit “D” includes an amendment that shifts how certain risks are allocated between the Customer and the System Owner. Under the default Service Price provisions of this Agreement, the Customer is responsible for purchasing all net metering credits that are allocated to it. Under the amended terms and conditions in the Comment to Exhibit “D”, the Service Price payable by the Customer during any Contract Year may be capped at the amount of the savings actually realized on the Customer’s Utility bills. As amended, Customer is not responsible for paying for net metering credits that expire for non-use. But if a Customer fails to use and pay for all of the net metering credits that are allocated to it, such that net metering credits expire without payment to the System Owner, the System Owner will have the right to modify the Customer’s allocation or terminate this Agreement (unless the Customer agrees to pay for such expired credits). These terms are not included in the standard formulation of the Agreement, because they may not be widely acceptable to developers and financing sources (or appropriate for all transactions). Although some developers and financing sources may be comfortable with these terms, others may not. Customers that require inclusion of the terms specified in the Comments to Exhibit “D” may be limiting themselves to a smaller pool of potential counterparties and bidders, which could result in a higher Service Price.

[**Signature Page Follows on Separate Page**]

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IN WITNESS WHEREOF the Parties do hereby execute this Agreement as of the __ day of _______________, 20_____. CUSTOMER: Customer Name: By: Witness Name of Signatory: Title: SYSTEM OWNER: System Owner Name: By: Witness Name of Signatory: Title:

Exhibit “A”

Description of System The System shall consists of an array of photovoltaic panels with an aggregate facility-rated output of _______ kW (AC) with an aggregate panel wattage of _____ kW (DC) located at the System Site as further described below: [**INSERT SYSTEM DESCRIPTION HERE, INCLUDING ESTIMATED YEAR ONE OUTPUT **] Estimated Year One Output: For the twelve (12) month period beginning on the Service Commencement Date, System Owner estimates that the Output of the System that will be allocated to the Customer Meters will be ____________ kWh (the “Estimated Year One Output”). The System Owner estimates that the total electricity that will be generated by the System during such period will be ____________ kWh. SYSTEM SITE DESCRIPTION: [**INSERT SYSTEM SITE DESCRIPTION HERE**] COMMENT The final design and specifications for a System may not be known at the time that the Group Net Metering Agreement is executed. Changes in the System design and specifications are not uncommon during the course of the permitting, interconnection and construction process. Customers should anticipate occasional amendments to the System Description and site plan as an ordinary part of the development and construction process. Where the System will be located at a System Site that is not owned by the Customer and the Customer is required to buy all of the Output allocated to it, the estimated Output of the System is a very important aspect of the System Description. General and approximate descriptions of the System that allow some flexibility to the System Owner are typically acceptable to Customers, in light of the Customer’s right to termination the Agreement if a change in the System results in a change of 10% or more to the Estimated Year One Output. For projects that will be sited on land leased from the Customer, it is important for the Customer to maintain approval rights over the System Design and site plan. This Agreement assumes that any such approval rights will be set forth in the Lease.

Exhibit “B”

Service Price

The Customer shall pay the System Owner a fee for the Services (the “Service Price”) equal to ____ percent (____%) of the Net Metering Credit Value attributable to Output from the System (check one only):

_____ that is allocated to the Customer Meters.

OR

_____ that is allocated to the Customer Meters and applied to reduce the amount payable to the Utility with respect to the Customer’s electricity usage and charges for the Customer Meters. In the event that all or any portion of the Net Metering Credit allocated to a Customer Meter for any Utility billing period exceeds the applicable electricity usage and charges for such period, such that the balance of the Net Metering Credit is rolled over to Utility bills for subsequent billing periods, then no Service Price for such excess Net Metering Credits shall be due until such excess credits are actually applied to reduce the amount payable by the Customer to the Utility; provided, however, that Net Metering Credits allocated to the Customer Meters that expire for non-use shall be deemed to be applied to reduce the amount payable by the Customer to the Utility at the time of expiration.

COMMENT The standard Service Price employs a floating rate based on a percentage of the monetary value of the net metering credits and other benefits allocated to the Customer Meters on account of electricity generated by the System and allocated to the Customer Meters. The Agreement presents the parties with two options for when the Service Price will become payable. If the first option is selected, the Customer will pay the Service Price for all Output that is generated and allocated to the Customer’s Utility bill during a billing period, rather than as the net metering credits are actually used by the Customer. Solar facilities produce significantly more Output in the summer months, so a Customer may build up and pay for a surplus of net metering credits that the Customer may not use until the winter months when System Output is lower. Unused bill credits expire after 12 months, unless the Utility voluntarily allows such credits to last longer (which the Utility is not obligated to do). If the second option is selected, payment of the Service Price becomes due at the time net metering credits are actually applied to reduce the usage and charges on the Customer’s Utility bill. Under the standard provisions of the Group Net Metering Agreement Template, it is the Customer’s obligation to use and pay for the net metering credits attributable to the Output that is allocated to it. Therefore, any bill credits that expire for non-use after 12 months are deemed to be used at the time of expiration. Note that the second option is disfavored by many System Owners on account of the administrative burdens of tracking the Customer’s usage, which depends in part on the reporting practices of the Utility. Although some Utilities provide the administrator of the System with comprehensive reports that make this task easier to accomplish, this option may not be practical if the Utility’s reporting practices are less robust. Alternative Service Price – Fixed Price Per kWh of Output. A common pricing structure is for the Customer to agree to pay a fixed price for each kWh of Output allocated to its meters. This option

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allows the customer to lock-in a fixed price for its electricity for an extended period of time. Unlike the other options presented above, the Customer bears the risk associated with changes in electricity prices. The benefits of the net metering arrangement to the Customer will increase as electricity prices rise. But if electricity prices fall below the fixed price agreed to in the contract, the Customer may pay more for electricity than it would in the absence of this Agreement. This pricing option is not presented in the current version of the model Group Net Metering Agreement only because: (a) the use of fixed price contracts has not been as widespread in Vermont for net metering arrangements with municipalities and school districts; and (b) because a number of changes may be required to reflect the different allocation of risk between the parties. The omission of this pricing option from the Group Net Metering Agreement Template does not reflect any opinion of the authors, publishers or sponsors as to the viability or desirability of a fixed-rate Service Price. An alternative version of this Agreement for a fixed price Service Price Structure may be published at a later date if there is sufficient stakeholder demand. Parties desiring to enter into a fixed-rate agreement in the interim should consult with a Vermont lawyer to amend and modify this Agreement appropriately.

For all purposes of this Agreement, including the calculation of the Service Price (check all that apply):

____ In no event shall the Net Metering Credit Value per kWh of Output allocated to a Customer Meter be deemed to be less than $0.___ per kWh (the “Floor”).

____ In no event shall the Net Metering Credit Value per kWh of Output allocated to a

Customer Meter be deemed to be greater than $0.___ per kWh (the “Cap”). ____ No Floor or Cap shall apply.

If no selection is indicated above, no Floor or Cap shall apply. COMMENT A minimum Net Metering Credit Value, known as a “Floor,” is often requested or required by developers. and financing sources. A “Floor” is often desirable to the extent it helps “bookend” the risk to lenders and other financing sources from a significant decline in electricity rates and corresponding Net Metering Credit Values, but shifts some of the risk of significantly lower electricity rates onto the Customer. Customer’s are often willing to accept this risk on the grounds that it only comes into to pay in a scenario where they would be paying less than they are now. A “Cap” is less common, but allows the Customer to capture the benefits if electricity rates or corresponding Net Metering Credit Values exceed a specified threshold. These provisions are not included in all net metering agreements, but may be desirable to the Parties or beneficial for obtaining financing for the project. If no Floor or Cap applies, the System Owner will bear 100% of the risks and receive 100% of the benefits associated with fluctuating utility prices.

Exhibit “C”

Allocation Instructions

System Owner shall instruct the Utility to allocate credits for the kilowatt hours of electricity generated by the System each month to the Meters set forth below in the following order of priority until the monthly electricity usage, charges and fees for each Meter are fully offset and satisfied: System Owner Meter: Priority Account Name Account # Meter # Rate Class

1 Customer Meters: Priority Account Name Account # Meter # Rate Class

2 3 4 5

COMMENT Where the Group will include other third-party customers, the relative rights and priorities of any such third parties should be specified in this Exhibit. Electricity generated by the System may alternatively be allocated on a percentage basis (by specifying a percentage of the generation to be allocated in lieu of specifying a priority). The following language can be substituted in this Exhibit “B” when allocation will occur on a percentage basis: System Owner shall instruct the Utility to allocate credits for the kilowatt hours of electricity generated by the System each month to the Meters set forth below in the following percentages: System Owner Meter:

Percentage Account Name Account # Meter # Rate Class__ %

Customer Meters:

Percentage Account Name Account # Meter # Rate Class__ % __ % __ % __ %

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Exhibit “D”

Additional Terms and Conditions

[None.] COMMENT Under the standard Service Price provisions of this Agreement, the Customer is responsible for purchasing all net metering credits that are allocated to it. Set forth below is provision that modifies the Service Price terms in Exhibit “B” such that the Service Price payable by the Customer during any Contract Year is capped at the amount of the savings actually realized on the Customer’s Utility bills. As amended, Customer is not responsible for paying for net metering credits that expire for non-use. But if a Customer fails to use and pay for all of the net metering credits that are allocated to it, such that net metering credits expire without payment to the System Owner, the System Owner will have the right to modify the Customer’s allocation or terminate this Agreement (unless the Customer agrees to pay for such expired credits). These terms are not included in the standard formulation of the Agreement, because they may not be widely acceptable to developers and financing sources (or appropriate for all transactions). Although some developers and financing sources may be comfortable with these terms, others may not. Customers that require inclusion of the terms specified in the Comments to Exhibit “D” may be limiting themselves to a smaller pool of potential counterparties and bidders, which could result in a higher Service Price. Parties that wish to include this provision should insert the text below into Exhibit “D”.

Exhibit “B” to this Agreement is hereby amended by adding the following language to the end of such Exhibit “B”:

Service Price Limited to Avoided Utility Costs. Notwithstanding anything in this Agreement to the contrary, in no event shall the Service Price payable by the Customer to the System Owner during any Contract Year exceed the Avoided Utility Costs for the Customer Meters for such Contract Year; provided, however, in the event that the aggregate amount of the Service Price payments actually paid by the Customer to System Owner during any Contract Year exceeds the Avoided Utility Costs for the Customer Meters for such Contract Year, then the amount of such excess shall be credited against the Service Price payable to the System Owner for future payment periods (“Excess Service Price Credit”) until such Excess Service Price Credit is exhausted. Upon the termination of this Agreement, the System Owner shall pay Customer the amount of any accrued but unused Excess Service Price Credit for Contract Years ending prior to such termination, which payment shall be made within 45 days of the end of the Utility billing period during which such termination occurs. With respect to any Contract Year ending after the termination of this Agreement, any Excess Service Price Credit for such year shall be refunded by System Owner to Customer within 45 days of the end of the Utility billing period during which such Contract Year ends. Customer shall promptly notify System Owner of any actual or anticipated change in Customer’s electricity usage or with respect to the Customer Meters that results, or could reasonably be expected to result, in the Avoided Utility Costs for the Customer Meters for such Contract Year being less than the amount of the Service Price that would otherwise be payable to System Owner hereunder (an “Adverse Usage Change”). Examples of such Adverse Usage Changes may include energy efficiency improvements made by Customer, the closing or change in usage of a building serviced by a Customer Meter, or the disconnection of a Customer Meter. Customer agrees to use commercially reasonable efforts, and cooperate with System Owner in

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good faith to mitigate the economic effects on the System Owner of such Adverse Usage Change, including modifying the Allocation Instruction or identifying and making available additional Meters of Customer, if any, for inclusion in this Group Net Metering Arrangement as Customer Meters. If an Excess Service Price Credit is generated for any Contract Year or an Adverse Usage Change occurs, then System Owner shall have the right, upon 30 days prior written notice to Customer, to terminate this Agreement or modify the allocation instructions attached hereto or allocate generation to third parties, in each case so as to mitigate the economic impact on System Owner of any such event, unless Customer refunds or waives its rights to any such Excess Service Price Credits or the Customer waive its rights to Excess Service Price Credits which may arise as a result of such Adverse Usage Change, as applicable.

LAND LEASE AGREEMENT1

This land lease agreement (“Lease”) is entered into as of the “Effective Date” (as defined in Subsection 19(k)). This Lease is made by and between _____________ (“Owner”) with an address at __________________, and _______________ (“Tenant”; together with Owner, referred to jointly as the “Parties”), a limited liability company, organized and existing under the laws of the State of Vermont, with an address at _______________. WHEREAS, Owner holds title to an approximately ____ acre parcel of real property located in the Town of ___________, State of Vermont (“Property”; as described more fully in attached Exhibit “A”); WHEREAS, Tenant desires to lease from Owner and Owner desires to lease to Tenant an approximately _____ acre portion of the Property (the “Site”; as described more fully in attached Exhibit “B”), for the site of a net-metered community solar electric facility (the “Solar Facility”; as defined in Subsection 5(a)), which, pursuant to a separate agreement and at Tenant’s expense, will be constructed by an entity selected by Tenant (“Developer”), and in which members of the Tenant (“Participants”) separately purchase percentages of Solar Facility from Developer;

WHEREAS, the power from the Solar Facility will be fed into the Green Mountain Power (GMP) electric grid and GMP will issue credits representing the power to Participants and Owner as follows: a portion of which credits will be allocated to Owner to offset Owner’s electrical use as land lease payments for use of the Site (“Lease Payments”; as defined in Section 3). The balance of such credits will be allocated on a pro-rata basis to Participants, pursuant to separate agreements with GMP and via “net metering” (as defined by Public Service Board Rule 5.100), to offset Participants’ electrical use;

WHEREAS, Tenant has been organized for the purpose of managing certain administrative and

financial matters on Participants’ behalf, including acting as liaison with Owner and GMP; WHEREAS, the Parties desire to set forth the terms and conditions of the lease of the Site

through this agreement;

NOW, THEREFORE, in consideration of all covenants contained in this Lease, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree to be legally bound as follows:

1 Disclaimer: This agreement is intended as a model agreement that should be adapted by the user to

apply to their specific circumstances and current law. We strongly recommend that all users of this agreement consult with legal counsel licensed in the appropriate jurisdiction on how best to apply this model agreement to their specific circumstances.

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Section 1: Lease of Premises. Owner agrees to lease to Tenant and Tenant agrees to lease from Owner the Site for the purposes

described herein, together with all required utilities and other Easements (as defined in Subsection 5(e)) and rights of access to the Site, to have and to hold the Site, the Easements and rights of access, together with all rights, privileges, easements and appurtenances thereunto belonging and attaching, unto Tenant. This Lease sets forth the covenants and agreements that the Parties agree to comply with during the Term (as defined in Subsection 2(a)). Section 2: Term.

(a) The term of this Lease (the “Term”) shall be twenty five (25) years, commencing on the

Effective Date and expiring on the twenty fifth (25th) anniversary of the Effective Date, unless otherwise terminated at an earlier date in accordance with the terms of this Lease.

(b) Provided that Tenant is not in default under the Lease, Tenant, upon mutual agreement with the Landowner, shall have the option to renew this Lease for an additional term of a length agreed upon by the Parties.

Section 3: Lease Payments.

The Lease Payments made to Owner by Tenant for the use of the Site and Easements shall be the

electric output of [five percent (5%)] of the power production of the Solar Facility, which shall be paid by net meter credits to Owner’s GMP Account# ____________ or any successor account that may be designated by Owner. Section 4: Feasibility and Permitting Period.

(a) Commencing on the Effective Date and terminating twelve (12) months thereafter (the

“Feasibility Period”), which period may be extended pursuant to Section 4(c), Tenant and its invitees and licensees are hereby granted the right, at no additional cost to Tenant, to enter upon the Site and Property and conduct such analyses, tests, reviews, inspections and studies (collectively, the “Tests”) as are required to determine the suitability of the Site for Tenant’s intended use and to obtain any and all government certificates, permits, variances, licenses, agreements, and entitlements necessary for said use (collectively, the “Approvals”). Such Tests may include, but are not limited to, surveys, soil tests, environmental evaluations, solar assessments, and other Tests as Tenant or its invitees or licensees find necessary. In addition, Tenant may obtain an abstract or preliminary title report (the “Title Report”) regarding the Property from a title insurance company of its choice. Tenant shall not be liable to Owner or any third party for any pre-existing defect, condition or encumbrance on or with respect to the Property, title to the Property and/or any improvements located on the Property, regardless of whether such defect, condition or encumbrance is disclosed by the Tests, the Title Report, or otherwise known by Tenant. The Owner shall not bear the costs of the Test and Approvals.

(b) During the Feasibility Period and throughout the Term, Owner shall cooperate with

Tenant, shall execute all documents required to obtain all permits, zoning, and land use approvals, and authorize Tenant and Tenant’s invitees and licenses to act as Owner’s agents for the limited purpose of

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obtaining such permits and approvals regarding this Solar Facility, the Site and the Easements. Owner shall permit Tenant’s intended use of the Site and the Easements in compliance with zoning, land use, utility service and building laws, rules, ordinances, permits, approvals, variances, and other governing rules and regulations. Owner shall not take any action that would adversely affect Tenant’s ability to obtain or maintain any governmental approval.

(c) Tenant shall have the right to extend the Feasibility Period for additional six (6) month periods (each a “Feasibility Extension Period”; collectively the “Feasibility Extension Periods”) by providing written notice thereof to Owner at least ten (10) days prior to expiration of the Feasibility Period or the Feasibility Extension Period then in effect, provided that: (i) Tenant is diligently and in good faith seeking to obtain the Approvals (as defined in Section 10); (ii) a required Approval has not been rejected without an opportunity to appeal; and (iii) Tenant pays to Owner the sum of _______ ($___.00) for each Feasibility Extension Period that Tenant extends in accordance with the terms of this Lease. Tenant shall make each such feasibility extension payment prior to the commencement of the Feasibility Extension Period to which such payment relates.

(d) If the state of title to the Property as set forth in the Title Report indicates any liens,

claims or encumbrances which may interfere with Tenant’s use and operation of the Site and/or the Easements, Tenant shall have the right but not the obligation to either (i) attempt to discharge such liens, claims and/or encumbrances, if possible, and deduct the cost thereof from the Lease Payments due in accordance with Section 3 of this Lease, or (ii) terminate this Lease by providing written notice thereof to Owner. Upon and after such termination, neither Owner nor Tenant shall have any further obligation or liability under this Lease except as otherwise expressly provided herein.

Section 5: Use.

(a) Tenant is granted the sole and exclusive right to use the Site (as described more fully in

Exhibit “B”) for the purpose of constructing, installing, removing, replacing, reconstructing, maintaining and operating a solar array, including solar panels, equipment, equipment shelters and buildings, electronics equipment, generators, electric cable, poles, conduits, and, other equipment, improvements, and such other personal property, fencing and landscaping within and around the perimeter of the Site or portion thereof (the “Solar Facility”; as described more fully in Exhibit “B”). Any and all such materials installed in, on, or under the Property shall be deemed property of the Participants, and shall not become fixtures or be deemed a permanent part of the Property. Tenant shall have the right to alter, replace, expand, enhance and upgrade the Solar Facility at all times (as defined below in subsection 5(h)) during the Term. Tenant shall require Developer to construct the Solar Facility and any modifications in material compliance with all applicable laws, rules, regulations, ordinances, permits, approvals and variances.

(b) Tenant shall keep and maintain the Solar Facility and the Site in good condition and repair, and shall maintain and operate the Solar Facility in material compliance with all applicable federal, state, and local laws, rules, regulations, ordinances, permits, approvals, and variances. Except, Tenant is not liable for normal wear and tear and casualty not caused by Tenant or, its invitees or licensees.

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(c) Tenant has the right to fence the Site and the Solar Facility, and the right to clear and keep the Site and Easements clear of all trees, bushes, rocks, crops and other vegetation using mechanical means, provided that no pesticides or herbicides shall be used at any time. During the construction or any required major repair or reconstruction of the Solar Facility only, Tenant shall have the right to use portions of the Property adjacent to the Site in connection with the construction, repair or reconstruction of the Solar Facility

(d) Pursuant to a separate agreement between Tenant and Developer, the Parties expect that Developer will pay for all utility services used at the Site and the Parties shall not, therefore, be required to do the same. If the Site does not have utility services, Developer shall have the right to cause utility services to be installed at the Site at Developer’s sole expense and the Parties shall not, therefore, be required to do same. Owner agrees to use reasonable efforts to assist Tenant in acquiring any necessary utility services to the Site. Owner is not liable for any costs incurred for Solar Facility’s utility services.

(e) As partial consideration for the Lease Payments, Owner hereby grants to Tenant, for the benefit of Tenant and its invitees, licensees, successors, and assigns, during the Term or any extension thereof, easements in, under, and across the Property: (i) for ingress, egress and access to the Site, by foot and motor vehicles, including trucks and heavy equipment; (ii) to install utility services; (iii) to install storm water management systems; (iv) for the installation and maintenance of equipment, utility wires, poles, cables, conduits, drainage lines, and pipes to operate the Solar Facility and accommodate the permitted use of the Site; and (v) to capture, use and convert the unobstructed solar resources at the Site (collectively, the “Easements”). The Easements shall be located on the Property, in the areas described and depicted in Exhibit “B” attached hereto, or as required in order to effectively operate the Solar Facility, and shall have the same term as this Lease.

(f) In the event that any utility company requires an easement not otherwise located within

the area of the Easements to provide utility services to the Site, Owner agrees to grant such necessary easement to said utility company. Such additional easements in favor of the utility companies shall be located within the Property in one or more areas mutually approved by and acceptable to Owner, such utility companies, and Tenant. Owner shall not be entitled to payment of any additional amount for use of any Easements or any electromagnetic, visual, view, light, noise, vibration, electrical, or other effects attributable to the Easements or other aspects of the Solar Facility.

(g) The Easements are non-exclusive easements to and for the benefit of Tenant and its invitees, licensees, successors, and assigns. Tenant shall have the right to construct, maintain and repair a roadway over the aforementioned Easements, including such work as may be necessary for slope and drainage and to install such poles, wires, pipes, cables, conduits and related appurtenances as shall be necessary to install services and systems, as defined in Subsection 5(e), for the Solar Facility. If Owner or other tenants, employees, agents, contractors, licensees or invitees of Owner damage or disturb the Easements, then Owner and Owner’s other tenants, employees, agents, contractors, licensees and invitees shall share in the reasonable and proportionate costs incurred to repair such Easements.

(h) Tenant and its invitees and licensees shall have reasonable access to the Site and the Easements for the purposes of constructing and maintaining the Solar Facility during the Term, provided that, barring exigent circumstances, all work shall be performed during daylight hours only. Tenant and

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its invitees and licensees shall have the right to park their vehicles on the Property during construction, repair, replacement, and/or servicing of the Solar Facility. All other access to the Property by the Tenant and its invitees and licensees will only be allowed through the advance notice and approval of the Owner.

(i) Tenant covenants that it shall comply with the decommissioning plan approved by the

Public Service Board in connection with the issuance of its Certificate of Public Good. Section 6: Assignment.

(a) [Upon notice to Owner and subject to Owner’s approval, such approval not to be

unreasonably withheld,]2 Tenant shall have the right to assign or transfer its rights under this Lease, in whole or in part, to any person or any business entity at any time, subject to the assignee assuming all of Tenant’s obligations hereunder.

(b) After delivery by Tenant to Owner of an instrument of assumption by an assignee wherein

such assignee assumes all of the obligations of Tenant under this Lease, Tenant will thereafter be relieved of all liabilities and obligations pursuant to this Lease.

(c) Owner may assign its rights and obligations under this Lease to its successor in interest in and to the Property without the prior consent of Tenant. The Parties agree that Tenant’s rights under this Lease shall continue for the full Term regardless of a sale, conveyance, transfer or other disposition of the Property or any part thereof or interest therein. Owner agrees that all sales, leases and transfers of the Property or any part thereof, and the granting of any easement, encumbrance or interest in and to the Property or any part thereof, shall, during the Term and any extension thereof, be subject to this Lease. Owner also agrees that all such sales, leases, and transfers of the Property and granting of any easement or interests shall be subject to Tenant’s rights and options under this Lease for the duration of the Term and shall not adversely affect the use of the Site or Easements by Tenant and its invitees and licensees. Section 7: Taxes.

(a) As of the date that the Solar Facility becomes operational (the “Commencement Date”),

Tenant agrees to pay, or ensure payment will be made when due, for any increase in real estate taxes, municipal charges and assessments, as determined by tax authorities, due against the Property because of the Solar Facility’s presence on the Property. Owner shall cooperate with Tenant in the protest of any tax assessment by providing Tenant with information regarding the relative valuation of the Property and allowing Tenant to participate in any proceeding related to such tax protest. Nothing in this Subsection shall be construed as limiting Tenant’s right to contest, appeal, or challenge any tax assessment.

2 All bracketed text is subject to the parties’ negotiations and final agreement. If desired, parties may

eliminate bracketed text without undermining the remaining provisions.

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(b) Tenant shall pay when due all personal property taxes that are directly attributable to the presence or installation of the Solar Facility on the Property. Section 8: Removal of Solar Facility.

(a) Tenant shall have the right at any time during the Lease to remove the Solar Facility without the consent of the Owner. If Tenant intends to remove the Solar Facility prior to the Term’s expiration, Tenant shall provide the Owner prior written notice of such intent to remove the Solar Facility at least __days prior to such removal.

(b) Upon written request of Owner, given to Tenant ten (10) days or more prior to the

expiration or earlier termination of this Lease, all personal property and trade fixtures of Tenant, Participants, Developer, and/or other third parties, specifically including, but not limited to, the Solar Facility, shall be removed by Tenant from the Site within ____________ days after the expiration or earlier termination of this Lease or as soon thereafter as weather and ground conditions reasonably allow. Section 9: Liability Insurance.

At its sole cost and expense, Tenant shall procure and maintain during the Term a Commercial General Liability policy issued by a company licensed to do business in Vermont by the Department of Financial Regulation. The policy shall insure Tenant and name Owner as an additional insured in the event of liability for injury or death of a person or persons or damage to property occasioned by or arising out of or in connection with Tenant’s occupation and use of the Site or activities thereon. [Tenant’s insurance policy shall provide a limit of at least $100,000 for a residential facility or a limit of at least $300,000 coverage for non-residential facilities, as formerly required by the Vermont Public Service Board Rule 5.100 and the GMP net-metering tariff.]

Section 10: Termination.

(a) Tenant may terminate this Lease at any time, in its sole discretion, upon written notice to Owner prior to the Commencement Date.

(b) Further, this Lease may be terminated by Tenant immediately, at any time, upon giving

written notice to Owner, and if: (i) Tenant cannot obtain all governmental certificates, permits, variances, leases or other approvals (each an “Approval”; collectively, the “Approvals”) and/or any easements required for the installation and operation of the Solar Facility as contemplated hereunder; (ii) any Approval is canceled, terminated, or expires or lapses; (iii) Owner fails to deliver to Tenant any non-disturbance agreement or subordination agreement required hereunder (as defined in Subsection 16(b)); (iv) Owner does not have proper ownership of the Property and/or authority to enter into this Lease; (v) Tenant permanently and completely removes the Solar Facility (as defined in Subsection 8(a)); (vi) Tenant determines that the Property contains Hazardous Substances (as defined in Subsection 12(a)) and such Hazardous Substances were not introduced to the Property by Tenant; or (vii) Owner is in default hereunder and fails to cure such default within the periods specified in Section 15.

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(c) Tenant shall have the right at any time prior to the expiration of the Feasibility Period and any Feasibility Extension Period to terminate this Lease by providing written notice to Owner if: (i) Tenant is unsuccessful in obtaining the permits necessary for the solar array; or (ii) in the sole and absolute discretion of the Tenant, Tenant determines that the Site are not suitable for the use of a solar array; (iii) or that the construction and operation of the Solar Facility on the Site would not be in the best interest of Tenant. Upon and after such termination, neither Owner nor Tenant shall have any further obligation or liability under this Lease except as otherwise expressly provided in this Lease.

(d) Any termination of this Lease pursuant to this Section 10 shall not constitute a waiver of

Parties’ rights under Section 11 and Section 12. Tenant, upon termination, shall, at its sole cost and expense, restore the Site as reasonably possible to its original condition. Section 11: Indemnity and Arbitration.

(a) The Parties agree to indemnify and hold harmless one another from and against any and

all administrative and judicial actions and rulings, claims, causes of action, demands and liabilities including, but not limited to, damages, costs, expenses, assessments, penalties, fines, losses, judgments and reasonable attorney fees (collectively, “Losses”). The Parties must indemnify against Losses to the extent such Losses are caused by or arise out of (i) the negligent acts or omissions of the indemnifying party; or (ii) a breach of, or default by, the indemnifying party under this Lease that has not been cured in accordance with the terms hereof. Notwithstanding the foregoing, this indemnification shall not extend to Losses exclusively arising from the negligence or intentional misconduct of the indemnified party.

(b) The indemnifying party’s obligations under this section are contingent upon (i) its

receiving prompt written notice of any event giving rise to an obligation to indemnify the other party hereto, and (ii) the indemnified party’s granting such indemnifying party the right to control the defense and settlement of the matter for which indemnification is being given, provided that no such settlement shall be agreed to or otherwise effective unless the same has been approved in advance by the indemnified party, such approval has not been unreasonably withheld, and the indemnified party shall have the right to participate in such defense with counsel selected by the indemnified party, and all costs and expenses of such counsel selected by the indemnified party shall be borne exclusively by the indemnified party.

(c) In the event a dispute shall arise between the Parties with respect to this Lease the dispute shall be submitted to binding arbitration in accordance with the rules then prevailing of the American Arbitration Association. The arbitrator’s decision shall be final and binding, and judgment may be entered thereon. The cost of any such arbitration shall be paid as determined by the arbitrators. The judgment rendered by the arbitrators may be entered into any court of competent jurisdiction. Section 12: Hazardous Substances.

(a) Owner hereby represents and warrants that it has no knowledge of any substance,

chemical, or waste on the Property that is identified as hazardous, toxic, or dangerous in any applicable federal, state, or local law or regulation (collectively, the “Hazardous Substances”). Owner has not

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introduced or used, and shall not introduce or use, any Hazardous Substance on the Property in violation of any applicable law. Owner shall be responsible for, and shall promptly conduct, any investigation and remediation as required by any applicable federal, state, and local laws or regulation of all spills or other releases of any Hazardous Substance caused solely by Owner or any employee, agent, licensees and invites, contractor, representative or affiliate of the Owner, that have occurred or may occur on the Property during the Term.

(b) Tenant hereby represents and warrants that it shall not: (i) bury underground or discharge into the sewage system at the Property any Hazardous Substances, or (ii) use the Property as a storage site for Hazardous Substances, except minimal quantities used in the ordinary course of business in accordance with all applicable environmental laws.

(c) The Parties each agree to defend, indemnify, and hold each other harmless from and against any and all Losses (as defined in Subsection 11(a)) that indemnified party may suffer or incur due to the existence or discovery of any Hazardous Substances on the Property or the migration of any Hazardous Substance to other properties or the release of any Hazardous Substance into the environment that arise from the indemnifying party’s activities on or at the Property. The indemnification obligations set forth in this Subsection specifically include, without limitation, costs incurred in connection with any investigation of site conditions and/or any cleanup, remedial, removal or restoration work required by any governmental authority. This Subsection shall survive the termination or expiration of this Lease (as described in Subsection 10(d)). Section 13: Casualty/Condemnation.

(a) If there is a condemnation of the Site, the Easements, and/or the Property, or a portion

thereof which is sufficient to render the Site and/or the Easements unsuitable for Tenant’s purposes, including but not limited to a transfer of the Site, the Easements and/or the Property or a part thereof by consensual deed in lieu of condemnation, then this Lease shall, at the option of Tenant, terminate upon transfer of title to the condemning or deeded authority, without further liability to either of the Parties, except as otherwise expressly provided herein. The Lease Payment due hereunder shall be prorated to the date of the taking, and Tenant shall not be required to make any payments for the period following the date of such taking. Tenant and Owner shall be entitled to pursue their own separate condemnation awards with respect to any such taking, which award to Tenant may include, where applicable, the value of the Solar Facility, moving expenses, prepaid rent to the extent not reimbursed to Tenant by Owner, and business dislocation expenses.

(b) If the Site, the Solar Facility, the Easements, and/or the Property are damaged or destroyed to an extent sufficient to render the Site and/or the Easements unsuitable for Tenant’s purposes, Tenant shall have the right, but not the obligation, to not rebuild, replace or repair any improvement and to terminate this Lease as of the date that such damage or destruction occurred, without prejudice to or otherwise affecting any rights or remedies that Tenant may have hereunder or at law or in equity, and the Lease Payment due hereunder shall be prorated to such date of termination.

(c) Notwithstanding anything in this Lease to the contrary, in the event of any casualty to or condemnation of the Property or any portion thereof during such time as any security instrument shall remain unsatisfied, the financing entity in whose favor such security instrument has been granted shall

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be entitled to receive all insurance proceeds and/or condemnation awards, up to the amount of the indebtedness secured by such security instrument, otherwise payable to Tenant and apply such proceeds in accordance with the terms of the security instrument, and shall further have the right, but not the obligation, to restore the Property, as reasonably possible to its original condition, in the event that the same is damaged or destroyed. Section 14: Quiet Enjoyment.

(a) Owner agrees that Tenant, upon making Lease Payments and complying with all

covenants and terms of this Lease, shall and may peaceably and quietly have, hold and enjoy the Site and the Easements and all related appurtenances, rights, privileges and easements throughout the Term without any unlawful hindrance or interruption by Owner and any person claiming to act by, through, or under Owner. Owner shall have access to the Site, but shall not take any action to interfere with the optimal and safe operation or maintenance of the Solar Facility.

(b) The Solar Facility shall be the exclusive property of and owned by Tenant, Participants, and/or Developer, as set forth in separate agreements between them, and not the property of the Owner. Owner covenants and agrees that neither the Solar Facility nor any part of the improvements constructed, erected or placed by Tenant on the Site or the Easements shall become or be considered as being affixed to or a part of the Property. The Parties agree and specifically intend that the Solar Facility and all improvements of every kind and nature constructed, erected, or placed by the Tenant on the Site, and the Easements shall be and remain the property of Tenant, Participants and/or Developer, as set forth in separate agreements between them. The Owner agrees and acknowledges that none of the above listed improvements or Easements, including, without limitation, any trade fixtures, shall become the property of Owner upon termination or expiration of the Lease. Owner hereby waives any and all lien rights and/or security interests it may have, statutory or otherwise, in or otherwise with regard to the Solar Facility or any portion thereof.

(c) Owner agrees for itself and all future holders of the Property that no use shall be made of the Property that would interfere with Tenant’s use of the Site and the Easements, including, without limitation, the operation of the Solar Facility.

(d) Owner hereby represents and warrants to Tenant that: (i) Owner is the fee owner of the Site and the Easements and the lands immediately adjacent which comprise the easements and rights of way granted to Tenant in this Lease; (ii) such ownership is free and clear of all liens, claims, and encumbrances other than those which do not interfere with Tenant’s use of the Site and the Easements; (iii) Owner has the lawful right and authority to execute this Lease and to grant the leasehold interests, Easements, rights of way, and other rights described herein; (iv) the Tenant’s intended use of the Site and the Easements by Tenant does not conflict with any agreements, restrictions, covenants, conditions, easements or licenses, whether or not of record, that affect the Premises and/or the Easements; (v) the Property, including the Site and the Easements, and all improvements located thereon, other than improvements constructed by Tenant, are in substantial compliance with all laws, rules, regulations and ordinances, including, but not limited to, building, life/safety, disability and other laws, codes and regulations of applicable governmental authorities; and (vi) Owner has obtained and delivered to Tenant the consents of all parties other than Owner that hold any encumbrance upon or interest in the Site and/or the Easements to the existence, execution, and delivery of this Lease, the granting of a leasehold

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interest in the Site and the granting of the Easements to Tenant in accordance with the terms in this Lease, and Tenant and its successors and assigns utilization of the Site and the Easements for the purposes described herein. Section 15: Default.

Notwithstanding anything contained herein to the contrary, and without waiving any other rights granted at law or in equity, if either of the Parties is in default under this Lease for a period of (i) forty-five (45) days following receipt of notice of default from the non-defaulting party, and where the default may be cured solely by the payment of money; or (ii) sixty (60) days following receipt of notice of default from the non-defaulting party with respect to a default which may not be cured solely by the payment of money, then, in either event, the non-defaulting party may pursue any remedies available against the defaulting party under applicable law or in equity, subject to the terms of Subsection 11(b) of this Lease. If a non-monetary default may not reasonably be cured within such 60 day period, the Lease may not be terminated if the defaulting party commences action to cure the default within such 60 day period and proceeds with due diligence to fully cure the default as soon as reasonably practicable thereafter. Section 16: Subordination and Non-Disturbance3.

(a) Tenant acknowledges that prior to the Commencement Date, Owner may have granted a

mortgage, deed of trust, or other security instrument (“Mortgage”) which encumbers some or all of the Property and/or the Easements to certain institutions or persons (collectively, the “Mortgagees”; individually, a “Mortgagee”). Tenant also acknowledges that Owner, may grant a Mortgage that encumbers some or all of the Property and/or the Easements to a Mortgagee on or after the Commencement Date.

(b) With regard to each Mortgage that is in effect and/or of record on or prior to the

recordation of a Memorandum/Notice of Lease, (“MOL”), substantially in the form of Exhibit “C” attached hereto. Owner hereby grants to Tenant permission to insert the Commencement Date of this Lease into the MOL after execution of the MOL and to record the MOL in the proper jurisdiction.

(c) Owner will request the Mortgagee to execute and deliver to Tenant a subordination,

non-disturbance and attornment agreement (“SNDA Agreement”) among Owner, Tenant and Mortgagee. In the SNDA Agreement: (i) Tenant confirms that this Lease is subordinated to the Mortgage granted to Mortgagee; (ii) Tenant agrees to attorn to Mortgagee in the event that the Mortgagee acquires title to the Property; and (iii) Mortgagee agrees to honor the Lease in the event of foreclosure under the Mortgage to which Owner and Mortgagee are parties, and that the Lease shall remain in full force and effect and shall not be terminated, and Tenant shall be permitted to exercise all of its rights and remedies, as long as Tenant is not in default under the Lease. If Owner

3 Subordination and Non-disturbance Agreements are subject to Vermont state and local laws and

customs. In crafting such agreement, we strongly recommend users of this model obtain independent counsel from an attorney with expertise in Vermont real estate and mortgage law.

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fails to deliver a SNDA Agreement to Tenant on or prior to the execution of the MOL, then Tenant shall have the right, in its sole discretion, to terminate this Lease by providing written notice thereof to Owner. Upon such termination neither of the Parties shall have any further obligations or liabilities hereunder.

(d) With regard to each Mortgage in effect and/or of record after the recordation of the MOL, Tenant shall promptly enter into a SNDA Agreement with Owner and the Mortgagee thereunder. If Tenant fails to deliver a SNDA Agreement to Owner, then Owner shall have the right, in its sole discretion, to terminate this Lease by providing written notice thereof to Tenant, and upon such termination neither of the Parties shall have any further obligations or liabilities hereunder.

(e) With regard to each Mortgage granted by the Owner after the recordation of the MOL, Owner shall promptly request the Mortgagee execute and deliver to Tenant a SNDA Agreement among Owner, Tenant, and Mortgagee. If Owner and Mortgagee fail to deliver a SNDA Agreement to Tenant, then Tenant shall have the right, in its sole discretion, to terminate this Lease by providing written notice thereof to Owner, and upon such termination neither of the Parties shall have any further obligations or liabilities hereunder.

(f) The Parties covenant and agree that, notwithstanding anything to the contrary set forth

herein, the form and terms of each SNDA Agreement shall be mutually approved by and deemed acceptable to Owner, Tenant, and the Mortgagee that is a party to such SNDA Agreement.

Section 17: Solar Energy Environmental Attributes

(a) A net-metered customer (“Net Metered Customer”) for the purposes of this Section is defined as a Vermont electric consumer who receives net-metered energy from the Solar Facility, including the Participants and Owner.

(b) Each Net Metered Customer shall own and retain the environmental attributes of their net

metered energy produced by the Solar Facility and shall have sole rights to make any green or renewable energy claims in regards to their net metered energy. Net Metered Customers shall not unbundle or separately sell the environmental attributes, including any renewable energy credits or certificates, from the net-metered electricity.

Section 18: ACKNOWLEDGMENT OF ARBITRATION

Owner and Tenant each acknowledge that this Lease contains an agreement to arbitrate in

Subsection 11(b) above. After signing this document, Owner and Tenant each understands that it will not be able to bring a lawsuit concerning any disputes that may arise which is covered by the agreement to arbitrate, unless such dispute involves a question of constitutional or civil rights.

Section 19: Miscellaneous.

(a) Owner and Tenant each represents and warrants that it has all right and authority to

execute this Lease, and that, upon execution of this Lease, the Lease shall be fully binding upon the Parties.

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(b) This Lease sets forth and contains the entire agreement between the Parties regarding the subject matter hereof, and supersedes all prior discussions, agreements and negotiations between the Parties with regard to the subject matter hereof.

(c) The Parties may sign this Lease in multiple counterparts, each of which, when executed, shall be deemed to be an original instrument, and all of which, taken together, shall constitute one and the same agreement.

(d) The terms and conditions of this Lease shall extend to and bind the heirs, personal representatives, successors, and assigns of the Parties.

(e) In the case a dispute arises that does not follow the resolution terms agreed upon per the indemnification and arbitration clause set forth in Section 11, the substantially prevailing party in any action or proceeding in court to enforce the terms of this Lease shall be entitled to receive its reasonable attorneys’ fees and other reasonable enforcement costs and expenses from the non-prevailing party.

(f) Notices, requests, and other communication shall be in writing and sent by United States Mail, postage prepaid, certified or registered with return receipt requested, or by any nationally recognized overnight courier service for priority delivery, to the respective addresses set forth below. Any such notice shall be deemed given when deposited in the United States Mail or delivered to such courier service. Notices shall be sent to:

For Tenant:

(Include Address and Name of Interested Party) For Owner:

(Include Address and Name of Interested Party) Either party may change the address for notice by sending written notice to the other.

(g) This Lease shall be governed by and construed in accordance with the laws of the state in which the Property is located, without giving effect to the conflicts of laws rules of such state.

(h) If Owner is represented by any broker or any other leasing agent in connection with the

transactions contemplated by this Lease, Owner shall be responsible for and shall pay when due all commissions, fees and/or other payments to such agent, and agrees to indemnify and hold Tenant harmless from all claims by such broker or anyone claiming through such broker with regard to such commissions, fees and payments. If Tenant is represented by any broker or any other leasing agent in connection with the transactions contemplated by this Lease, Tenant shall be responsible for and shall pay when due all commissions, fees and/or other payments to such agent, and agrees to indemnify and hold Owner harmless from all claims by such broker or anyone claiming through such broker with regard to such commissions, fees and payments.

(i) This Lease may not be amended, supplemented or restated except by a written instrument that has been executed and delivered by each of the Parties.

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(j) The effective date of this Lease is the date of execution by the last party to sign the Lease

(the “Effective Date”).

(k) The waiver by any party hereto of a breach of any provision of this Lease shall not bar or be construed as a waiver of any subsequent breach by any party.

(l) If any provision of this Lease is found by a court of competent jurisdiction to be unenforceable or illegal, such findings shall not impair the remaining provisions of this Lease and the remainder of this Lease shall be enforceable as if such illegal or invalid provision had not been contained within this Lease.

IN WITNESS WHEREOF, the Parties do hereby execute this Lease as of the ______ day of ____________________________, 20 . IN PRESENCE OF: (NAME OF OWNER), as Owner ___________________________________ ___________________________________ Witness Duly Authorized Agent

(NAME OF LLC), as Tenant

___________________________________ By:____________________________________ Witness Duly Authorized Agent STATE OF VERMONT COUNTY OF __________________, SS. On this _____ day of ________________, 20___, personally appeared (NAME OF OWNER) to me known to be the person who executed the foregoing instrument, and he acknowledged this instrument, by him signed, to be his free act and deed. Before me, Notary Public Printed Name: Notary commission issued in XXX County My commission expires: DATE OF EXPIRATION STATE OF VERMONT COUNTY OF __________________, SS. On this _____ day of ________________, 20__, personally appeared ______________ Duly Authorized Agent of (NAME OF LLC) to me known to be the person who executed the foregoing

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instrument, and he acknowledged this instrument, by him signed, to be his free act and deed and the free act and deed of (NAME OF LLC). Before me, Notary Public Printed Name: Notary commission issued in XXX County My commission expires: DATE OF EXPIRATION

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EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

The Site (as described further in Exhibit “B”) is located on the “Property”. The Property is a ___ acre (approximately) parcel including (i.e. lands and premises, farm buildings and easements). The entire parcel, located in (enter location by address or in manner recorded by municipality). Said overall parcel is described and annotated by metes and bounds descriptions in the following deeds recorded in the (Municipal) Land Records:

1. (Include here, if any, a) Warranty Deed of any (Person), dated (Date) and recorded on (Location).

2. (Include here, if any, a) Quit Claim Deed of (Person) dated (Date) and recorded in (Location).

The following Rights of Way and Easements are annotated in the Deeds mentioned above. 1. (Include here, if any a) Right of Way in warranty Deed, (Date and Location) 2. (Include here, if any a) Utility Line Easements: (Location).

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EXHIBIT “B”

DESCRIPTION OF THE SOLAR FACILITY AND SITE

A ____ kW AC nameplate solar generating Solar Facility (“Solar Facility”) as specifically designed, approved and permitted in the Certificate of Public Good issued by the Public Service Board. The Solar Facility shall be comprised of ____watt solar modules, required racking assembly, combiner boxes, inverters, panel boards, fuses, disconnects, data acquisition equipment, and meters consistent with all local, state, and federal codes. The “Site” is the land area within the Owner’s Property (as described further in Exhibit “A”) that will be utilized by the Solar Facility and will be approximately ___ acres or less. The Site should not be any larger than necessary to accommodate the Solar Facility’s design and to ensure compliance with zoning, land use, utility service and building laws, rules, ordinances, permits, approvals, variances, and other governing rules and regulations. The Solar Facility will be located in (describe the area where Solar Facility will be located on Property4) as depicted below.

4 In describing the property give particular focus upon any potentially sensitive ecological or

man-made features within the Site that may influence the Site’s preparation, Solar Facility construction, operation, and maintenance activities.

CAN INCLUDE HERE GOOGLE (OR EQUIVALENT) EARTH IMAGE OF SITE AND PROPERTY DELINEATIONS INCLUDING THE LAYOUT OF SOLAR FACILITY

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EXHIBIT “C”

MEMORANDUM/NOTICE OF LEASE Site Name/Location: ______________________________ _______________________________ This Memorandum/Notice of Lease, dated ____________________, 20__, evidences that a land lease agreement (the “Lease”) dated ________________, 20___, was made and written between _____________________________ (“Owner”), and ______________ (“Tenant”), a Vermont limited liability company with an address at ______________________. The terms and conditions of the Lease are incorporated herein by this reference. Nothing in this Memorandum/Notice of Lease shall be deemed to modify, amend, limit, or otherwise affect the terms and conditions of the Lease. In the event of any inconsistency between the terms of this Memorandum/Notice of Lease and the terms of the Lease, the terms of the Lease shall control.

Such Lease provides in part that Owner leases to Tenant that certain parcel of real property located at _______________________, Town of ______, State of Vermont, more particularly described in Exhibit “A” attached hereto (the “Site”). The Site is situated within a larger parcel of real property that is owned by Owner and more particularly described in Exhibit “B” attached hereto (the “Property”). Pursuant to the Lease, Owner has also granted to Tenant an easement for non-exclusive rights of access to the Site and for electric, stormwater management, and other utility services and facilities to the Site. The date of the Lease is as of ________________. The Lease term shall commence on the _____ day of ______, ______, which is the date the Solar Facility is commissioned at the Solar Site (the “Commencement Date”), and ends on the 25th anniversary of the Commencement Date.

The Lease provides [subject to written notice to Owner and Owner’s consent, which consent shall not be unreasonably withheld] Tenant the right to assign or transfer its rights under the Lease, in whole or in part, to any person or any business entity at any time, subject to the assignee assuming all of Tenant’s obligations thereunder. After delivery by Tenant to Owner of an instrument of assumption by an assignee, wherein such assignee assumes all of the obligations of Tenant under the Lease, Tenant will thereafter be relieved of all liabilities and obligations pursuant to the Lease.

Upon the cancellation, termination or expiration of the Lease, Tenant will make, execute and deliver to Owner an instrument releasing this Memorandum/Notice of Lease, which instrument shall in form and substance be satisfactory to Owner and shall be in recordable form.

Tenant does hereby make, constitute and appoint Owner as Tenant’s true and lawful agent for the limited, specific and exclusive purpose of executing, delivering and recording a termination of this Memorandum/Notice of Lease, in the event that Tenant has not signed and

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returned to Owner a termination of this Memorandum/Notice of Lease, within ten (10) business days after the cancellation, termination or expiration of the Lease, in accordance with the terms thereof. This agent is coupled with an interest and shall be irrevocable until this Memorandum/Notice of Lease has been validly released of record. The agency relationship set forth in this paragraph is hereby expressly limited to the specific matters and rights set forth in such paragraph.

This Memorandum/Notice of Lease may be executed in counterparts, each of which,

when executed, shall be deemed an original instrument, but all of which taken together shall constitute one and the same agreement. Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to such terms in the Lease.

The location of the original Lease is on file and available for inspection during usual business hours at the offices of Tenant. IN WITNESS WHEREOF, the Parties hereto have executed the Memorandum/Notice of Lease as of the day and year first above written. IN PRESENCE OF: NAME OF LANDOWNER, as Owner ___________________________________ By:___________________________________ Witness Duly Authorized Agent NAME OF COMPANY/ENTITY, as Tenant ___________________________________ By:____________________________________ Witness Duly Authorized Agent STATE OF VERMONT COUNTY OF __________________, SS. On this _____ day of ________________, 20__, personally appeared ______________ Duly Authorized Agent of NAME OF LANDOWNER to me known to be the person who executed the foregoing instrument, and he acknowledged this instrument, by him signed, to be his free act and deed and the free act and deed of NAME OF LANDOWNER Before me, Notary Public Printed Name: Notary commission issued in XXX County My commission expires: DATE OF EXPIRATION

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STATE OF VERMONT COUNTY OF __________________, SS. On this _____ day of ________________, 20__, personally appeared ______________ Duly Authorized Agent of COMPANY/ENTITY to me known to be the person who executed the foregoing instrument, and he acknowledged this instrument, by him signed, to be his free act and deed and the free act and deed of COMPANY/ENTITY. Before me, Notary Public Printed Name: Notary commission issued in XXX County My commission expires: DATE OF EXPIRATION

WILLIAM H. SORRELL ATTORNEY GENERAL

SUSANNE R. YOUNG

DEPUTY ATTORNEY GENERAL

WILLIAM E. GRIFFIN

CHIEF ASST. ATTORNEY

GENERAL

TEL: (802) 828-3171

FAX: (802) 828-2154

TTY: (802) 828-3665

CIVIL RIGHTS: (802) 828-3657

WEBPAGE:

www.ago.vermont.gov

STATE OF VERMONT

OFFICE OF THE ATTORNEY GENERAL

109 STATE STREET

MONTPELIER

05609-1001

Guidance for Renewable Energy Marketing Claims

The Vermont Attorney General’s Office and Department of Public Service issue this updated

guidance to clarify that all marketers of renewable energy projects must comply with the rules

that prohibit deceptive marketing statements.

1. What are renewable energy projects?

Renewable energy is generally an energy source that is naturally replenished, such as solar,

wind, hydro, geothermal, and biomass. The 2011 Vermont Comprehensive Energy Plan sets out

a pathway for Vermont to obtain 90% of its energy from renewable sources by 2050.

2. What are RECs? What is null electricity?

Renewable energy certificates or renewable energy credits (“RECs”) are certificates that track

the source of the renewable energy and are the legal attribute of renewable energy. The nature of

electricity is that it is physically untraceable. Once generated, the electricity flows into a

common pool where it cannot be physically traced to its source or end use. The system of

tracking attributes via RECs is the only legal way of characterizing the “renewability” of

different sources of electricity. RECs can be separated, or “unbundled,” from the electric output

and sold to anyone, such as to a utility that needs renewable credits to comply with a state

renewable portfolio standard. Because the RECs are produced in relation to electric output,

RECs can be continuously sold as more electricity is produced.1 Whoever buys the RECs has

paid a cost to bring renewable energy to the grid and has the only legal claim that their energy,

equal to the RECs purchased, is renewable. Electricity that has its RECs stripped away and sold

is called “null electricity.” Null electricity is not renewable and is simply unspecified and

undifferentiated power.

1 Vermont’s Renewable Energy Standard (Act 56 passed in 2015) begins in 2017 and over time will

require more renewable energy to be consumed in Vermont. Currently, however, other regional states

have higher renewable energy standards that create more demand for RECs. Selling RECs to out-of-state

buyers is a common and legal practice that gives renewable energy power providers an additional source

of revenue, thereby encouraging the development of new renewable energy facilities.

http://legislature.vermont.gov/assets/Documents/2016/Docs/ACTS/ACT056/ACT056%20As%20Enacted.pdf

2

3. Can my company describe renewable energy projects as “renewable” if the RECs are sold?

NO. If a renewable energy project sells its RECs out-of-state, then it is deceptive to state or

imply that the electricity consumed from that renewable project in Vermont is “renewable,”

“clean,” “green,” etc. That practice is known as “double counting” the RECs, and it is deceptive.

The Federal Trade Commission (FTC) has issued its Guides for the Use of Environmental

Marketing Claims (known as the “Green Guides”), which state:

“If a marketer generates renewable electricity but sells renewable energy certificates for

all of that electricity, it would be deceptive for the marketer to represent, directly or by

implication, that it uses renewable energy.”2

As the FTC has explained, this applies to power providers:

“[P]ower providers that sell null electricity to their customers, but sell RECs based on

that electricity to another party, should keep in mind that their customers may mistakenly

believe the electricity they purchase is renewable. Accordingly, the Commission advises

such generators to exercise caution and qualify claims about their generation by

disclosing that their electricity is not renewable.”3

The FTC has clarified4 that this also applies to utilities:

“[A] utility should avoid unqualified or poorly qualified representations that state or

imply that its customers will receive renewable electricity from its renewable facilities

when, in fact, the utility has sold or will sell the RECs from those projects elsewhere.”

“[I]f the utility subsequently sells RECs from the [renewable] facility, it carries a

particular burden to inform their customers that they are no longer receiving renewable

electricity.”

In that same letter, the FTC provided overall guidance to the industry:

“By selling RECs, a company has transferred its right to characterize its electricity as

renewable.”

“[P]ublic statements about electricity generation, including the development of

generating facilities, can lead to consumer misperception if inadequately qualified.”

2 This is codified in federal law at 16 C.F.R. § 260.15(d).

3 Green Guides’ Statement of Basis and Purpose, page 225 (emphasis added).

4 FTC Letter to Green Mountain Power (Feb. 5, 2015) available at:

https://www.ftc.gov/system/files/documents/public_statements/624571/150205gmpletter.pdf.

https://www.ftc.gov/system/files/documents/public_statements/624571/150205gmpletter.pdf

3

4. What are examples of deceptive statements?

As the FTC explains, “a claim is deceptive if it likely misleads reasonable consumers.

Therefore, the Green Guides are based on how consumers reasonably interpret claims, not on

technical or scientific definitions.”

Public statements, including those on websites or in print material, that energy is “clean” or

“renewable” can be deceptive if the RECs are sold and there is no adequate disclosure about it.

Disclosures must be proximate to the promotion of renewable energy; disclosures on websites

(such as on an “FAQ” page) are not enough. Below are some example statements drawn from

promotional material distributed in Vermont.

Examples of deceptive statements for a

renewable project that sells its RECs

Examples of acceptable statements and

adequate disclosures

“It’s green power”

“[we] buy 100% percent of the wind farm’s

production . . . and sell the associated

renewable energy credits.”

“The power of the wind is ours to use and

enjoy”

“The sale of RECs allows us to support and

generate new renewable resources, while

controlling costs by selling RECs to other

entities. Sales of such RECs affect [our] claim

to what portion of the energy provided to

[our] customers is renewable. This avoids

double counting since the purchasers of these

RECs will have the right to claim the

renewability.”

“Your home is now running on cleaner,

cheaper, greener energy”

“We retain the renewable credits (RECs)

associated with our solar farms. We expect to

sell these and use proceeds from them to keep

your price per panel as low as possible.”

“Local customers can take the first step

toward relying on the sun to provide their

household electricity needs”

“Remember, unless you pay us to retire your

RECs, technically, according to the FTC, you

are not buying solar power, nor are you

buying renewable energy, you are simply

buying solar panels and lowering your utility

bills through emissions-free solar generation.

“We deliver clean, safe, in-state, renewable

energy”

“The sale of RECs in no way negates the fact

that community solar arrays are in fact

creating energy from a source that has

renewable attributes”

Please see the attached “REC Best Practices and Claims” as well as the further resources below,

and visit Green-e.org for more explanation and examples of what statements are allowed.

http://www.green-e.org/docs/energy/Solar%20FAQ%20and%20Claims.pdf

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5. What are the consequences of making deceptive statements?

A deceptive statement about the renewable attributes of an energy project that sells its RECs

would violate the Vermont Consumer Protection Act, 9 V.S.A. § 2453(a), which prohibits unfair

or deceptive acts or practices. The Vermont Attorney General is authorized to investigate

deceptive claims by issuing subpoenas under 9 V.S.A. § 2460, and can seek injunctive relief. 9

V.S.A. § 2458. The Attorney General may seek civil penalties of up to $10,000 per violation and

consumers who have been harmed may also sue for relief. 9 V.S.A. § 2461.

The Federal Trade Commission Act also prohibits deceptive acts and practices in or affecting

commerce. 15 U.S.C. § 45. This applies to marketers of renewable energy projects: “the

Commission can take action under the FTC Act if a marketer makes an environmental claim

inconsistent with the [Green Guides].” 16 C.F.R. § 260.1(a). The FTC is authorized to conduct

investigations by subpoena, and take enforcement actions including seeking injunctive relief and

civil penalties.

What should marketers of renewable energy projects do?

1. If you are a utility, power provider, or other marketer of a renewable energy project

that sells the RECS, do not make any statements or suggestions that consumers are

using renewable energy from your project.

a. You may say that consumers are helping to generate renewable energy, but you

may not imply that a consumer’s home is using, or running on, “clean, green,

renewable energy,” etc.

2. Describe exactly what happens to the RECs in your renewable energy project – who

owns the RECs and whether they are sold.

3. Describe this clearly and up front on any main webpage for your renewable energy

project, not just on an FAQ page.

4. The descriptions should be clear, conspicuous, and in understandable language. Look at the examples contained in this Guidance for suggestions.

5. The descriptions should be harmonized across all promotional materials: i.e., all

webpages, all brochures, and all discussions that you have with a consumer, whether in

person, or via phone or email. The explanation of what happens to the RECs should be

the same, and it should be clear across all forms of communication with the public.

6. All contracts and lease agreements should have the same clear explanation of who

owns the RECs and whether the RECs will be sold. For example, some acceptable

lease and contract provisions are as follows:

a. “Developer shall be the sole owner of any renewable energy certificates available

in connection with the net generation of the Project, and as part of the bargain of

this Agreement, Developer expects to sell the renewable energy certificates.”

5

b. “Owner owns all RECs associated with the community solar array (CSA). You

agree the Owner may sell associated RECs to facilitate the construction of the

CSA. Owner expects to sell the RECs associated with the electricity generated by

the CSA.”

7. Harmonize all contracts and lease agreements with all websites and promotional

materials (including discussions). For instance:

a. if a consumer only looked at your website, the website would be clear on what

happens to the RECs;

b. if a consumer only looked at the contract or lease agreement, the same clarity is

provided;

c. and, of course, a consumer reviewing both your website and contract should see

the same, clear disclosure about the RECs in both places.

Conclusion: The Attorney General and Department of Public Service urge all marketers of

renewable energy projects in Vermont to follow the above recommendations and regulations.

Failure to disclose the ownership and sale of RECs while promoting “clean, renewable energy”

constitutes deceptive marketing—it causes consumer confusion and undermines fair competition.

The Attorney General’s Office and Department of Public Service look forward to working with

businesses and consumers to ensure a fair and vibrant renewable energy industry in Vermont.

If you are a consumer or a business and wish to file a complaint, please visit the Consumer

Assistance Program or call (802) 656-3183.

For general inquiries about this Guidance, please contact: [email protected] and put “renewable energy” in the subject line

For questions about renewable energy generally and Vermont’s renewable energy plan, please

visit the Public Service Department at http://publicservice.vermont.gov/renewable_energy

FURTHER RESOURCES

FTC Green Guides

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-

guides/greenguides.pdf

FTC Green Guides’ Statement of Basis and Purpose

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-

guides/greenguidesstatement.pdf

Center for Resource Solutions – “REC Best Practices and Claims”

http://www.resource-solutions.org/pub_pdfs/REC%20Best%20Practices%20and%20Claims.pdf

https://www.uvm.edu/consumer/?Page=complaint.html

https://www.uvm.edu/consumer/?Page=complaint.html

mailto:[email protected]

http://publicservice.vermont.gov/renewable_energy

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguides.pdf

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguides.pdf

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguidesstatement.pdf

https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguidesstatement.pdf

http://www.resource-solutions.org/pub_pdfs/REC%20Best%20Practices%20and%20Claims.pdf

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