5. Option AgreementOPTION AGREEMENT
This Option Agreement ("Agreement") is entered into this day of
, 2014, by and between [ ] ("Subscriber") and MN
Community Solar, LLC, a Minnesota limited liability company ("MNC Solar").
RECITALS
1. MNC Solar is developing a solar photovoltaic facility approximately kW in size to
be located on the (the "Project"). The Project will be owned by MNC Solar or an
affiliate and managed by MNC Solar. The Project is expected to be qualified as a community
solar garden pursuant to Minn. Stat. Section 216B.1641 (2013) and sell all the power it produces
to Northern States Power Company ("NSP").
2. Subscriber is a retail customer of NSP and intends to remain a retail customer of NSP
for at least two years. Pursuant to regulations and tariffs to be promulgated by NSP and
approved by the Minnesota Public Utilities Commission ("PUC"), eligible NSP customers will
be allowed to receive credit against their retail electric bills for an amount of electricity produced
by the Project equal to up to 120 percent of their average annual electric consumption.
Subscriber is likely to be eligible to participate under the expected regulations and tariffs with
respect to electricity to be produced by the Project.
3. MNC Solar estimates that the Project will produce an average of kWh
annually, using approximately 41OW modules. The capacity represented by one-half a
module (205W) is referred to as a "Leaf'.
4. Subscriber wishes to reserve the opportunity to participate as one of the NSP
customers entitled to share in the electricity production from the Project once the Project is
completed pursuant and subject to the terms of this Agreement, and the Participation Agreement
to be executed and delivered as described below.
NOW, THEREFORE, in consideration of the above recitals and the mutual promises set
forth below, the adequacy and receipt of which are acknowledged, the parties agree as follows.
AGREEMENT
1. Option Payment. (a) Subscriber agrees to deposit with MNC Solar the amount of
$ ("Option Payment") to reserve [one Leaf or Leaves] and the associated
production participation opportunity in the Project. If the Project is completed, and, after
adoption of all necessary regulations and tariffs, Subscriber remains eligible to utilize a portion
of the production from the Project against its NSP retail bills, Subscriber shall be entitled to a
production participation opportunity up to an amount equal to the lesser of (i) the production of
its reserved Leaf or Leaves, or (ii) the number of Leaves which is expected to produce an amount
of electricity closest to, but not in excess of, Subscriber's maximum eligible production amount
as defined by the final applicable rules and tariffs.
(b) The Option Payment represents a portion of the full amount which Subscriber will be
required to pay for its production participation opportunity, an amount which will reflect the final
Project cost, an evaluation of Subscriber's most recent NSP electric bills and usage, the final size
and expected production of the Project, and the assumption that Subscriber will be fully eligible
to participate under the final rules and tariffs as adopted ("Subscription Amount"). After
adoption of the applicable rules and tariffs, the Project size and cost and Subscriber's NSP usage
data will be updated and any necessary adjustment to the amount of the Subscription Amount
determined to reflect lower or higher expected benefits to Subscriber. The Subscription Amount
may also be subject to reduction if MNC Solar is successful in obtaining certain third -party
financing for the Project.
2. MNC Solar Obligations. (a) MNC Solar will design and develop the Project,
including (i) leasing the site, (ii) obtaining interconnection approvals from and agreements with
NSP, (iii) structural and other design assessments, and (iv) equipment selection, in order that the
Project will be prepared for procurement and installation as soon as practicable after adoption of
all final applicable rules and tariffs. Upon adoption of all such rules and tariffs and any
necessary adjustments to the Subscription Amount, and subscription payments of other
subscribers, MNC Solar shall procure and install the Project in accordance with its final design.
(b) MNC Solar will participate in negotiations with NSP and proceedings before the
PUC and other applicable agencies to support the adoption of rules and tariffs which permit the
participation by Subscriber in the Project as described in this Agreement, on the best terms
possible for subscribers. Subscriber agrees to cooperate with MNC Solar in such efforts.
3. Use of Funds. (a) The Option Payment and option payments received from any other
subscribers with respect to the Project (in the aggregate, the "Project Deposits") shall be held by
MNC Solar in a segregated account for the benefit of Subscriber and other prospective
subscribers in the Project. MNC Solar shall be entitled to use amounts from such funds only for
the development of the Project, including: (i) lease payments, (ii) interconnection study costs,
(iii) electrical and structural engineering costs, and (iv) third -party legal and professional
expenses associated with development of the project. MNC Solar shall take no compensation
from the Project Deposits prior to completion of the Project. All costs incurred by MNC Solar
with respect to Project development shall be allocated across the Project Deposits
proportionately.
(b) The Option Payment shall be refundable in full to Subscriber if (i) the Project cannot
be completed for legal or technical reasons, and Subscriber elects not to subscribe to participation
in another MNC Solar project; (ii) Subscriber is not eligible to participate in the Project as
contemplated due to restrictions in the final rules and tariffs or a change in circumstances
(Subscriber is no longer an NSP customer, for example); (iii) other reasons which render
Subscriber's ability to participate in the production of the Project impossible; or (iv) Subscriber
2 Option Agreement
elects to withdraw prior to the Notice Date pursuant to Section 3(c). Subscriber's rights to its
production participation opportunity in the Project, as adjusted, shall become fully vested, and
the Option Payment, as adjusted, shall become nonrefundable (except as set forth in Section 3(c))
upon the determination that Subscriber remains eligible for such participation and MNC Solar's
notice to all Project subscribers of its intent to proceed with construction of the Project within
sixty (60) days (the "Notice Date").
(c) Prior to the Notice Date, Subscriber shall have the right to voluntarily withdraw from
participation in the Project for any reason upon notice to MNC Solar, in which case Subscriber
shall be entitled to a full refund of the Option Payment. After the Notice Date and prior to the
execution of a Participation Agreement, Subscriber shall have the right to voluntarily withdraw
from participation as a Subscriber in the Project, and shall receive a refund of the Option
Payment less the proportion of Project development costs described in Section 3(a) previously
incurred by MNC Solar and allocated to Subscriber. Subscriber acknowledges that the Option
Payment is subject to use by MNC Solar as described and waives any right to a refund of
amounts used in accordance with this Agreement if Subscriber voluntarily chooses to withdraw
after the Notice Date pursuant to this Section 3(c).
(d) After the Notice Date, Subscriber's rights with respect to the Project and Subscriber's
production participation shall be governed by a participation agreement conforming to final
applicable rules and tariffs to be executed and delivered by Subscriber, MNC Solar, and any
separate entity which owns the Project, ("Participation Agreement"). Upon execution of the
Participation Agreement, Subscriber will be required to pay the balance of its Subscription
Amount, and the Option Payment will be fully credited against the Subscription Amount. The
Subscription Amount shall be released in full to MNC Solar for use in procurement and
installation of the Project.
4. Status of Project and Production Participation. MNC Solar agrees to provide updates
to Subscriber as to progress with respect to the development of the Project, the use of any third -
party financing, and adoption of the final rules and tariffs applicable to Subscriber's production
participation opportunity.
5. Disclosures. Subscriber acknowledges and agrees that the Subscription Amount, the
Project, and the amount and value of any production participation opportunity, may be affected
by a number of risks and factors beyond the control of MNC Solar, including, but not limited to
the following:
(a) MNC Solar makes no representation or warranty as to the likelihood that the Project
or any one or more Leaves will generate any specific amount of electricity or sufficient electricity
so as to create any expected value to Subscriber in the form of reduced NSP electricity bills
during any period of time or over the term of the Participation Agreement as a whole. Subscriber
acknowledges that the operation of the Project and its electricity production is subject to adverse
weather, lack of sunlight, equipment failures, changes in law and regulation, and other events
beyond the control of MNC Solar that may interrupt or prevent production and delivery of
energy. Any representation by MNC Solar to Subscriber as to the amount or value of electrical
3 Option Agreement
energy expected to be produced and delivered by the Project or the value to Subscriber of such
electrical energy is purely an estimate based on the information available to MNC Solar at the
time and is not a guarantee that any such production will occur or that any particular value will
be received by Subscriber at any time.
(b) MNC Solar makes no representation or warranty as to Subscriber's future electrical
usage, or the costs to Subscriber of purchasing electricity from NSP at Subscriber's residence or
business. Subscriber's usage is subject to Subscriber's existing and future electrical appliances
and equipment, lifestyle choices, weather, the characteristics of Subscriber's residence or
commercial building, and a number of other factors beyond the control of MNC Solar. The rates
and charges paid by Subscriber to NSP against which any production credit will be applied are
subject to determination by NSP and the Commission, and are beyond the control of MNC Solar.
(c) MNC Solar makes no representation or warranty that the Project will utilize any
specific equipment or cost any specific amount, and equipment selection and performance and
cost is dependent on availability, market circumstances, NSP requirements, specific Project
design and location characteristics, and other factors not subject to control or prediction by MNC
Solar.
(d) Subscriber is not acquiring any title to or other ownership interest in or to the Project
or any of its constituent assets, including any specific module or modules constituting a Leaf or
Leaves, or any membership interests or other ownership rights in MNC Solar, or any entity
created to own the Project, and MNC Solar, or the entity it creates to own the Project, shall own
the Project, which shall remain the exclusive property of such owner. Subscriber is merely
obtaining the right to have a proportion of the electricity created by the Project credited against
Subscriber's retail electrical bill at its residence or business in accordance with applicable laws,
rules and regulations, and shall have no right to any other cash, tax, or other noncash benefits
from the Project or ownership of the Project.
(e) Any renewable energy credits, and the right to claim the use of renewable energy
from the Project shall belong in the first instance to either (i) NSP, if the Project uses certain
incentives, or applicable rules and tariffs provide for NSP to receive such attributes, or (ii) the
owner of the Project. If such attributes are owned by NSP, Subscriber may not claim that it is
receiving or using renewable energy from the Project except to the extent allowed by applicable
laws, rules and tariffs. If such attributes are not owned by NSP, they may be sold or transferred
to Subscriber or third -parties by the Project owner as set forth in the Participation Agreement.
(f) MNC Solar is making no representation or warranty about its ability to obtain any
cash grants, rebates, tax investment or other financial benefits which would reduce the
Subscription Amount, the availability of which is subject to various laws, regulations, market
circumstances, and other factors beyond the control of MNC Solar.
Subscriber accepts the risks and uncertainties associated the items set forth in Sections
5(a) — (f) and is providing the Option Payment with full knowledge and acceptance of all such
risks and uncertainties.
4 Option Agreement
6. Miscellaneous.
(a) This Agreement is agreed to be personal to each parry and neither party may assign or
transfer this Agreement or any rights or obligations under this Agreement, in whole or in part,
without the prior written consent of the other party. Any such purported transfer or assignment
shall be void without the required consent. Subscriber acknowledges that the opportunity which
it is acquiring pursuant to this Agreement is subject to Subscriber's eligibility as determined in
accordance with applicable law, and that Subscriber's opportunity to participate in the electricity
production of the Project is not transferable and cannot be sold, assigned, or otherwise conveyed
to any other person or entity either voluntarily or by operation of law.
(b) Subscriber acknowledges that the opportunity secured by its Option Payment
pursuant to this Agreement is not intended to be a security or investment subject to any federal or
state securities laws, and Subscriber is acquiring only an opportunity to have a defined amount of
electricity produced by the Project applied to and credited against its NSP retail electrical bills.
Subscriber agrees that it is entering into this Agreement solely for such purposes, and not for
investment, resale, distribution, or any other transfer of its rights, whether for consideration or
otherwise.
(c) No provision of this Agreement is intended to nor shall it benefit any third party so as
to constitute any such person a third -party beneficiary under any provision of the Agreement or
give rise to a cause of action in any person not a party to the Agreement. This Agreement
constitutes the entire agreement between the parties and supersedes all prior oral or written
understandings, representations or statements. This Agreement may only be amended in a
writing executed by both parties. The Agreement is made in Minnesota and shall be governed by
the laws of Minnesota. This Agreement may be executed in two or more counterparts and by
different parties on separate counterparts, all of which shall be considered one and the same
agreement, and each of which shall be deemed an original. Electronic signatures shall be
accepted as original signatures, but a physical original signed instrument shall be retained by
MNC Solar.
The action contained herein shall be effective as of the day of , 2014.
SIGNATURE PAGE TO FOLLOW
5 Option Agreement
a0jal101:A1.01a i
MN COMMUNITY SOLAR, LLC, a
Minnesota limited liability company,
Its
Option Agreement